Alfred Kahn, a top economic adviser to President Carter, learned that lesson [using the word recession] in 1978 when he warned that rampaging inflation might lead to a recession or even 'deep depression.' When presidential aides asked him to use another term, Kahn promised he'd come up with something completely different. 'We're in danger,' he said, 'of having the worst banana in 45 years.'" - from PRWatch (When United Fruit Co., complained about “banana,” Kahn switched to “kumquat.”)
No one in government wants to use the word recession. It is a new forbidden word. It is just a matter of time before the FCC puts it on the list of what cannot be said on TV or radio. This could be added to George Carlin's "seven dirty words". That may be an extreme, but creditability is lost when there is not a clear discussion. Language is important. Candor is critical.
What would be the harm of saying, "We are in a recession based on past technical definitions, but this cycle is unusual because the labor market is strong. This may cause us to revise our view of a recession." This is not far from current thinking, but there has been verbal gymnastics to avoid a clear discussion of the issue.
Let us say we are in a recession. What will change, given we are also at full employment based on labor market measures? If the administration says we are in a recession given conventional definitions, would the Fed change? Would there be a different fiscal policy? Would markets change?
What is the impact of a word?
No comments:
Post a Comment