From: utzoo!decvax!duke!phs!jfh
Newsgroups: net.politics
Title: Re: Rich People
Article-I.D.: phs.1267
Posted: Sat Mar 12 16:40:01 1983
Received: Sun Mar 13 11:31:58 1983



	This article is in response to mitccc430, submitted by Robert van
der Heide.  The gist of that article was "How much is a billion dollars?".
The article stated, quite correctly, that if you made one thousand dollars
a day it would take you more than 2000 years to accumulate a billion.  The
actual figure is 2738 years (give or take a week or two).  The article went
on to state that the Rockefellers have about 12 billion dollars.  Unlike
Mr. van der Heide, I have no doubt about the intentions of those who
originated the article.  It seems clear that the implication is that there
is no way any person or family could make this much money in a moral way.
	However, there is a flaw in the analysis, which is mentioned in the
article.  The offending premise is "neglecting interest".  Few people seem
to realize just how amazing compound interest really is.  If you assume that
your thousand dollars a day is put into an account paying just 8% per annum
compounded daily (annual yield less than 8.5%) then the time to accumulate
a billion dollars is reduced from 2738 years to only 67.5 years!!!
	Although few of us are fortunate (?) enough to make $1000 per day,
the accumulation of large amounts of money seems much more reasonable when
viewed in this manner.  Also, don't forget that the Rockefeller fortune and
much other "old money" was largely made in the days before income taxes,
which in this country are of relatively recent vintage (mid teens of this
century, if my memory is correct).  The current average tax rate (at all
levels) of about 40%, plus the double taxation of corporate profits makes
it MUCH harder to accumulate money today.
	The reason for the ? in the above paragraph is to remind you that
there are two sides to every coin.  Making and having lots of money must
be counterbalanced against the responsibility and headaches of maintaining
a fortune.  Don't forget that the Hunt brothers lost 980 million dollars
(nearly a billion) in less than a month during their attempt to corner
the silver market.  Easy come, easy go?  (Headache or not, it sure would
be fun to try for awhile.)

					Just trying to make you think,
					Fran Heidlage
					duke!phs!jfh