Thursday, December 15, 2011
Stimulating economy: 10 billionaires vs 10k millionaires
In this exercise, there are two Groups and each has $10 billion dollars to be divided equally among members. Group A is composed of 10 individuals with a net worth of exactly $1 billion each. Group B is composed of 10,000 individuals who each possess exactly $1 million each.
Now for purposes of this exercise, each individual's wealth is to be taken away unless they fill certain criteria:
Each billionaire member of Group A had to spend $400k in automobiles, $10 million in residential real estate and spend $2500/month ($30k/year) on discretionary spending-- clothes, restaurants, etc. This would mean each person in Group A would have put back over $10.43 million into the national and local economy and still have a little over $989 million left over.
Each member of group B had to spend only $50k in automobiles, $250k in real estate and spend $500/month ($6k/year) in discretionary spending. This would mean each person in Group B would have put back $306k into the national and local economy and still had $694k left over.
10 billionaires x $400k = $4 million into auto industry
10k millionaires x $50k = $50 million into auto industry
~ 10,000 millionaires would end up collectively pumping $46 million MORE into the auto industry than would 10 billionaires... Next...
Residential Real Estate:
10 billionaires x $10 million = $100 mill. into real estate market
10k millionaires x $250k = $2.5 Billion into real estate market
~ 10,000 millionaires would collectively inject $2.4 Billion dollars MORE into the residential real estate market at $250k per person than the 10 billionaires each buying property costing 40x more... Lastly...
10 billionaires x $2500/mo or $30k/year = $3million into local communities
10k millionaires x $500/mo or $6k/year = $60 million into local communities.
~ 10,000 millionaires would collectively place $57 million MORE into discretionary spending i.e. local businesses in a calendar year than the 10 billionaires.
Remember, each group had $10 billion. When you add up all the numbers based on the spending criteria of this exercise among 10,000 millionaires vs. just 10 billionaires, $2.603 Billion Dollars more is circulated into the national and local economies when spent by the millionaires vs the billionaires.
Just something to think about...