The Innumeracy of the Masses
I’m still fascinated with the outrage that the AIG bonuses have generated. I can understand that it looks like a lot of money. But lets write two numbers down for a minute,
Now the second number is 1000x larger than the first as a reasonable approximation. But people seem to be completely unaware of the second number even though the first number is totally dependent on the second number. That may sound a bit cryptic, so let me put it another way. Because the Federal Government has given AIG $170,000,000,000 AIG can now hand out 0.1% of that money, $165,000,000, in retention bonuses.
My question is, if the number that is 1000x times smaller than the actual bailout of AIG is causing all this fuss why aren’t people in the streets in huge numbers demonstrating against the $170,000,000,000 bailout? It is, after all, a bailout. A way of propping up a company that was a key player in bringing about the financial crisis that also is a significant if not the main reason for the recession that is putting people out of work.
And it doesn’t stop there. President Obama has his $750,000,000,000 stimulus package. If there is only 1% waste, fraud and abuse (a laughably small number given how fast the government is going to try and spend it—think of the money for Katrina aid that went to strip club trips) that is still $7,500,000,000 that is wasted. That number is 45.5x the size of the AIG bonuses. Where is the outrage?
My only conclusion is that most people are innumerate. When a number gets too big they just can’t grasp the magnitude of that number. Here is one way of trying to get a grasp on the magnitude of these numbers. If you took 170,000,000,000 one dollar bills and stacked them one on top of each other (not end-to-end) it would be 11,537 miles high. If you took 750,000,000,000 one dollar bills and did the same thing it would be 50,899 miles long, or it could go around the earth twice at the equator. Why people are worried about a stack of one dollar bills that is only 11 miles high beats me.