Ideas@TheCentre – The CIS newsletter (Sydney), 10 April 2009

Imagine a journey of nine trillion four hundred sixty billion seven hundred thirty million four hundred seventy-two thousand five hundred eighty kilometres and eight hundred meters (roughly).

You can’t imagine it either? Then it is for people like you and I that astronomers have invented the measurement of light years. The figure above is precisely the distance that a ray of light travels in one year, and light years were meant to make the vast distances of our universe a little more comprehensible.

When it comes to economics, we are all also dealing with ever higher numbers these days. They have not quite yet reached galactic proportions but we are getting there.

Take the Federal Reserve’s policy of ‘quantitative easing’. The $1.2 trillion the US central bank is providing to the markets could form a stack of one dollar notes over 131,000 km high, which is almost half-way to the moon. Alternatively, you could cover an area of about 12,000 square kilometres with these dollar notes, which is just about the size of Sydney (personally, I would start the implementation of this policy in Greenwich in Sydney).

Maybe we should seriously begin thinking about the way in which we are dealing with economic figures. To most people, presumably including our politicians, they have simply become too big to handle.

Take an example: Kevin Rudd’s second stimulus package was worth $42 billion. Would it have been more of less appropriate if it had been $41 billion? “Well, what’s the difference?” some would say. But the difference is 1,000,000,000 dollars – enough to employ 16,000 extra nurses for one year. Which leads us to the next problem: How to imagine 16,000 nurses? Maybe as a 3.6 km long line of 340 full Sydney buses, stretching from Kirribilli to the QVB?

A billion here, a billion there, and soon we’re talking about real money. But how could we make the money figures our politicians are throwing around more comprehensible? Perhaps an Obama would be the unit for a serious bank bailout, a big stimulus programme in a small economy could be called a Rudd, and a Brown should become the new measure for damaging a hitherto developed nation through reckless borrowing.

Whether this made things in the economy more comprehensible? Perhaps not. But then again I cannot really imagine a light year, either.