The Meaning of Words

To a successful businessman, words must mean what they mean, especially when they are describing complex financial and numerical matters. That’s why Mr. Trump’s endlessly-repeated assertion, “… and Mexico will pay for the wall,” deserves examination.

In last night’s TV coverage of the Iowa caucuses, two words kept coming up – “winner” and “bellwether” – showing that when it comes to the real meanings of numbers as well as words, even the "experts" don’t get it.

I frequently write about the importance of using words properly in order to make numbers understandable. An article about recent trends in health insurance premiums – a critically important subject, and in a prestigious publication – has several statements that are unsupported by the facts. The problem isn’t that the author misunderstands the information, it’s that he’s mischaracterizing it. This is where proper use of words comes in.

Pres. Obama’s has just threatened a “proportionate response” to North Korea’s cyber-attack on Sony Pictures’ computer systems. I’m at a loss to understand what he really meant by that, or why he chose the words he did. In quantation, getting the words right is critically important – the numbers mean nothing without them. So today’s word is “proportionate,” a word with obvious quantation implications.

In clear, effective quantation, the words we put around the numbers are often as important for audience comprehension as the numbers themselves. In this morning’s Washington Post is an excellent op-ed piece, “What to call this economy?” by Robert Samuelson, where he observes that we lack the economic vocabulary to describe the current state of the U.S. economy.

The words we wrap our numbers in can play a key role in how well those numbers are understood. A great example of this is the question of “payroll taxes” – the payments employees and employers make toward Social Security and Medicare. They are a major topic in the raging debate about the “fiscal cliff,” but I have to ask: Are “payroll taxes” really taxes? The answer to this question has important public policy implications; it’s not just a question of semantics.

It’s tax-filing time again, and that means many of us are going to get refunds. Is that a good thing? Well, it’s always nice to get a check from the government, but let’s face it: all it really means is that you’ve already paid Uncle Sam more than you ended up owing him. In other words, you’ve given the government an interest-free loan for several months.

In the current debate about the U.S. federal government’s fiscal predicament, there is much rhetoric, from both sides of the aisle, about the need to “rationalize” and “simplify” the federal income tax code, and lower tax rates in the process. The real issue, of course, is the deficit, and the only way to reduce a deficit is to either spend less or tax more. So how can “lowering tax rates” help solve the problem?

On this morning’s “Meet the Press,” the usually oracular Alan Greenspan was unusually plain-spoken. He suggested that while tax increases rarely achieve their intended deficit-reduction purpose, given the U.S. government’s current deficit troubles, it might be best to allow the Bush era tax cuts (“BETCs”) to expire for all taxpayers, not just those in the upper income brackets.

First, the good news: there is a group of U.S. Senators called the “Gang of Six” – three Democrats and three Republicans who are addressing the federal deficit issue in a constructive, bipartisan, and I hope sensible way. They are filling a leadership void that has existed in every branch of the federal government. Uh, am I being too subtle here?

If you are looking for a frighteningly fascinating Website to visit, I recommend “The Debt to the Penny and Who Holds It.” The site is operated by your and my U.S. Treasury Department, and if you’ve ever wanted to see what at an actual fourteen-digit number looks like (plus two decimal places), look no further.

A while ago, I wrote a deliberately uninformed post, suggesting that the whole Bernie Madoff fiasco wouldn’t have happened if Madoff’s fund had had an audit conducted by a reputable firm, and that this should be a requirement for all investment funds (see “Madoff and the ‘Idiot Plot’” 12/17/08).