The Most Dangerous Words in Economics: “Do Something” : Why governments should resist the pressure to “do something”

A few days ago, while scrolling through my socials, I came across a post by one of Tanzania’s leading opposition figures. He was criticising the government over recent “losses” on the Dar es Salaam Stock Exchange (DSE). He had attached that day’s headline from The Citizen: “Dar es Salaam Stock Exchange loses Sh299 billion as share trading slows.”

I don’t usually read articles like that. Market corrections are normal, and anyone with basic knowledge of financial markets will tell you so. But curiosity got the better of me, and the article confirmed what I suspected.

Market capitalisation fell from Sh40.37 trillion to Sh40.07 trillion in the week ending 9 October 2026. That is a dip of roughly 0.7% in one week. The market review was prepared by Vertex International Securities. Its Research and Analytics Manager, Frank Abel, noted that continued declines could keep investors cautious. He also pointed out that falling prices can create opportunities for investors willing to hold fundamentally strong stocks for the long term.

In other words, it was a routine week in a functioning market.

That isn’t what prompted me to write, though. What concerns me is the pressure on governments to “do something,” and how readily they give in to it.

In Basic Economics, Thomas Sowell observes that elected governments face constant pressure to act, “even when there is nothing they can do” that is likely to help. Economic processes take time to run their course. Politicians are often unwilling to wait, especially when their opponents are advocating for quick fixes like wage and price controls.

I’ll admit I wasn’t always on this side. Not long ago, I strongly advocated for government intervention, particularly on fuel prices. History, and the past few years, changed my mind.

I say this while fuel in Dar es Salaam sits at a record Sh 4,057 per litre, and I feel the pinch like everyone else. But I haven’t added my voice to calls for further government interventions. That call is understandable from opposition politicians, since it’s part of their job. Instead, I’ve adjusted. I changed my working arrangements, cut my driving significantly, and dropped most of my luxury spending. These are exactly the trade-offs a price-coordinated economy asks of us. A high price is a signal to economise on what has become scarce

So does government intervention ever make things better?

Sowell’s account of US recessions offers a useful test, because it sorts them into “do something” and “do nothing” responses.

Do something (1929–1930s). After the October 1929 crash, unemployment peaked at 9% two months later. It then trended down, reaching 6.3% by June 1930, and never hit 10% in the year after the crash. Then the interventions began. The first was the Smoot-Hawley tariffs, the highest in over a century, signed in June 1930 despite a public warning from roughly a thousand economists that they would backfire. Within five months, unemployment hit double digits. It never fell below that level for the rest of the decade, and it stayed above 20% for 35 consecutive months, as intervention followed intervention under Hoover and then Roosevelt.

Do nothing (1921). The 1921 downturn was initially worse than the year after the 1929 crash, with unemployment at 11.7%. President Harding’s main response was to cut government spending as tax revenues fell. That is the opposite of what Keynesian economists would later prescribe. Unemployment fell to 6.7% the next year and 2.4% the year after.

Do nothing (1987). The stock market suffered its largest one-day fall on record, breaking 1929’s mark. Despite fierce media criticism, President Reagan declined to intervene. The economy recovered on its own. The Economist later described the two decades that followed as a period of steady growth and low inflation.

To be fair, this isn’t the whole story. Many economists argue that the 1930s were deepened mainly by monetary failure: the US central bank let the money supply collapse amid waves of bank failures. In 1987, the Fed moved quickly to provide liquidity. But this sharpens the point rather than weakening it. Interventions that help tend to be quiet, rule-based, and aimed at keeping the system working. They are not dramatic, political reactions to a headline.

A 0.7% weekly move on the DSE does not need a government response. Neither does every painful price. What both need is time, plus citizens and businesses who respond to the signals prices send.

So before we demand that the government “do something,” we should ask one question: Is 'something' going to work?