George W. Bush was laughed at for using the non-word ‘misunderestimate’. But, given the right definition, I think it could have its uses.
Suppose there are two values, x and y, measuring two properties of something. If you think x is lower than it is, you’re underestimating x. But, let’s stipulate, you’re misunderestimating x if the reason you underestimate it is because you’ve subliminally noted the low value of y and have somehow gotten confused between x and y.
Take the economists who signed this letter to George Obsorne, warning him of the economic danger of his proposal to force governments by law to run surpluses in ‘normal times’. I think they misunderestimate him.
Here is their explanation of why his policy might be dangerous:
The government’s budget position is not independent of the rest of the economy, and if it chooses to try to inflexibly run surpluses, and therefore no longer borrow, the knock-on effect to the rest of the economy will be significant. Households, consumers and businesses may have to borrow more overall, and the risk of a personal debt crisis to rival 2008 could be very real indeed.
Of course the letter might not be really directed at Osborne. But the authors misunderestimate him if they suppose that he would care about their warning.
A poorly timed government surplus can, of course, drive a private debt crisis. It is perhaps significant that the US, the UK, and Japan all had governments running surpluses a few years before their big housing bubbles burst:
But a big asset bubble bust is good for some people. It transfers wealth from people who came late into the market to people who came early. To people who were rich enough to already have lots of assets before the bubble blew up. To people like George Osborne and his mates.
In trying to pass legislation to force governments to constantly maintain an environment of financial instability and inevitable crisis, Osborne is looking after his class interests quite well. His class interests are summed up thus: ‘It is not enough that we are rich; others must be poor’. He lacks decency, not economic competence. Don’t misunderestimate him.