Back in September or so I blogged in favor of the $700 billion stimulus package. In those days, now so long ago, I thought, against my otherwise better judgement, that we needed to do something.
Now I don’t.
Now I think we need to let the train wreck finish happening before we “stimulate” anything. If we even bother at all.
I say that for two reasons.
First is that nobody knows wtf to do, really. If we do anything.
Second is that “doing something” is overrated. For that insight I thank this excellent piece in the Washington Post, by Shankar Vedantam. And to Russ Nelson for pointing to it.
The gist:
| The action bias, or the desire to do something rather than nothing when you have just been through a terrible experience, plays a powerful role in our lives. It influences individuals and companies, investors and leaders. You can see the action bias on display in current thinking on the housing and economic crises, in the bitter debates over the war in Iraq — even in discussions about how to fix a football team that’s a perennial loser. |
| When people suffer losses and confront the possibility of even greater reverses — it doesn’t matter if you are talking about a terrorist attack or a meltdown in retirement savings — it is psychologically difficult to do nothing, to hold course. This is true even when the action you contemplate produces an outcome that leaves you demonstrably worse than you were in the first place... |
| When things are going well, there is a tendency to stagnate, rather than innovate and make things even better. When things are going poorly, on the other hand, our bias is to flail. |
We’re flailing, and we’re doing it with trillions of non-existent dollars. Spending them risks making them even more worthless than they already are.
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