Saturday, November 14, 2009

What would be the economic impact if everyone you know got rich?

Scott Adams asks whether you'd rather get $5 million and no one else gets anything, or you get $10 million on the condition that everyone you know gets $20 million. His point is that some people aren't going to be happy if they're the poorest person they know, even if they have millions of dollars.

But, to me, the big question is: how would everyone else's $20 million affect the (objective, purchasing power) value of my $10 million?

I know a lot of people. Everyone I've ever worked with or gone to school with or been taught by, every neighbour I've ever been on a "Hi, how are you?" basis with, my massive extended family and a selection of their friends and relatives, a bunch of people on the internet - hey, guess what, you'd get $20 million too! But how far does this definition of "people you know" go? My co-worker's kid whom I've met once? The homeless guy who propositions me when I'm wearing cheap shoes and proposes marriage when I'm wearing my more expensive shoes? The national archives librarian who tracked down that obscure article my text insisted on citing? Would it be enough people to have an impact on the economy as a whole and cause prices to inflate to the point where my $10 million is insignificant?

Even if this isn't enough to have an impact on the economy as a whole, it might have a major impact on certain pockets of life. For example, a lot of people would retire if they got $20 million. I know a significant number of the translators in Toronto. I know the vast majority of the profs and staff members at my alma mater who were there when I was there. How would that affect my profession? Would I be able to command a significantly higher salary because supply has suddenly plummeted?

I also know many of the retailers/service providers in my neighbourhood. My doctor might retire. My dentist might retire. Many of the librarians at my local branch, many of the cashiers at my supermarket, several of the pharmacists at my drugstore, all the different shoe repair guys I go to. Would someone else step into their shoes, or would there suddenly be an egregious lack of services in my neighbourhood?

Another thing I might do if I came into a whole lot of money is buy a condo. The kind I covet run for about half a million, which I could never afford IRL, so the $10 million would certainly make that possible. But what if my neighbours are like-minded? What if giving a significant number of them $20 million caused them all to run out and buy condos, thus pricing the condos I covet out of my reach? But then there'd be a huge vacancy rate in my current (rental) building, and the people who move in would likely be strangers so they wouldn't have $20 million, so my rent would become more affordable and perhaps I could even upgrade to one of the better units in this building.

The other question: can I have the recipients of the $20 million know that it's my fault they got $20 million? Scott Adams says the genie who has given us this money "offers" to erase our memory, which implies that we have the option of not having it erased. If we can also have everyone believe us when we tell them we did it or, better, find out independently, that has the potential to make up for the inconvenience of somehow being the poorest person in the room. For example, I'm sure I could convince my parents and grandparents to make me their sole heir, and it's quite possible that their other descendants wouldn't even care. (After all I'm responsible for giving them $20 million each.) Before my property managers quit, and since I'm the only one who can't buy a nice new condo, maybe they could kinda sorta let me not have a rent increase this year. Even if my a hairdresser stops working, I could probably convince her to keep doing my hair (and maybe even for free) since I was responsible for her getting $20 million. I could probably convince most people reading this to paypal me a few thousand dollars if $20 million had just appeared in their bank account because of my doing. So maybe you could just float through life that way. I wonder how long the gratitude would last?

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