It’s been a while since I posted on here, and mostly that’s because I haven’t had the headspace for anything longer than a Twitter rant (you can, of course, go follow me over at @schadenford for those). But with Howard Schulz potentially running for president in the most entitled way humanly imaginable, I wanted to share a few of my favourite descriptions of just how much money a billionaire has.
Most people think of a million dollars as a lot of money, and it is. With a million dollars, you can retire in most parts of America today, regardless of your age. If you invest only in index funds—nothing fancy, nothing high risk—you can live a comfortable, middle class life off the interest alone (which would, by the way, be a lot more than I’ve ever made in a year). A million dollars is what you save up if you put away roughly $1200 every month for thirty years and average a very healthy 5% rate of compound interest on every cent. That’s $14,400 that you earn but do not spend for thirty years, over and above the cost of: rent (or a mortgage if you’re lucky), food, utilities, fun, servicing student debt, paying off student debt, taking on more debt if you have kids, and so on. A million dollars is a lot of money.
The mistake, when people consider a billion dollars, is that they think in linear scales. They (roughly) think a billion is as much more than a million as a million is more than they have. And while that’s relatively true—if you’ve got $1000—it’s not the way we think about it. A billion is proportionately more than a million the way a million is proportionately more than a thousand. But the way your brain thinks about it is different. Honestly, you probably feel like a million dollars is a million more than you have, and a billion dollars is that much again. When you imagine a billion dollars, you’re probably imagining something a lot closer to two million dollars than a thousand million dollars.
So here to explain are some of my favourite thought exercises to understand just how much a billion dollars really is.
Exhibit A: A billion is so, so much more than a million. A million seconds is roughly twelve days. A billion seconds is 31.7 years. Imagine not having something you like for twelve days. Chocolate maybe. Your favourite ramen. Beer. Democracy. Now imagine the difference between that, and not having it for thirty one point seven years. Getting the picture?
Exhibit B: A billion dollars is more than you can spend in a lifetime. If you have a billion dollars, and you never earn a single cent of interest (ha!), you’ll still be able to spend $30,000 every single day of your life without running out of money. That’s just shy of the $31,000 and change that’s the US median yearly income every single day for ninety years.
Exhibit C: A billion dollars is more than enough to continue to be rich by every definition for every generation since Jesus of Nazareth purportedly walked the Earth. If you had a billion dollars on The Day Jesus Was Born™, and you spent $1350 every. single. day. since then, you would still have almost six million dollars today. Two thousand and nineteen years later. To save that up over thirty years you’d need to be putting away $86,400 every year (at 5% monthly compounded interest). You’d need to be saving almost three times the US median yearly income for thirty years just to save up as much pocket change as you’d have left after spending $1350 every day (over $490,000 a year!) for over two thousand years.
Exhibit D: It is literally impossible to save up a billion dollars. Remember how I said if you saved up $14,400 a year for thirty years you’d have a million dollars (if you manage 5% compound interest)? If you saved up $50,000 a year (without interest) you’d have a million after twenty years. At that rate it would only take you twenty thousand years to save up a billion dollars. For reference, that’s four times longer than all of recorded history. That’s over eighty three times longer than the US dollar has even EXISTED.
All of this is just to say the following: a billion dollars is an utterly unimaginable sum of money. At the rates at which we value labour, a human being cannot earn a billion dollars. They cannot accumulate a billion dollars through any amount of hard work, because if you get $60,000 a year for the very hard work of teaching, or $35,000 for the very hard work of collecting garbage 40 hours a week, or you get $60,000 for the very hard work of building the infrastructure we all use and live in, that’s the value of hard work, somewhere in that ballpark. You literally cannot work more or harder or better enough to earn the difference between that and a billion dollars through work, you can only extract it from the economy at the expense of undervalued labour.
The very existence of billionaires is proof positive that something is deeply broken in the way our society assigns value to things.
Now if you’ll excuse me, I’ve got some work to do.
Signed: The Remixologist.