Saturday, October 31, 2009

Booster's Billions

Brewster's Millions, Wikipedia tells us, is a novel written by George Barr McCutcheon in 1902, originally under the pseudonym of Richard Greaves. It was adapted into a play in 1906, which opened at the Globe Theatre, and the novel or play has been made into a movie nine times. (The YouTube embed above is a snippet from a 1945 version that I like better than the Richard Prior version that may be more familiar to most of you.)

Links: Project Gutenberg Text, Librivox Audio Book

The novel's story revolves around Montgomery Brewster, a young man who inherits a million dollars from his rich grandfather. Shortly after, a rich and eccentric uncle who hated his grandfather also passes away. The uncle's will leaves Brewster with seven million dollars, but only under the condition that he keeps none of the grandfather's money. To inherit the seven million dollars, Brewster is required to spend every penny of his grandfather's million within one year, and end up with no assets or goods gained by his grandfather's wealth at that time. Should he make the deadline, he will earn the full seven million; should he fail, he remains penniless.

Brewster's uncle puts restrictions on how the million must be spent requiring that Brewster demonstrate business sense by obtaining good value for the money he spends, limiting his donations to charity, his losses to gambling, and the value of his tips to waiters and cab drivers. Brewster finds that spending that sort of money sensibly in so short a time frame is not an easy thing -- a full time job, actually -- and much of the interest in reading the book is to see how he manages to do it.

What brings Brewster's Millions to mind right now is that our collective uncle -- Uncle Sam that is -- has decided to give a million of us pretty much the same job: to spend 787 billion dollars as quickly as possible to stimulate the economy while, at the same time, only spending the money on necessary, useful things that we would need to do anyway, only perhaps just not all at once.

There is an active debate going on while I write this about how many jobs have actually been created and/or saved by the stimulus bill. I'll get back to my take on that debate later but for now to avoid getting mired down in needless controversy I will simply take the "American Recovery and Reinvestment Act of 2009" at its stated goals as presented by its sponsors and proponents: to spend 787 billion dollars to create and/or save a million American jobs.

787 billion bucks is a big number -- but then again a million jobs is a big number too, so maybe it's a wash -- one big number divided by another big number can give a small number after all if you do the math. So let's do it then.

Faced with really big numbers -- things like the mass of the sun in grams or the number of carbon atoms in a gnat's ass -- a scientist will generally use scientific notation to avoid big-number fatigue from writing all those zeros before the decimal point. For those of you with a more scientific bent I will restate the stimulus package in scientific notation: that's 7.87x10^11 dollars for 1.00x10^6 jobs or 7.87x10^5 dollars per job, or in conventional notation, $787,000.00 per job created using the stated goals of the stimulus package.

You know, I do OK for myself but there are years where even I don't make that kind of money and, having worked through the math I am forced to consider any attempt to justify the stimulus package as a jobs-creation program to be absurd on its face. But of course, jobs creation is only part of the deal; there is also stimulating the economy (whatever that means,) and investing in "infrastructure," where the term is generally understood to involve spending on pet projects in districts that vote heavily Democratic.

The inevitable answer to my complaint, of course, is that we collectively voted for these guys and so we collectively deserve what we get. Leaving aside my objection that it is not my fault that the collective "we" is often an idiot, I can still wonder: where do they think all that money is going to come from?

I have a theory. I think the majority of the members of congress view wealth in pretty much the same way you would see it in a Scrooge McDuck cartoon if you watch it with the sound off. When they think of private wealth they see a cavernous vault with gold, jewels and currency stacked in untidy heaps which wealthy bankers and insurance company CEOs like to wallow in like a small child in a pile of stuffed animals.

If they confiscate half of Uncle Scrooge's gold then he will still have enough to swim in but it won't be quite as deep -- he might even touch bottom at the shallow end of the vault. But, hey, times are tough and that idle wealth can create a lot of jobs so Scrooge will just have to suck it up.

What they miss, of course, is that Uncle Scrooge might have most of his money committed to industries that employ people -- all, admittedly, working to make him richer yet -- and some of those people might lose their jobs. And remember that Scrooge is a miserly old duck and it is likely that he doesn't pay $787,000 per employee. Three or four people working at real jobs in Duckburg might lose those jobs to create one Brewser's Millions-style job in Washington where the chief responsibility is to look busy whenever an auditor or a Republican comes near. Which is to say, I am skeptical, actually, about the job-creation claims of the supporters of the stimulus package. I think that if you subtract the jobs lost in the private sector from the jobs created in public works projects you will get a lower number than the targeted million job figure.

In closing, lest I be unfair to Scrooge McDuck, the reason I talked about watching the cartoon with the sound off is that the cartoon I linked to goes out of its way to make exactly the points I have accused our congressmen and senators of missing. It's not a bad capule presentation of the economic case for capitalism -- on a third grade level, admittedly, but possibly too difficult for most politicians to grasp.

Here's the second part:

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