Submitted by [deleted] t3_11aylcj in explainlikeimfive
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NavaHo07 t1_j9v6gjl wrote
The average American couldn't handle a surprise couple thousand dollar bill. And that's America. 5000 is living like royalty in some places. 20,000 would be a substantial windfall if we're talking about a fairly typical American family of 4 so how would it not be significant if you looked at countries where you could retire on that kind of money?
engineerfieldmouse t1_j9va4tk wrote
5k would instantly lift all of Africa out of poverty.
phiwong t1_j9vfpcw wrote
No it won't. The average GDP per capita of Africa is $2000 per year. It would make life better for awhile (if it even could be done practically speaking) but it does not solve any long term issue. Of course, there are several countries where this would make an immense difference (the poorest of the poor) but it wouldn't lift all of Africa out of poverty by any stretch.
The really wealthy are really wealthy by the standards of any one individual but there is this misunderstanding that this compares in any way to the long term economic output of a country or region.
hems86 t1_j9uzxag wrote
It would be an utter disaster and crash the economy. Billionaires don’t have a billion dollars of cash sitting in their bank account. It’s all tied up in real estate and shares of stock. For them to give all their wealth away, they would have to sell all of those properties and stock holdings. What do you think happens to the value of a company if 10% or 50% of the shares were sold at once? The price would crash and likely bankrupt that company. Same with real estate. Prices would crash.
So, the average person might get a check for $10,000, but their 401k value is down 95%, their home is now worth 30% less, and they are now unemployed because their company went bankrupt.
Mammoth-Mud-9609 t1_j9uv5ej wrote
It depends how they did it, most of their money isn't available as cash instead it is in assets like property, art and companies.
Any-Growth8158 t1_j9uxmx9 wrote
In the US? Not much. If they gave it directly to USA citizens it would amount to about $8500 per person. If they gave it to the government to pay down it's debt, they'd reduce it by about 10%.
Everyone wants the rich to pay for free stuff for everyone, but they actually do not have sufficient wealth to do it. This is why when the government starts giving away "free" stuff it inevitable falls upon the middle class to pay for it.
[deleted] OP t1_j9v6c7r wrote
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LedParade t1_j9uyks0 wrote
That’s thing about our world: If everything was divided equally we’d be all poor. So I don’t think it has much impact, maybe an ice cream for all?
ethylalcohoe t1_j9v2qje wrote
What do you base this on?
LedParade t1_j9v3f9y wrote
Just my hunch obviously, no one ever disagreed when I said it. Thought it was generally accepted just like the fact that the North-Western world is much richer than Africa or South America.
You never thought what would happen if we all gave half of our money to them? It could def fix poverty there.
phiwong t1_j9uwpkw wrote
To the masses, not really very much. One estimate of the wealth of the 0.01% is around 50 trillion dollars. Divided over (for ease of math) 10 billion people, this is $5,000 per person. Not an insignificant amount of money but hardly life changing for an average income earner even in a relatively poor country (presumably this is a one time deal)
Economically, in any real sense, it would be a disaster. Most of the wealth for the very rich are held in assets (property, ownership of companies, etc). It would be pretty much impossible to liquidate it quickly without causing markets to crash and companies to fail.
For another perspective, total global GDP per year is estimated at 100 trillion. So the amount you're discussing is 6 months worth of global economic activity. Certainly substantial but not exactly "everyone could live in luxury for the rest of their lives" substantial.