“The Fix” for the economy?

My friend forwarded this email to me because he knew I would enjoy the economics of it.

The Fix

There recently was an article in the St. Petersburg , Fl. Times. The Business Section asked readers for ideas on:
“How Would You Fix the Economy?” I think this guy nailed it!

Dear Mr. President,

Please find below my suggestion for fixing America ‘s economy. Instead of giving billions of dollars to companies
that will squander the money on lavish parties and unearned bonuses, use the following plan.
You can call it the “Patriotic Retirement Plan”:

There are about 40 million people over 50 in the work force. Pay them $1 million apiece severance for early retirement
with the following stipulations:

1) They MUST retire. Forty million job openings – Unemployment fixed.

2) They MUST buy a new AMERICAN Car. Forty million cars ordered – Auto Industry fixed.

3) They MUST either buy a house or pay off their mortgage – Housing Crisis fixed.

It can’t get any easier than that!!

P.S. If more money is needed, have all members in Congress pay their taxes..

Mr. President, while you’re at it, make Congress retire on Social Security and Medicare. I’ll bet both programs would be fixed pronto!

If you think this would work, please forward to everyone you know.

If not, please disregard.

The information provided in the email is actually true. You can find the original article here. It was written just over 2 years ago.

Now the fact that I somehow have the email in my inbox means that people have been forwarding the message. I can think of 2 main reasons people would forward it:

  1. They found it amusing/appalling/didn’t read it
  2. They believe this is a valid “fix”

Looking back in the email and reading some of the forwarding comments leads me to believe that quite a few people do believe this is a valid fix. So let’s start with the basic math.

  • 40 million people over 50 and giving them $1 million each.
  • 40,000,000 x $1,000,000 = $40,000,000,000,000

That’s $40 trillion. Our national debt of $14 trillion is chump change compared to that.

Of course each person won’t get $1 million after taxes, etc. but let’s even ignore that.

Let us imagine that somehow the government did give $1 million to each person above the age of 50 and required each person that received the money do exactly as the plan stated – all without the law being declared unconstitutional. Here are a few things we should expect to happen:

  1. Most people work well past the age of 50. Removing literally millions of people from the workforce would create losses of expertise and would cost tens of millions of dollars of overhead, lost man hours, and training costs to replace them all at once.
  2. It would literally take years for American car companies to produce 40 million vehicles. I don’t think retirees would be willing to wait that long for a new car, or they would simply buy a foreign car to drive while they were waiting for their American car.
  3. Adding $40 trillion into the money system would create some of the most intense inflation the world has ever seen. Just imagine the riots when McDonald’s releases their $50 value meals and Toyota Corollas start to cost $100k+.

This goes to show for many people that while their hearts are in the right place, their calculators aren’t. Don’t forget the numbers.

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