Internet theory proposes government give billions to people, not companies

KUSA - It's an e-mail that has been coming into our television station's information center for more than a week. In it, the unnamed creator concocts a formula in which the government takes the $85 billion that it used to bail out insurance giant AIG and, instead, gives it to the taxpayers.

Metro State student Clayton Bailey likes the idea.

“I would think the people (should get the money), because the companies don’t need it as much as single people do,” said the Applied Math major.

Here is an excerpt from the aforementioned e-mail:

“To make the math simple, let's assume there are 200,000,000 bona fide 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 $85 billion that equals to a hefty ‘$425,000.00’ My plan is to give $425,000 to every person 18+ as a ‘Dividend.’”

Metro State Mathematics Professor Dr. Nels Grevstad found some fault with the formula. Doing the math in front of us, he calculated that the so-called “dividend” amount would really be $425 per person.

“It’s not uncommon to make mathematical mistakes once in a while,” he said. “However, you should be able to look at your answer and if it’s obvious that it doesn’t make sense, you should be able to realize that.”

Besides the mathematical error, University of Denver Finance Professor Mac Clouse, PhD., says giving money to Americans would be good for their personal situations, but would do nothing to stabilize the economy.

“It all helps on a personal level,” he said. “It just isn’t going to do anything to get our financial institutions back to play the role they need to play in our economy.”

Clouse says the country’s economic trouble isn’t a result of people holding onto their money too tightly.

“The problem isn’t that citizens aren’t spending enough money,” said Clouse, “the problem is the banking and economic structure.”

For that reason, Clouse theorizes that even if Americans split and spent the billions of dollars, the economy would still suffer and eventually affect even more everyday Americans.

“Businesses have to have credit available to them. If that doesn’t happen, then we don’t have businesses,” Clouse said. “If we don’t have businesses, then it doesn’t matter whether consumers have money to spend on consumer goods or not.”

Some economists endorse the idea of resisting a government bailout and letting the economy sort itself out. Clouse says that will eventually happen, but Americans will have to endure some “very rough times” first.

“We’d see businesses laying people off. And the immediate affect would be high unemployment and lower output of goods and services,” he said. “Eventually the market would come back. But it would be years before it comes back.”