Would an Efficient Economy Create Billionaires?
I’ve been running the numbers. It doesn’t look good.
Scratch a conservative and they will tell you that capitalism is the best system for allocating scarce resources. I’m not sure about that. How about capital? I’m not so sure about that, either. We don’t have very many useful metrics for understanding wealth. We’re not in the habit of using them, either.
Here’s a metric that I like for the number, one billion. One billion seconds is about 30 years. That’s how long it would take you to count to a billion. To put that number in perspective, one million seconds would elapse 11 days, 13 hours 46 minutes, and 40 seconds. That’s a useful metric for understanding the scale of the numbers we use to describe wealth.
When we talk about the economy, we’re talking really big numbers. We fling around words like million and billion and trillion like playing cards. We need a way to put these numbers in context.
Rarely do we discuss the cost of a program in the federal budget as a percent of the total budget. Well, I found one economist who consistently hammers on this point: Dean Baker at the Center for Economic Policy and Research. Back in 2019, he had this to say:
Polls consistently show that the public hugely overestimates the share of the budget that goes to items like SNAP (food stamps), Temporary Assistance to Needy Families (TANF) and foreign aid. People will typically give answers in the range of 20 to 30 percent of the budget for these categories of spending. In reality, the shares are 1.5 percent for SNAP, 0.4 percent for TANF and 0.4 percent for foreign aid.
Here we see an economist who undertook the task of putting these numbers in perspective. In the same article, Baker expresses some concern that if we’re spending a lot of money on poor people and we still have a lot of poor people, those programs may be perceived by voters as not very efficient.
Huh. There’s that word, efficient.
So I began to wonder if is it more efficient to create billionaires through capitalism or to give the money to poor people so that they won’t starve. Maybe we could use that money to clean up our environment. I think I can make the argument for the latter…