Thursday, December 15, 2011
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...
Posted by Susquehanna at Thursday, December 15, 2011