FRIDAY, JULY 29, 2022
"Recession" joins the list: We're going to make a painful admission:
We've never quite understood the familiar term, McGuffin (or MacGuffin)!
In the highly literate circles we frequent, the term is most commonly used in connection with films by Alfred Hitchcock. Why haven't we ever understood what a McGuffin is?
Mainly, it's because we've read and listened to Hitchcock's explanations of the term so many times! According to the leading authority on the device, "Hitch" explained the term this way in a lecture at Columbia:
It might be a Scottish name, taken from a story about two men on a train. One man says, "What's that package up there in the baggage rack?" And the other answers, "Oh, that's a MacGuffin."
The first one asks, "What's a MacGuffin?"
"Well," the other man says, "it's an apparatus for trapping lions in the Scottish Highlands."
The first man says, "But there are no lions in the Scottish Highlands," and the other one answers, "Well then, that's no MacGuffin!" So you see that a MacGuffin is actually nothing at all.
In fairness, that lecture was given in 1939—and the master's films had never made much sense up to that point either!
(Back in those days, college kids didn't walk out of lectures like that.)
We've never quite grasped the meaning of "McGuffin." As of this week, we may be forced to add the term "recession" to this mystery list.
As of last week, we thought we knew what the term "recession" meant. We thought it meant that the GDP had recorded negative growth for two consecutive quarters.
As it turns out, it's nowhere near that simple. The leading authority on the term starts its discussion as shown:
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events...
Although the definition of a recession varies between different countries and scholars, two consecutive quarters of decline in a country's real gross domestic product (real GDP) is commonly used as a practical definition of a recession. In the United States, a recession is defined by the National Bureau of Economic Research (NBER) as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." In the United Kingdom and most other countries, it is defined as a negative economic growth for two consecutive quarters.
As it turns out, we were right in what we thought, but only when visiting England.
Here in this country, a group of faceless bureaucrats have come up with a more complicated definition of the term. And not only that—according to the leading authority, "The NBER is considered the official arbiter of recession start and end dates for the United States!"
Apparently, here's how it works:
The bureaucrats throw data from five economic indicators into a wide-brimmed hat. At some future date of their choosing, they declare that we were in a "recession" at some earlier point in time.
Their declaration means that we were experiencing "a significant decline in economic activity spread across the market, lasting more than a few months," at that earlier juncture. This declaration comes to us rather late, and out of a Waring blender.
It's hard to say what's really gained by the use of this well-known term. Consider:
Under the old rules, everyone knew what someone meant when he or she said we were in a recession. Under the new rules, no one quite knows what the term really means, and no one knows who was involved in making the declaration.
"We've experienced two quarters of negative growth." What would be wrong with simply saying that, then adding in whatever other economic data seemed relevant?
We humans sometimes craft magical terms. It's hard to say just what the words mean, but people are constantly using them.
One more thought: We'd like to see Alfred Hitchcock explain the relativity of simultaneity.
While we're at it, what the heck? The NBER too!