Sunday, January 24, 2016

Econolanguage and Linguinomics

If you can't dazzle them with brilliance, baffle them with balderdash.

   Economic prophecies can be self-fulfilling, and that's why growth predictions are almost always positive. At worst, government forecasters use words like "moderate," or perhaps "slow," with "some downside risk."
   Besides, those in the private sector who see a decline as sure to come hedge their bets (investments) by selling short. That is, they will sell stock they don't have and their broker credits their account, in the expectation that the stock will be delivered later. Then, when delivery time comes, they can actually buy the stock at the lower price, give them to the broker and pocket the difference. And, of course, the steeper the decline, the more the profit.
   
   Government forecasters, however, are usually vague if not obtuse when they see a strong likelihood of a downturn or recession, lest they be accused of being doomsayers or worse, and then be blamed for causing the recession.
   Economists in the private sector, on the other hand, are not obliged or encouraged to speak openly of their negative views, since their job is to advise their employers. If they bet wrong and the boss loses money, advisors lose their jobs. Even if they're right, and the firm's business suffers, forecasters can lose their jobs in corporate downsizing.
   Tenured academics, however, can warn of impending disaster as long as they want, but few people really want to hear that the sky is falling.

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