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Quotation of the Day…

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… is from page 3 of Fritz Machlup’s undated essay “On the Cultivation of Economic Semantics,” which is the opening chapter in Essays in Economic Semantics [2], the 1963 collection of some of Machlup’s essays:

Some people regard exercises in semantics as a waste of time.  I consider them useful, if not indispensable, if we care to understand one another.  A good many earlier economists have felt this way and devoted considerable effort to the terminological cleaning-up job that becomes necessary from time to time.

DBx: We human beings communicate chiefly through words, and words have both conventional meanings and valence (rather like “connotation,” but a bit different).  It is very easy to use words – intentionally and unintentionally – in ways that mask or distort reality and that convey false impressions.

Talk of “the trade deficit” is an especially rich source of misunderstanding.  Most people who use the term simply don’t know what it means, and nearly all non-economists who have some skeletal notion of its meaning have no understanding of its context or implications.  The term “deficit” sounds bad and, therefore, a trade deficit is popularly yet misakently taken to be bad.  It is largely to contribute to the effort to correct this unfortunately terminological mishap that Dan Klein and I wrote our recent EconLib essay [3].