When to do Nothing

Many column inches have been spent in recent months asserting that the Republicans are out of ideas. Reading up about McCain's "cap and trade" global warming proposal, I could almost wish that were the case.

It is one of the facts of human nature that we often feel we must "do something" even if we don't actually know what, if any, action would be helpful. It is painful and difficult to sit still and do nothing when you know that there are things going wrong. Often this is a good urge, but sometimes it gets us into trouble, especially when we don't actually have any idea how to remedy the problem in question.

I encounter this pretty often at work. When the business is behind and not making it's financial forecast, everyone becomes very urgent to "do something". As an analyst, it often falls to me to point out that one or another of the proposals which is suggested to "do something" won't actually help, and may make things worse.

"Let's do fifty percent off on product X." Sorry, the data for the last year shows that product X is not price elastic. All you will do is cut our revenue on that product by 50% while zeroing out our profit on it entirely.

"Let's do buy-one-get-one-free." When we do buy-one-get-one-free on a proprietary product, we just flood ebay with resellers offering out product at below market prices. We'll see depressed demand for the next month or two. I've got the data to prove it.

However, almost invariably, we do these things anyway. Why? Because people always want to be able to say that they're doing something about the crisis. No one wants to tell his boss, "We're missing our number, but we're not doing anything about it, because none of the ideas we've had would help any."

(If the above makes it sound like there's nothing we can do to increase sales, it's because our extant marketing plan generally has all the price elastic products as heavily optimized for volume as possible -- such that only cost concessions from our suppliers could allow us to be more aggressive than we're already being. Those kind of cost negotiations are the responsibility of another group in the company. So when our specific group gets told to "do something", it's often the case that we're already doing basically everything that's likely to work.)

In a "change election" like this one, we effectively have a country-wide demand that "somebody do something". It's not necessarily an unreasonable demand. We're spending money we don't have, health care is definitely a problem for many Americans, we have a set of immigration laws that we lack the ability or will to enforce, etc. Certainly, people would like to see solutions to those problems. But that does not necessarily mean that doing anything is better than doing nothing.

On health care, for instance, the current American system clearly has problems which are causing a lot of people a lot of pain. I'd like to see reform on that. However, I very strongly do not think that single payer health care run by the Federal government would be an improvement. So while I may not be crazy about the status quo, I'll certainly settle for that as compared to the "change" options currently on the table.

The question is not so much whether one has ideas, or is out of ideas, but rather whether the ideas one has are any good.