## Thursday, May 14, 2009

### The Penny Budget

I remember teaching at a 2 year business college where the kids were so damn stupid they didn't know the difference between a million vs a billion vs a trillion. I then had to spend a day explaining the concept of moving a decimal three places. So hopefully this simple (yet brilliant) analogy will penetrate the thick skulls of all the 20 something children who voted for Obama because he was "cool."

Brought to you by The Deets! YOU CAN'T HANDLE THE DEETS!!!!

CBMTTek said...

That was a really good demonstration.

What I like to do with numbers like billion and trillion are explain it in terms of a yearly salary of \$100K. I use \$100K because almost everyone I talk to can envision what that would look like, even if they have no hope of earning that kind of money anytime in the near future.

Anyway, if you earn \$100K a year, it would take you 10 years to earn a Million. And, they go OK, because it is still numbers they can get their head around.

Then I tell them it would take you ten thousand years to earn \$1 Billion. And, I see the shock on their face, because now they are beginning to see the numbers kicked around in the federal budget in terms of yearly salary.

And, while I have them on the ropes, I hit them with the knockout punch. If you earn \$100K a year, you would have to work for 12 million years to earn the \$1.2 Trillion in the so-called stimulus package.

At this point, they usually have too glazed over of a look to bother asking the real question. Which would be "and do you really think that increasing the taxes on 5% of the population will be able to pay that back in a timely manner?"

neoprophet said...

Considah the following:

If one makes an average 40K a year in a lifetime career of 50 years, that person has earned 20 million dollars.

Economically speaking, a human life is worth about that much, probably somewhat less.

A billion dollars is therefore worth the lives of fifty people.

A trillion -- fifty thousand.

As far as economics are concerned, wasting a trillion dollars is therefore equivalent to murdering fifty thousand people.

Discuss.

Ryan Fuller said...

I wouldn't equate wasting a trillion dollars with murdering 50,000 people. There's a moral dimension involved with murder that just isn't there when you're talking about wasted money.

A better comparison would be to say that wasting a trillion dollars would be like wasting the lifetime careers of 50,000 people. It still puts it in perspective how big of a waste that is without possibly distracting your audience with something irrelevant.

CBMTTek said...

@Neoprophet:

The problem with summing up money like that is the average liberal thinks life is priceless, and would never agree that any dollar amount can used as the value of a human life.

neoprophet said...

Fifty thousand lives and a trillion dollars are economically equivalent (or thereabouts if you want to find more accurate figures), which is different from morally equivalent (or maybe not, if you accept a moral system based on economics)

The only difference between murdering fifty thousand people and wasting a trillion dollars of other people's money is that in the first case the friends and families of those people are going to suffer terribly, and in the second case the pain is distributed between millions of taxpayers. But if you think the two situations are on two wholly different moral levels, consider this:

You could get a trillion dollars by enslaving fifty thousand people for their whole lives, or by sticking up several million people once each for several thousand dollars. End result is the same: you acquire a trillion dollars by immoral means. Now waste all that money on stupid pet causes, paying off cronies, and rewarding failed business models. Now, I can't be scientifically certain about this, but assuming the first case in which fifty thousand people are enslaved for life, I would bet that a poll of those people, upon being informed that their entire life's product amounted to nothing because it was spent by a fool, would indicate something of a consensus that just killing them would have been better.

Now how exactly is it less wrong just because the same amount of damage is distributed to a larger number of people?

neoprophet said...

I can't believe I did this:

So a trillion dollars is more like 500,000 lives.

Colin said...

People have difficulty understanding the magnitude of large numbers. One way to imagine it is in measurement of time.

We all have a very good idea of just how long one second is.
1000 seconds?