[FOUNTAIN]The search for lukewarmA fool walks into a shower and turns on the water. Naturally the water is cold, but the fool doesn’t wait for the water to warm up and turns up the hot water. Then he is startled and nearly scalded and turns the water back to cold, which of course makes the water icy. On and on the fool goes, back and forth between hot water and cold.
That is the concept of the Nobel Prize-winning, University of Chicago economist Milton Friedman’s “Fool in the Shower,” used to describe the government’s incompetence in stabilizing the economy. The idea is that the fool disregards the lag time needed for the water temperature to adjust and reacts impulsively to the temperature of the water he senses.
The scenario is used to explain the economy. When a cycle turns and the economy begins a recovery, there is still some time needed for obvious indicators because there are a number of factors that create a lag time. A failure to recognize the lag time often leads to a prescription of a stimulation policy, just as the economy is entering an upturn, and it will effectively push the economy into overdrive. There are two leading cases of this misguided policy in this country, and they were stimulus measures announced in 1990 and 1993.
Stretching The-Fool-in-the-Shower theory a little bit, we can talk about a range of people who react to the slightest impulse. And we have been seeing a lot of them recently. The government’s position on the National Education Information System has taken a 180-degree turn just in the past few days.
The government also went around its “absolute” rejection of independent truck drivers’ demand for a fuel tax cut overnight and proposed a “rebate” of the tax after collection. The prosecution refused to even look into the allegation last year that President Roh Moo-hyun’s former business partner, Ahn Hee-jung, received suspicious donations from Nara Merchant Bank. Then, just recently, the prosecution made two failed attempts to lock him up, pending indictment.
The government may say that only a fool can’t operate a shower, but the government may even be expecting sympathy for the “anguished decisions” it is making.
Mr. Friedman talked about letting a robot manage a country instead of letting a fool go back and forth. If only running a country was as easy as finding a robot to do it.
by Lee Se-jung
The writer is a deputy economic news editor of the JoongAng Ilbo.