This is one of those fun, or, perhaps, overwhelming number games. It’s going to be like the drake equation, where we’re throwing numbers around, stacking assumption on assumption on assumption, and surely several assumptions will be wrong, and the number of zeros will get quite insane, but in the end the point will be: there’s life out there.
The other day I was at a concert with my wife, for this phenomenal one-man-country-blues-band called ‘Shakey Graves‘. This guy’s amazing to see live, super intense, and supremely talented. He left his guitar behind at the last show a town or three over, so he had to rent some equipment that night. Naturally, his rental equipment popped a string or two during the very first song, so he took some down time between songs to fix the situation.
While he was switching instruments, I took a look around the venue (The parish, aka the best sounding venue in Austin, ever). The place was packed, probably 500 people, easy. Lots of people for the amount of space.
I got to thinking about how different people might look at a crowd of 500. I wondered what an economist would think of this situation, and that’s where our story really begins.
An economist might try to guesstimate the total net worth or yearly income of such a crowd, I thought. Not everyone works, sometimes someone’s a stay-at-home-spouse, sometimes someone’s unemployed, and so on, but what if, on average, each of our 500 people made $50K a year. How much yearly income would we be tossing around for the crowd?
$50K * 500 = $25 million dollars, per year.
Not everyone earns 50K per year, for example, poor Bill Gates only makes 25 million dollars every 3 days or so. Certainly many people earn more or less than $50K per year, but we’ll just call 50K a decent average.
$25 million dollars, for 500 people, per year, every year. If we do the math, assuming a 40 year consistent career, this crowd of 500 people with zero unemployment or non-working fathers or children in the headcount would collectively earn $1 billion dollars over the span of 40 years.
A billion dollars of total lifetime net worth, in that little room of 500 people. Think about that for a moment.
Of course, Bill will earn this much in about 120 days – 20,000 man years of decent-wage income in 120 days, not bad.
Still, even with all of his massive wealth, Bill couldn’t buy New York City, with our idealized ballpark math, 10 million New Yorkers bring in $500 billion per year in personal income, more than 10x Bill’s total worth – every year. Throw in Los Angeles and we’re at $1 trillion dollars per year in income, for two cities, 20 million hard-working citizens.
The math sounds all wrong because we’re not accounting for unemployment, or families with one income, and so on, but remember, the United States has about 300 million people. In an ideal simple math 50K per head world with 100% of the population working, thats 15 trillion dollars a year in personal income.
Coming back down toward reality, there’s a whole lot of people who aren’t working: children, elderly, disabled, stay-at-home-hobbyists, and so on. Some families have 4 children, some have none, and such. For 2011, an estimated 150 million taxable households existed, with 70 million paying no income taxes that year, if we say each of those households had our 50K estimate that’s 7.5 trillion dollars of income per year, or 300 trillion dollars over a collective 40 year career.
With a flat 20% tax rate (if only..) for that 300 trillion, the United States would have 60 trillion dollars to work with over 40 years, or $1.5 trillion per year, which is, about right.
$300 trillion dollars in lifetime income, with 1/300,000th (or, $1 billion) of that income represented by a sardine-tin venue packed with only 500 people.
The world is sometimes both very large and very small, all at once. I think Drake was right, there’s a lot of life out there.