It is all in the numbers
By Peter Schwartzman
Millions, billions, trillions, quadrillions, it is all the same, right? Listening to the media you would think so, however, the answer is emphatically “no.” They are not the same at all. Is a penny, the same as $10? Is $10 the same as $10,000? Is $10,000 the same as $10 million? Obviously, no. Unfortunately, when one works with big money numbers that none of us deal with on a personal level, we typically get lost. This is understandable but it is not something we can continue to allow to confound us. There is way too much at stake.
AIG got more than $170 billion from us in bail-out funds because our elected congressional representatives agreed that it was necessary to save them from bankruptcy. The past two weeks we’ve heard a huge uproar because $165 million in bonuses were to be given to AIG executives. It is understandable that we might be upset about this, especially because it was these executives that put AIG (and our economy) in such bad economic circumstances to begin with. But, while the bonuses are outrageous, they only amount to a fraction of the money the government gave AIG overall; actually, in comparative terms, one penny on a $10 bill. So while we hear tons about how our “tough” elected officials are fighting for this lousy cent, the other $9.99 (or in real cash, $169.8 billion) goes somewhere else (including many European banks) without much notice. Worse yet, other recipients, e.g. Bank of America, use the bail-outs to buy other companies, namely, Merrill-Lynch, and consolidate power even more within the hands of those financial institutions with “failed” economic strategies.
One of the greatest oversights of all these bail-outs relates to the truly gargantuan size of these sums of money. Since most of us don’t work in billions, we don’t often think about money of that scale. Let’s look at its enormity through a couple of lenses. Through a time lens, one would need to earn $190,000 per minute, working 24/7/365, to earn $100 billion a year! Exxon-Mobil came close in 2008 with $40.6 billion in profits; remember those $4+ a gallon prices, guess where it went? Another lens relates to the “good” that could come from this money if used in constructive ways. Through this lens, $100 billion is truly a substantial sum. Economist Jeffrey Sachs, recent Director of the United Nations Millennium Project, asserts that half of extreme poverty (a level below which over a billion people currently live) could be eliminated with an annual commitment of ~$160 billion annually over the next fifteen years. According to some engineers and scientists, an annual $10 billion investment in the expansion of solar energy over the next forty years would be sufficient to create a solar infrastructure capable of producing 69% of U.S. electricity and 35% of all U.S. energy by 2050 (as well as cut CO2 emissions some 62% from current values) (Seibel et al.). Providing all the world’s people proper prenatal and family planning services would cost a mere ~$20 billion a year according to the world’s top experts on population and development. And, lastly, the World Health Organization recently reported that an additional $1 billion annually for immunizations could save more than 10 million lives over the next decade.
So, $100 billion dollars is a lot of money because it has the power to do so much good in the world. But there is something even more revealing about the recent parceling out of so much money. How many times have you heard that even though we live in the richest country in the world, we don’t have enough money to do any of the following: (a) provide basic health care to all citizens; (b) provide quality education for all citizens (through college); (c) provide basic food and shelter for all citizens; and, (d) provide sufficient public transportation to ensure than everyone has access to their workplace and civic activities? Well, if we have hundreds of billions of dollars to bail-out banks and investment firms, we certainly have enough to do all the above, assuming we made those things priorities.
And the motivations for being so generous to
our citizens aren't just good will or a commitment to basic human rights. Truly
prioritizing these things will make our society more safe, healthier, and,
undoubtedly, happier in the future. It is a proactive (rather than reactive)
investment strategy. It is also a common sense strategy. If kids are properly
cared for, they are much more likely to become productive citizens—something
that will benefit all of us in the near future. For example, every high school
student who drop outs means more public money for Medicaid and other social
programs. It also means lost productivity and tax revenue over that person’s
life as well. Just as it pays to be proactive and invest in our children, it
makes complete sense to provide all our citizens with basic needs.
In John Allen Paulos’ book, Innumeracy: Mathematical Illiteracy and its Consequences, states that, “Innumeracy, an inability to deal comfortably with the fundamental notions of number and change, plagues far too many otherwise knowledgeable citizens." No doubt this is true, when one considers the examples above. There is no way that a numerate citizenry would continue to let hundreds of billions of dollars go to multinational corporations who had little to no accountability to us, the taxpayers. It is time that we forced ourselves to comprehend the difference between a million, a billion and a trillion. The health and happiness of our future may depend on it.
K. Zweibel, J. Mason, & V. Fthenakis. (2008) “A Solar Grand Plan.” Scientific American. January.