Steven Harrison in his book Doing Nothing tells this tale:
A man boarded a train for Delhi and sat across from the swami. The swami was uttering all sorts of incantations and taking dust from a bag and throwing it into the air. Unable to suppress his curiosity, the man finally asked the swami what he was doing. “I am protecting this railcar from tigers with my special tiger dust,” replied the swami. “But,” the man protested, “there aren’t any tigers within thousand miles of us!” And the swami said, “Effective, isn’t it?”
If only the economy was as easy to control as tigers!
Of course, Harrison is making a universal point about just how internally consistent our false belief systems can seem to each of us. For a moment, reflect on this: After all of the incorrect economic forecasts from Paulson, Bernanke, and Bush; after all of their interest rate cuts, tax rebates, bank bailouts, and bans on short-selling; why does the public still believe that the government’s “tiger dust” works?
Many have written essays about why the financial bailout was passed by Congress. Yes, it is true, as some point out, that the Congressional elite will protect the banking elite. Yes, it is also true that Americans have been surrendering their freedoms for many years already. No doubt, it is important to understand all of this and much more. But yet, the truth is that if Americans did not collectively believe in “tiger dust,” we would never be in the position we are in today.
This past week, fearing that parents may give their children adult cough and cold medicine, the FDA rejected a proposed ban on children’s cough and cold medicine. The ban was rejected even though the ineffectiveness and potential dangers of children’s cough and cold medicines was well-established. “When a treatment is ineffective, its risks — unless zero — always exceed its benefits,” said Dr. Michael Shannon of Children’s Hospital in Boston.
Puzzled? No, I am not accidentally mixing blog posts. The FDA action and the financial bailout have everything to do with each other.
Last year, when my children were in for their annual checkup from their pediatrician, my daughter noticed a child in the waiting room who was there to see the doctor for his sore throat. Admittedly, my daughter did not know the severity of the sore throat or the complete circumstances of the other child, but she did know that she had never seen a doctor for a sore throat. She was puzzled why a child would be at the doctor’s office for a sore throat. She wondered why the child’s parents didn’t know what to do for the child.
Again, for all we know, the other child in the waiting room may have had symptoms that warranted an office visit; but as we all know, there are far too many visits to doctors’ offices made for illnesses that the doctor can do nothing about. But there is a bias on the part of the parent—if their child is ill, they believe they must see the doctor; and they expect the doctor do something. It has been well observed that many doctors feel pressured to give useless antibiotics to children who have viruses.
Back to the potential ban on children’s cold medicine. There has been widespread publicity about the ineffectiveness and possible harm coming from these medications, yet the bias on the part of some parents is that they need to administer these drugs to their children. In other words, they must do something—unfortunately, in this case, the “something” is administering “tiger dust”. Last year, when I first wrote about the proposed ban on these medications, I offered advice on what a parent could do instead of administering these drugs. One parent found my advice to be “patronizing and unsympathetic.”
Does any of this sound familiar? We are told we must do something about the financial crisis. We are told that doing something is better than doing nothing. We are told we must act immediately or terrible consequences will happen. We are told that the healing mechanism of the market is not to be trusted. We are told that if we don’t do something about the financial crisis, we are “unsympathetic” to those who are suffering.
Clearly, as long we believe in “tiger dust,” the bias will be to treat the patient. Whether we are administering harmful medications that don’t work to a child or harmful bailouts that don’t work to an economy, at least we feel that we are doing something. If we are unsuccessful, who can fault us? At least we cared, we reason.
But clearly, our logic breaks down. When we believe in “tiger dust”, we are not open to real solutions. Whether those lasting solutions include building up a child’s immunological system so that his incidence of colds is reduced or eliminating the power of the Fed to create credit expansions, we are so busy treating symptoms with “tiger dust”, that we are blind to them. And being blind to real solutions has real consequences.