So many ways to say we’re in trouble
Without an Inuit thesaurus I have no way of checking how many words the Eskimos really have for snow, but each day’s newspapers reveal just how large a lexicon we have for an economy going into reverse. Recession, depression, downturn, decline, disinflation, slump, slowdown, squeeze, freeze, meltdown, bust, crash, crunch, collapse, for starters. But when the economy was booming the only word we heard was, well, boom.
I could add in all those euphemisms beloved by ministers such as ‘testing times’ and ‘difficult conditions’, but why are there so many terms for a shrinking economy but such little choice when it grows? We even invent new words like ‘hyperflation’ and ‘stagflation’ to add colour to the bad times, but if ‘deflation’ is another negative term, ‘inflation’ is not its positive opposite.
It would be easy to suggest that, like the Eskimos and their glossary of snow words, we have so many ways to describe a slump because that’s all we know. But there has not been recession in the UK for 16 years: we did not need the extensive vocabulary of slowdown phrases. No, the reason for the dearth of words to describe a boom is because we never think there is one. We have convinced ourselves that those were not 16 years of fat to be balanced at some point by lean years, but that they were normal — and, by implication, the better-than-average years were still to come.
We have Black Mondays but no white ones when shares rise. We can argue between hard landings and soft landings but there is no phrase for the economy’s zenith. So while we are now in a financial crisis, there is no antonym of that term to describe the recent years — no expression for the excess of the decade of living beyond our means. Alan Greenspan, the former chairman of the US Federal Reserve, had to string two words together to come up with ‘irrational exuberance’ and the man now blamed for our current plight said that 12 years ago when the party had hardly started.
Consumers, companies and governments were guilty in seeing the recent boom as unexceptional. Homebuyers, instead of regarding houses priced at five times the average income as expensive, preferred to think that was the new baseline — and in good years prices would rise yet higher, not revert to their long-term average of below four times income. The government, as the Tories now delight in saying, did not use the good years to build reserves for the bad times because ministers did not think they were good years, just the new average. Workers — whether in dealing rooms or on the shop floor — did not see their easy earnings as a bonus to be banked for when the economy slowed; they spent freely and borrowed more against the better years they hoped would come.
Now they realise that was as good as it would get and the norm is much worse. Indeed, as above-average years are replaced by below-average, house prices, overtime, tax revenues and all other products of the boom are not only crashing back to the long-term trend line but plunging far below it.
Companies regarded the boom as business as usual and are now finding how hard trading is when business is unusual. No chief executive ever told shareholders their company was making unsustainable supranormal profits, no chairman issued a profit warning alerting investors that returns would be too high: they took the credit during the boom but now turn to that list of recession words to excuse poor results in conditions that are a normal part of the cycle. Many businesses did the equivalent of buying a home in the summer and only finding there is no central-heating when autumn comes. We are seeing which companies can adapt to slump and which were built on business models that worked only during a boom. And the most Panglossian offenders, the worst optimists who thought last year was normal rather than exceptional, were the banks that taxpayers are now rescuing. Like Basil Brush, they thought boom could follow boom rather than doom follow gloom.
If Gordon Brown had been prepared to forfeit the alliteration when he promised no more boom and bust, he could have chosen a wide range of alternatives for bust but would have been pushed to call the boom anything but that. ‘Recovery’ obviously refers to the bust that preceded it and ‘bubble’ clearly alludes to the one that will follow. A previous generation of politicians described the economic cycle as ‘Stop, go’, but those are not nouns and cannot be used independently.
Alistair Darling should use his pre-budget review to explain that the past year has not been bad, merely a long-forgotten normal state of affairs — and that the bad is yet to come. It doesn’t matter that there are so few words for a boom: we won’t be needing the term in the near future. The Eskimos should be pleased they have so many terms for snow: if you live in an igloo, the Inuit word for ‘thaw’ is probably the same as that used for ‘homeless’.