As usual, simple arithmetic is crucial to understanding many of the biggest, most important news stories (as well as those, like the Tiger Woods saga, that are of no public significance). What follows is a collage of some of these stories.
One problem is that people often view numbers as providing decoration rather than information. Over the last couple of weeks, for example, I performed a little experiment with people I randomly met.
If our idle conversation turned to current events, I mentioned a headline I claimed to have just read proclaiming, "Experts Fear Annual Housing Costs in the U.S. (Rent, Mortgage Payments) May Top $2 Billion." I followed up with, "Imagine that -- more than 2 billion dollars per year."
People usually responded by bemoaning the mortgage crisis, foreclosures, Wall Street, and a host of other issues. Only one noticed that $2 billion is an absurdly low number. A population of 300 million translates to about 100 million households. Dividing 100 million into $2 billion results in about $20 in rent or mortgage paid annually by the average household. Just $20!
This anecdote is not without relevance for bigger issues such as the various health care proposals. There are different bills under consideration, but each of them has an approximate cost of $1 trillion over 10 years.
Most people realize that a trillion is much, much bigger than a billion, and so assume $1 trillion is an overwhelming fiscal burden. But the price tag for the Iraq war was also about $1 trillion in direct costs and double that in associated collateral costs, not to mention the dead and badly wounded U.S. soldiers and Iraqi civilians. One needn't be a pacifist or "leftist" to believe that health care coverage would be a more beneficial expenditure than the Iraq war was.
Climate change is another issue where fundamental numerical misunderstandings are rife. One of the most amazing is the reaction of some politicians, specifically Senators Jim DeMint of South Carolina and James Inhofe of Oklahoma, who said that the big snowstorms in the east this winter are evidence that global warming is bunk.
I hope this was just their lame attempts at humor, but Inhofe suggested that an igloo home be built for Al Gore, and DeMint tweeted that the snow would keep falling "until Al Gore cries uncle."
Here again, one needn't be able to graph y=x+sin(x) to realize that a generally upward movement of average temperatures doesn't preclude occasional local dips. Likewise, someone with terminal cancer will feel pretty good on some days without doctors revising their prognosis.
The stimulus bill and its impact on job creation has also been badly misunderstood, and in a somewhat similar way. Newly-elected Sen. Scott Brown of Massachusetts said, "In fact, we haven't created one new job."
But, whatever your attitude toward the stimulus (I think it should have been bigger), a considerable, albeit debatable, number of jobs have been created by it. A monthly net loss of jobs, smaller than it's been but still a net loss, is quite compatible with the creation of many jobs, just as a medicine that makes one better, although not completely so, is still a valuable intervention.