Economist Alfred Kahn has died at 93. The long-time Cornell University economics professor is considered the architect of airline deregulation. Say what you will about the joy of flying these days, but the fact airlines are now what long-distance bus service was generations ago is due primarily to him.
But Kahn was also memorable for one of the best economics lessons ever for someone trying to understand what makes recessions worse: emotion.
As an economic adviser to President Jimmy Carter, he warned lawmakers that if they didn’t get inflation under control in the ’70s, the nation was heading for a recession or a depression.
But, as we’ve seen since 2008, if you even say the “R” word, let alone the “D” word, consumers shut the spigot off, more companies lay off workers, which makes more people stop spending, which makes more companies lay off more workers and on and on it goes until you’re where we pretty much are today.
Only Kahn introduced this concept by invoking a new economic term: “banana.” When he was giving testimony at the Capitol, whenever he needed to say recession or depression, he’d simply say banana instead.
It even inspired the late William Safire to write an essay on why people find the word banana so darned funny.
In old American slang, banana oil means “nonsense” (its humorous connotation far different from snake oil , meaning “fraudulent”). A top banana is a leading comedian. To go bananas is to go crazy, and the nonsensical meaning is reflected in the verse of another 1930’s song, “But Not for Me,” from the Gershwins’ “Girl Crazy”: “I never want to hear/From any cheerful Pollyannas/Who tell you fate/Supplies a mate;/It’s all bananas !”
A banana republic was not just a country that produced profits for the United Fruit Company; it was a country with a rinky-dink government, having “backwardness” as its hallmark (until the name was adopted by an American retailer; now it has a yuppie connotation). A banana boat is a very slow boat.
Of course Kahn’s strategy did not work. It was funny and all, but Americans could easily figure out what was going on, they stopped spending, and we had a heck of a banana shortly thereafter.