Basically, if space aliens came and made us all communists, how big a slice of the pie would each person get?
One simplistic answer looks at world GDP (80 trillion ish) divided by world population (7 billion or so) to arrive at roughly $11k/year. But that doesn’t take into account what % of the world is employed, and it doesn’t take into account what the average person could buy based on their cost of living.
What’s the right way to calculate this?
You first have to decide if you’re going to distribute GWP equally or wages equally. There’s a lot more in GWP than wages. This is true even if you mean by wages all other forms of compensation like salaries (which I assume you do mean) and performance bonuses (probably ditto). A lot of GWP is cost of raw material and return on capital.
According to the international Labor Organization, the World average wage in Purchasing Power Parity dollars is $1,480 per month.
You would also have to compensate for cost of living differences. $1480 would buy a Bangladeshi a great deal more than it would a Swiss.
:dubious:
I would think a good point to the exercise would be not to do this, and highlight the disparities.
Is that averaged over:
[ul]
[li]all employed adults?[/li][li]all employable adults, or[/li][li]all humans?[/li][/ul]
Because this makes a huge difference. I assume at minimum the equal distribution posited should go to all working age adults, whether they currently have a job for money or not. That seems only fair. (for complete fairness, whatever sum arrived at should also go to underage and elderly dependants, since they also need to eat and be housed)
But if the figure above was calculated by averaging all wages earned in the world by all currently employed workers, it’s probably a lot higher than you’d get if you distributed the pot equally to all people. Maybe as much as two times higher? (Wikipedia seems to suggest that an employment-to-population ratio of about 50% is probably roughly right)
I feel obligated to remind everyone that this hypothetical scenario can’t even be remotely figured accurately. Because if it were to happen the world economy would very quickly collapse, there would be massive famines & starvations & riots, and basically an end to modern civilization as we know it. So called ‘wealth’ is not a magical thing that’s just ‘there’ no matter what. If you completely remove any incentive to create it, no one’s going to.
So there would very quickly be** absolutely nothing you could buy** because nobody would be producing anything. Check every communist society ever…
Communist societies produce things.
Besides, the potnetial consequences of such an action being so catastrophic don’t render it impossible to calculate out in the 1st place. Just because an IRL scenario might lead to famine etc. doesn’t mean we can’t figure out the numbers – it simply means maybe we shouldn’t go through with it.
Presumably, in a real wealth distribution scheme, such cost of living differences would radically shift due to the changing economy. Imagine this - if you were a poor Bangladeshi peasant struggling to make $100 a year by doing odd farm work for 20 cents an hour, and you suddenly had a $15,000 income fall in your lap, would you continue to plow fields for 20 cents an hour? Really? You’d make more money just investing your new money at 2% interest than you would working, so you retire. Now, there are fewer farm laborers in Bangladesh, so the average wage goes up and now farmers have to pay 50 cents or even a whole dollar an hour for work. Because of increased labor costs, food prices go up and now our retired peasant can’t afford food anymore, so he goes back to work. Things tend toward an equilibrium.
A better way to calculate this, rather than focus on the amount of money (since, as people point out, the cost of things is very much dependent on our current economic situation), is to focus on the amount of stuff, and figure out what an average distribution of resources would look like in those terms.
For instance, it’s known that in general the world produces enough food for everyone to eat, though some people don’t get it due to poverty/politics/wars/distribution problems. So in an equalized world, assuming no wars are buggering up local conditions, everybody is fed.
As another example, the world average meat consumption is about 40kg per person per year (cite). So in an equalized world, the average person can afford to eat about 100g of meat a day, which is actually not that far off what my own first-world non-vego family eats, and doesn’t sound too bad.
Then again, apparently the world average electricity consumption is about 300W per person - a twentieth of the highest-ranked country (Iceland, 5800), a fifth of the US, a third of Australia, a half of the UK. (Cite). So generally speaking, those of us in first world countries would be cutting back significantly on electricity, but not so unbelievably dramatically as to be unthinkable. Just very difficult.
As people point out, a situation in which everybody is guaranteed the same wage is totally unsustainable, because our economic system really depends on a certain degree of inequality to work at all. And to transition instantly to equality would also wreck everything, because it would be massively disruptive, and massive disruptions of any kind always wreck everything.
Nonetheless, I myself believe that a system with far far lesser degrees of inequality than the current system (say, top person earns four or five times more than the bottom person, rather than four or five billion) could still work perfectly well economically, if there were some way to transition smoothly to it. People geared to work hard and achieve will generally do it for some kind of reward, but the reward doesn’t have to be money - an awful lot of people will also do it for the prestige and fame, and I’m perfectly happy to continue paying them in that coin.
I’ve always believed the value of money is in the different amounts people have. If everyone in the world had the same exact amount of money, it would all be worthless. Delta earnings = value.