Oh, Now I Get It

In case any of you have been struggling to understand all this stuff about bailouts, stimulus packages, etc...and maybe even been trying to wrap your minds around even the concept of trillions of dollars, you don't have to worry any more. Katie Couric has explained it all for us.

"For many Americans, it can be tough to grasp how all this deficit spending will turbo-charge our economy and end the recession. Tonight, with the help of a few visual aids, we'll show how everyone gets a macro-cosmic boost whenever Uncle Sam opens his wallet....Think of each dollar in the economy as a jelly bean. You and I each have a few jelly beans, but the government has a whole lot of them. In a recession -- a jelly bean shortage -- we might feel like holding on to our jelly beans instead of sharing them, but that would bring our jelly bean party to a grinding halt. But if Uncle Sam re-fills the jelly bean bags of those who are running low, our party can go on and on....And if we ever find ourselves running out of candy, Uncle Sam can always make more -- he owns the jelly bean factory! The fun never has to stop...."

-- Katie Couric explaining the economics of bailouts on the April 1
CBS Evening News.

Now, Katie Couric is an professionally trained economist, and I'm not...but is there something a little screwy about this?

She seems to be forgetting that if Uncle Sam has a huge bag of jelly beans, he got them from us in the first place.

So...say I have 10 jelly beans (it's jelly bean payday) and Uncle Sam takes state and federal income taxes, medicare, social security, gas tax, property taxes, and sales tax. That's 7 jelly beans, leaving me with 3 to pay for my mortgage, student loans, utilities, food, clothes, medical care, birthday presents, car repairs, house repairs, insurance, personal loans and Girl Scout Cookies.

Is Katie saying that I shouldn't be so tight-fisted with my 3 remaining jelly beans? The government might have a whole lot of jelly beans (something I'm not convinced of), but if so, it has them because it took my 7 jelly beans. Katie seems to be saying that if I just shared my 3 jelly beans with the government, rather than keeping them to take care of my family, we would all be having a lot more fun.

But then she says that if the government's bag runs out of jelly beans, they can just make more. But if that's true, why do they need my 7 jelly beans in the first place? And why should I be complacent about handing over my remaining 3?

And for what? So that our jelly bean party doesn't come to a grinding halt? Do I care about our jelly bean party? If every jelly bean represents a dollar, I must have missed my invitation to the big Mount Vernon dollar party.

The thing is...the government can't just make more money. Every piece of paper represents something of value...gold, perhaps, or items in trade, or hours of your life that you trade for compensation. Doesn't anyone remember the depression, when Germany printed millions of dollars and it was all worthless? It has to represent something.

And government can't just create jobs, either. I might get more jelly beans if I have a government job, but to pay for my job, the government has to take even more jelly beans from me and everyone else. Why not let people keep their jelly beans and let them create the jobs? That way, I have not simply handed over pieces of my life for a handful of jelly beans someone's just going to take away, anyway.

But like I said, I'm not an economist, not like Katie Couric.