In one of the forwarded posts recently, it stated:
"You cannot multiply wealth by dividing it"
This got me thinking. Read below:
393 million have USD 200 trillion
3207 million people have USD 7.3 trillion
(https://en.wikipedia.org/wiki/Distribution_of_wealth#/media/File:Distribution_of_wealth_globally.jpg
)
So, let us say, by dividing the $200 trillion by half, that
is taking away $100 trillion from the rich and giving it to the 3207million
poorest people
This will then mean the 3207 million poorest people will now
have 107.3 trillion (i.e. increased their wealth by 14.7 times)
Hence, by dividing the richest 393million peoples wealth by
half we would have multiplied the poorest 3207 million peoples wealth by 14.7
times (50% reduction of wealth of the richest, results in 1400% increase in the
wealth of the poorest)
Therefore, the response to the original statement is:
Yes, you can multiply wealth of people by dividing it.
This is just the mathematical calculation.
We can similarly work out economics, social, health and other
calculations; my prediction is that it could work out similar to the
mathematical effect.
We could argue that while we have multiplied wealth for
large many people, by reducing the wealth of a small number of people, but we have not multiplied wealth itself.
Can we increase wealth itself by dividing it?
Try this.
The wealth of the richest are not stuffed in notes and coins
in their mattresses and pillows. They are invested to provide a return.
Let us say for the purposes of illustration, that some of
the wealth of the rich are invested in toothpaste, with every rich person
buying one tube of toothpaste per month bought at $1 with a profit of 25% per
tube. And for the purpose of illustration that the poor cannot buy the
toothpaste.
Before dividing any wealth the rich 393million persons get a
return of $969 million from the sale of toothpaste.
Let us assume that after the wealth from the poor was given
to the rich, the toothpaste still manufactured by investment by the rich,
becomes affordable for the poor with a tube sold every alternate month for 50
cents with a profit of 25% - this will provide the rich with a profit of $ 2.4
billion. The wealth made by ‘toothpaste’ profits alone multiplies by 2.47
times.
Therefore the answer to the original statement is still
Yes, you can multiply wealth by dividing it.
In fact I would argue that the rich are getting richer by
this method, in the modern world. Like in ancient times if the rich had to
mobilise armies to fight for wealth, artisans were making things traded by
barter, this phenomenon seen in the modern world by the rich parking the money
and themselves not doing a lot thereafter would not happen.
Hemadri
©M HEMADRI
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