If everyone is a billionaire?


billionaire-rubber

OK let’s assume everyone is a Billionaire

If everyone was a billionaire?

What would happen if everyone on the planet suddenly had the equivalent of one billion US dollars added to their bank account?

Immediate massive inflation, of course. Physical money transactions become impossible until the governments produce new currency. A lot of instability as we find the new price points for every product and service, most of them proportional to the old prices.

Now, many answers believe that wealth inequality would take a massive hit: instead of some people having a billion times more money than others (ignoring debt), the worse ratio would be something like 20 or 50, and only in rare cases.

100 trillion Zimbabwe dollars
100 trillion zimbabwe dollars Image Credit: robertsworldmoneyblog

But wealth isn’t only about money. Rich people’s possessions are simply worth much more, and inflation has little effect on the value of those possessions.

The concept of ‘Money’ is the most fantastic creation of the human mind. It is artificial and holds up only because we all allow it to.

Money is not wealth. Wealth is things.

Generally speaking, in a free market the price of any thing is the maximum anyone is willing to pay for it. If everyone is a billionaire, that maximum price is going to be so high that you’ll have to add ten or more zeroes to the price of a loaf of bread. And since billionaires don’t go to work, and nobody will produce anything because there’s no incentive, pretty soon there will be no things to buy and all the money will be worthless. Then it’s back to this – “you do my laundry, and I’ll make you a chair in exchange.” Or, “I’ll trade you two potatoes for that lemon.”

So what this amazing invention called ‘money’ has done is to reduce every product, experience, service, and interaction to a common scale – the value scale – measured through a certain currency (convertible to another, or most of the rest). It has helped speed up a lot of our daily lives, due to an easy understanding of transactions. That this ‘money’ is physical or virtual, convertible or non-convertible, means little in the bigger scheme of things (unless, of course, you are a crook or a cyber-thief siphoning off central banks’ monies! Or North Korea.)

Value” is what underlies everything. It defines how much money we are willing to part with, or earn through hard labour, and also why shining objects called the iPhones can keep commanding ridiculous sums of money to get owned, despite equally good or even better products available at much lower ‘prices’.

Value is, because you have more of what can measure it, and I have less of it (or vice versa). Value (created through human effort) and the dissimilar amounts of money that can exchange it, create the required ‘potential difference’ that keeps economies moving.

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So, when you give a sum of, say, $ 1 billion to every human on Earth,

  • Sums of money with everyone = Equal, huge, equally huge!
  • Potential Difference needed to create meaningful flows of value = Nil
  • The value of the “money” we hold = Equal, hence very low!
  • Worth of what we hold = drastically down
  • Prices of nearly all products and services = sky high (worth down)
  • Welcome to hyperinflation, and the breakdown of monetary systems.

Another perspective

Let’s quit the negative aspect maybe because we are clothed in the current economic paradigm of inflation, credit, and debt, and by extrapolation, interest rates.

It looks like I am hypothesizing the scenario where many zeros are appended to the end of the balance of everybody’s bank account.

What if we could think differently? As it was pointed out there is a world of difference between riches and wealth. And money is simply an expression (and not the only one) of both.

In the first instance, it is possible for EVERYONE on earth to be wealthy – to own decent housing (with sustainable energy supplies (and a pool – if that is your measure of wealth/riches)), clothing and food (in abundance) and transportation – without the negative consequences espoused in most responses to the question.

The problem with money is that it is an artificial invention that is artificially kept in limited supply to maintain the current (status quo) balancing act between inflation and interest rates.

Most western nations are already living on near zero (even negative) inflation and near zero (even negative) interest rates. It is now so much easier to see (and argue) that life can still be sustained if we jettison/abolish inflation and interest rates (or keep them at zero: the same effect).

The question is how do we build riches/wealth in non-inflationary, interest-free world?

If we could, everyone can indeed be a billionaire. And that is no Utopian dream. [Before you throw barbs at me, I am not a socialist angel].

Societal Renaissance advocates for non-inflationary, interest-free economies unleashes the “unequal” full potential of every human being and in the process could eliminate the divide between the “haves” and the “have nots”.

However, what if we add more detail to this hypothesis? Let’s suppose that everybody is granted a million dollar worth of material rather than money. For example, let’s say, just for the sake of argument, that everybody is given a magic amulet that holds a million dollar worth of crude oil, which can be poured out whenever the bearer wishes to do so. Since oil is material and can be used as fuel or chemical input, it has its inseparable value.

However, when I work further down this path, I will find out that even in the form of material this extra wealth will inevitably lead to a kind of inflation. The most typical thought that would come to the average mind would be “well, I don’t have to work anymore.” The abrupt slump in the supply of labor will cause the price of labor to soar. The oil value everybody holds will be watered down, but never to zero. Another consequence would be that oil will become a secondary currency, less valuable than other currencies though.

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This somewhat leads me to the conclusion that value is value only when things are compared. Compared to the abundance of oil, labor becomes valuable. Compared to the little money distributed among the majority, labor becomes cheap (just like today’s world). That might explain why we can’t all be rich. Rich in its definition means a privilege over a certain number of others.

A look at Money

The problem with money is that it is an artificial invention that is artificially kept in limited supply to maintain the current (status quo) balancing act between inflation and interest rates.

What is used for “Money” needs to be limited because the supply of labor and goods are limited? The economy can only produce so many goods and services. If you have an excess of ‘money’ to compete to buy those same amounts of goods, the cost of them goes up (and vice versa).

You can’t make everyone ‘rich’ as there isn’t enough made to make everyone rich.

If everyone on the planet is a billionaire, it’s because every country in the world has suffered a lot of inflation, either on the long term or as a result of hyperinflation.

hyperinflation Germany 1923
Hyperinflation Germany 1923
Image Credit: businessinsider

Moving on.

The biggest impact would be on debtors and creditors. Are you in debt? Well, not anymore you’re not. You just got much richer. Are you a creditor? Well tough luck: any money you loaned is simply lost. Speaking of which: do you know how much money banks credit at any given time?

Remember the financial crisis of 2007–09? Where banks almost collapsed? It was nothing compared to this. Prepare for complete market failure, and banks being only part of it.

The only way I see out of it is quick government intervention to restore the status quo. No matter how abused it is, money is a representation of value that modern society cannot function without in the short term, and the billionarization of everyone kills everything money stands for. The government could force banks to cancel the extra billion in every account. There would be irregularities, and lawyers would have a field day, but nothing short of that would have a chance of averting a global crisis.

If everyone is a billionaire then who will work?

Well, I asked this question to my self when I saw the garbage collectors working hard in the night closing their nose. If everyone is educated and rich, who will do such jobs? But I believe, the better literacy rate in a country would bring great innovative ideas. For example, there are no garbage collectors in South Korea, all the garbage bins are setup with sucker machine that is will send the garbage to the central location for segregation and recycling.

To answer the question here, when I imagine the world with only billionaires, then our monthly utility bill would be in millions. We may wash our car ourselves etc…

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Therefore, there is always hunger for money.

People wrongly assume that billionaires don’t work or that when you financially free you won’t work anymore. That could not be further from the truth.
Billionaires are the hardest working people in the world, it’s just that they do another kind of hard work that is unknown to the 99%: they do productive hard work. The keyword here is productive.

If everyone were a billionaire, then we would all be equally poor, which sounds pretty terrible. The situation would be no different from idealized communism or a collapsed fiat currency from hyperinflation.

With no concentration of capital, the economy would grind to a halt. Bartering would dominate as prices for everything would be non-sensibly high. Eventually, the industrious ones among us would figure out how to redirect the flow of money until there’s enough concentration of capital to produce a working economy.

We’ll soon have trillionaires and quadrillionaires who made their money offering and selling essentials. Then, quintillionaires would emerge as they take control of major industries and infrastructure, leading all the billionaires to bemoan how there’s a huge wealth inequality and life is unfair.

Why can’t everyone be a billionaire?

Everyone can.

There are about 1,645 billionaires in the world. Think about that. 7 billion people alive and only a small fraction are billionaires. And only 40 ish people in the entire world have a net worth above 16 billion. Anyone can make money, however, it takes a special talent, skillset, and determination to become a billionaire that 99.99% of the world doesn’t have.

Let’s go back 200 years back. Would you imagine what the lifestyle was like?

  • People worked in factories and farms with no automatic machines.
  • Electricity wasn’t available everywhere.
  • There were no washing machines to wash clothes.
  • There were no dishwashers to clean the dishes.
  • Traveling long distances would take forever.
  • Communication was primitive compared to today.
  • There were no cell phones, internet or computers, even cars.

If someone from that time were to see what average life in the 1st World is today, they would think that everyone was a billionaire as everyone consumes so much.

So what is it that we have today that we didn’t have back then?

The answer is goods!

So the real difference between those times is production.

The real wealth is production. How much can we produce. If we can’t produce, then we can’t consume.

So the final answer to this question is, YES!! Everyone can be a billionaire, but we have to produce that much first. And if the day comes when everyone is a billionaire, then few people would have become trillion-aires, and the question would be “Why can’t everyone be a trillionaire?” and the answer would remain the same. Everyone can be a trillionaire if we could produce that much.

when everyone is a billionaire, no one is a billionaire.

Read also: How to Become a Successful Young Entrepreneur: China’s Richest Man

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