A question for those with more background in Economics than I...

[damonm]

I got this email from my dad - my gut says this is wrong, but I can't put my finger on why. Perhaps some here in DU with an economic bent can help me out here.

Subject: A different Economic Recovery Plan

I'm against the $85,000,000,000 bailout of AIG , and the $700,000,000,000 bail out of Wall Street
Instead, I'm in favor of giving $ 785,000,000,000 to America in

We Deserve It Dividend




To make the math simple, let's assume there are 200,000,000
bonafide U.S. Citizens 18+
Our population is about 301,000,000 +/- counting every man, woman
and child. So 200,000,000 might be a fair stab at adults 18 and up.
So divide 200 million adults 18+ into $785 billon that equals
$ 3,925,000.00.

My plan is to give $ 3,925,000 to every person 18+ as a
"We Deserve It Dividend."

Of course, it would NOT be tax free.

So let's assume a tax rate of 40%.

Every individual 18+ has to pay $ 1,570,000.00 in taxes.

That sends $314,000, 000,000 right back to Uncle Sam.

But it means that every adult 18+ has $ 2,355,000 in their pocket.

A husband and wife has $ 4,710,000

What would you do with $2,355,000 to $4,710,000 in your family?

Pay off your mortgage - housing crisis solved.

Repay college loans - what a great boost to new grads.

Put away money for college - it'll be there.

Save in a bank - create money to loan to entrepreneurs.

Buy a new car - create jobs.

Invest in the market - capital drives growth.

Pay for your parent's medical insurance - health care improves

Enable Deadbeat Dads to come clean - or else.

Remember this is for every adult U S Citizen 18+ including the folks
who lost their jobs at Lehman Brothers and every other company
that is cutting back. And of course, for those serving in our Armed Forces.

If we're going to re-distribute wealth let's really do it...instead of trickling

out a puny $1000. 00 "to buy your vote" economic incentive that is being
proposed by one of our candidates for President.


If we're going to do an $785 billion bailout, let's bail out every adult
U S Citizen 18+!

As for AIG - liquidate it. - Sell off its parts.

Let American General go back to being American General.

Sell off the real estate.

Let the private sector bargain hunters cut it up and clean it up.

Here's my rationale. We deserve it and AIG doesn't.

Sure it's a crazy idea that can "never work."

But can you imagine the Coast-To-Coast Block Party!

How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $ 785 Billion.

"We Deserve It Dividend" more than I do the geniuses at AIG, Wall Street, or in
Washington DC .

And remember, This plan only really costs $471 Billion because
$ 314 Billion is returned instantly in taxes to Uncle Sam!!!!

[TexasObserver]

1. Tell your dad if he could do simple math, he'd know he's off by a factor of 1000 times.

It's $3925 a person, not $3,925,000 per person.

Explain to him that the simplest part of economics is the math, and he blew that.

[sharesunited]

2. They always make that same decimal place error in that lightbulb moment.

[TexasObserver]

3. And I've gotten that same email from a banker and an accountant.

What it proves is that people repeat things they hear without verifying them, because the material is something they wish to believe.

[frogcycle]

5. its because "billion" means different things in different countries

http://en.wikipedia.org/wiki/1000000000_(number)

http://en.wikipedia.org/wiki/Long_and_short_scales

[damonm]

6. Goddammit...

And here I am, a frickin' Math minor, and I totally missed that. Serves me right for being a lazy bastich...:blush:

[doc03]

9. You are right but wouldn't giving every American adult

$3925 have a more stimulating effect on the economy then giving bonuses to the Wall Street crooks that caused the problem in the first place? I think you should point out to your father that that money was handed out last year by the Bush Administration? I seem to remember that money was just handed over to Paulson to do whatever he wanted to do with it with no oversight. Oh I seem to remember John McCain suspended his campaign to go back to DC and get it done.

[TexasObserver]

13. It would stimulate the economy, if one was required to spend the money in America

I would rather have seen the money spent that way than saving banks that don't need to be saved.

If the $3925 had been sent out to all those Americans, and all of them spent it, that action would have helped people all over America, and the impact would have been many times the amount funded, as each person who got money spent it in their community. Such revenues would have turned over 7 times in the economy, creating far more benefit than any bank bailout could ever accomplish.

We should have let the banks fail, and be replaced by those banks which did not make stupid bets.

[Kid Dynamite]

17. Or we could have simply bought the banks outright

for much less than the cost of the bailout. Then we could get to the matter of how to extend loans and credit on a more equitable basis.

[Budgies Revenge]

4. If you multiply 3,925,000 by 200,000,000 you get.....

785,000,000,000,000 NOT 785,000,000,000...so yeah, that might be a problem.

[Kid Dynamite]

7. Why not use the ~1 Trillion to create government JOBS for the unemployed

?

You could literally create 10 million jobs with ease with that kind of money and it barely matters what they are assigned to. Its not as if there aren't enough jobs that need doing. Thats a huge chunk of the unemployed in this country who could be put back to work and with a reasonable, respectable wage.

[elleng]

10. HOW create jobs?

That is the question, I think.

Businesses create jobs. What causes them to do so?

[Kid Dynamite]

11. Establish an office called the Office Of Government Jobs

When the line forms for people wanting jobs, hire them. Duties to be determined later.

Business creates jobs only when its good for business, I am talking about creating jobs because it is good for people. I think that is more consistent with the philosophy of most DUers than groveling at the feet of business to please give us a few more crappy non-paying dead-end jobs.

[elleng]

12. Forget this 'groveling;'

The question is, HOW ARE JOBS CREATED?

[Kid Dynamite]

16. You have already answered this question

and your answer was the market fundamentalist claim that business creates jobs. Almost every finds that answer laughably absurd but it is irrelevant for my proposal because I am suggesting that the government create jobs DIRECTLY. If you are still uncertain, how were all of the currently existing government jobs created?

[elleng]

19. I've been thinking of small 'businesses,'

and you apparently have been thinking of other kinds.

The mom + pop grocery store at the corner 'creates' jobs by wanting help in doing their business (like the word or not) and by paying people to do those jobs, like opening boxes of 'stuff,' putting 'stuff' on shelves, being cashier, sweeping floors, being accountant, etc.

What's 'market fundamentalist' got to do with this?

The 'currently existing government jobs' were created as the result of laws that made it necessary that certain things be done, like foods inspected, crooks prosedcuted. "GOVERNMENT JOBS" announcements, did not CREATE these jobs.

[Kid Dynamite]

22. Unless you think McDonalds franchises are "small business"

how exactly does it matter? Because thats the jobst that are on the horizon..

[elleng]

23. Read my post again.

[Kid Dynamite]

24. I read it

This "mom and pop" stuff is not only inane and insipid, it is not even based in this reality.

[elleng]

25. 'This reality,'

as distinguished from 'that reality?' No small 'businesses' in your part of reality, I guess. Too bad. Just go follow the 'Government Jobs' signs.

[TexasObserver]

18. Your idea was adopted by FDR to help the unemployed in the Depression.

It is a sound one. Businesses only create jobs when they NEED additional workers. When the economy is lagging, job creation is virtually impossible by the private sector. The actions by the Obama administration are mainly aimed at keeping current workers on the job, not bringing the unemployed back to work.

I like your idea, because sometimes we just need to find work for people. FDR put them to work building roadside parks, parks, monuments, and such. Beautification programs or municipal gardens could be created and tended.

Ultimately, business will recover, and increased employment will follow. But people need jobs now, and the federal government is the only way to give them work.

[Kid Dynamite]

21. Business will recover and employment will follow

Yes, but with a huge caveat: the jobs that are "created" will all SUCK. How many good paying jobs will be created? When?

[Warpy]

14. Businesses don't create a single job unless

they've got customers ready and able to pay whatever that job produces.

That part of this little fantasy is true, even if the math is off by a factor of 1000. People would get a windfall and some would blow it and that would create jobs.

Unfortunately, a collapse at the top would mean we'd have to get our $3925 in currency and since we wouldn't be able to get to our banked assets because the banks had been allowed to go under, that money would have to last us for a very long time.

Sure we could go shopping, but without access to credit and the ability to pay their bills long distance with checks, retailers and grocery stores would soon run out of stock with no way to replenish it except from local sources. Pickings would become very slim in the cities and out here in the desert pretty quickly.

Unfortunately, we still need those bankers and their insurers. There had to be a bailout of some type since we lacked the national will to nationalize the buggers and fire all the assholes who got them into so much trouble.

Just distributing the money while allowing the financial structure to disappear overnight wasn't the answer, though.

[Kid Dynamite]

15. Who "lacked the will" to nationalize the bankers

exactly? I think its instructive to ask. In fact, I would say that almost all Americans "lacked the will" to give the banks a trillion dollar handout. Yet this happened in a matter of days. So clearly "lacking the will" is not the impediment you say it is.

[elleng]

8. Don't know that the math is as significant

as the wisdom of the approach, generally.

What do/did we expect to get as result of bailouts; why do them? and What would we get from individual 'dividends?'

[armyowalgreens]

20. The amount he wants to give to each person is 1000 times what it actually would be...

Talk about making gross calculation errors.

No, we are not each going to get $4 million. Nice try though.