When Will We See Our First Trillionaire?
Imagine you picked up a popular book in the hot, eventful summer of 1968. You might have grabbed The Population Bomb, which begins with a bang. "The battle to feed all of humanity is over," Paul Ehrlich wrote. "In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate."
In reality, "since Ehrlich wrote, the population has more than doubled to seven billion -- but the amount of food per head has gone up by more than 25 per cent," notes Tim Chivers at Britain's Telegraph.
This came to mind when, citing "financial forecasters," Marina Koren predicted in National Journal that "we're just 25 years away from the world's first trillionaire." Perhaps. But that estimate is based on the idea that the planet's largest fortunes will continue to grow at their current rate. Thomas Piketty may assume they will, but it seems unlikely. A lot will happen over the next a quarter of a century.
For example, "Microsoft founder Bill Gates' $77.2 billion fortune is expected to top $1 trillion first, when he will be 83 years old," National Journal writes. Of course, 25 years ago Microsoft wasn't what it is today; it had just launched its Office suite, and Windows 3.0 was still in the future. There's every chance that somebody has already created something that will make Microsoft irrelevant in the decades ahead.
We already know Gates's fortune won't continue to pile up; he's vowed to give almost all of it away. Even if he didn't, he'd reach $1 trillion when he's the same age Warren Buffett is today. Buffett has already scheduled lunch with a journalist for the year 2034, so maybe he, too, will live to see a trillion. But it's not a smart bet.
This highlights a big problem with big numbers: We think we understand them, but we really don't.
Recall that at the start of his presidency, Barack Obama asked his cabinet to slash spending by $100 million. That sounded like a lot -- it's more than you'll ever earn -- but as CNN reported at the time, it was really just 0.003 percent of the federal budget. At the same time, he was stumping for and signing a $787 billion "stimulus" package.
It's almost impossible to process the difference between those two numbers. Million. Billion. They're both too big to imagine. Before long the country would be talking about "trillion," as the federal deficit shot through that once-unimaginable ceiling.
When they're expressed bloodlessly, "9 million," "5 billion," and "1 trillion" look about the same. In fact, you may be thrown by the single digit and think 9 million is bigger than 1 trillion, since 9 is much larger than 1. In reality, a single trillion is made up of a million millions.
So let's step back and find better ways of looking at these monstrous numbers.
If you could get someone to give you $1 million (in one-hundred-dollar bills) you could fit it in a reusable grocery bag. Increase that to $1 billion, and you'd need ten warehouse pallets, stacked about as high as a toddler. To house $1 trillion, you'd need the entire warehouse, and then some. Hundreds of pallets, double stacked with $100 bills, stretching toward the horizon. That's $1 trillion.
It's probably not possible for humans to intuitively understand billions and trillions. They simply aren't concepts that arise in our daily life. But journalists could help, by always writing out the true numbers with all the zeros. That would make it instantly obvious that $1,000,000,000,000 is much larger than $9,000,000. As a substitute, journalists could express big numbers as percentages or per-person amounts. As in the example above, it's clear .003 percent isn't much. Or they could illustrate $1,000,000,000,000 by pointing out that it's more than $3,000 for every man, woman, and child in America.
There won't be a trillionaire in our lifetimes, unless politicians inflate away the value of the dollar. (In Zimbabwe, a 100-trillion-dollar bill is worth about $5 American.) However, there may eventually be one if humankind continues to generate economic growth for generations to come.
That's exactly what's at risk today. Our government managed to spend $3.5 trillion last year alone. $680 billion of that was borrowed. It doesn't take brilliant forecasting to predict that can't go on much longer.
Rich Tucker is a senior writer in the B. Kenneth Simon Center for Principles and Politics at the Heritage Foundation.