The Appearance of Action

From the New York Times piece today on the mortgage bailout:

Skeptics say the plan is a handout for irresponsible borrowers and lenders, who would be able to get rid of their worst-performing mortgages, putting taxpayers on the hook for billions of dollars in risky loans.

But in a contested election year, with Americans losing billions of dollars in home equity, officials in both parties seem reluctant to be seen as sitting on their hands.

And then there’s this:

“There’s a great desire to act,” said Representative Barney Frank, Democrat of Massachusetts, the bill’s main author in the House.

This, I think, cuts to the core of the political problem with the bill: So much of it is spurred by the desire to appear to be doing something rather than the desire to do something that’s actually sensible.  So the crafters of the legislation seem to have taken some, ah, helpful suggestions from Bank of America (see this document posting and report) and then decided, "Hey, this will make us look like we’re doing something!"

Megan McArdle likes to refer to Bryan Caplan’s blog-famous explanation of the logic behind this kind of thing like this:

1. Something must be done
2. This is something
3. Therefore, this must be done

It’s the "look busy" approach to work; when your boss shows up near your cubicle, you’d better pull up a spreadsheet and start filling in those fields. In this case, the public showed up and a bunch of legislators wanted to look busy.

Unfortunately, doing something doesn’t always mean doing something effective.