Monday, February 03, 2020

Pie R Squared

So CBS (among others I presume) is running around showing people pies in an attempt to show them how it's unfair that the rich pay so little in taxes and how going after their wealth is the only way to do things for "the rest of us:. It's standard "scarcity mentality" that plagues so many of the Left. The way they see it, and I did once, the pie is of finite proportions and therefore the only way people at the top get more is by taking from the rest. of course, if you look at the economy as food, which, once consumed is all gone, it seems logical. So here's a pie lesson for those who don't get it.

Here's a pie:

Let's call it "small pie". For demonstration purposes, we'll assume "the rich" have half the pie. The "middle class" has 40 percent of the pie and the poor 10%. These numbers are not accurate and being used for demonstration purposes. So the pie is the total wealth. How do we calculate the total wealth? Well the total wealth is the area of the pie. The math for that is pi* r*r (pi times the radius squared). For simplicities sake, lets say that the radius is 1. It makes the math easy to follow. so:

3.14 *(1 * 1) = 3.14.

Everyone follow? Let's assume that 3.14 is $3.14 trillion. It's not in real life, but again, this is to simplify the math. So "The rich" own half of that so that's:

3.14 / 2

$1.57 trillion.

Doing the rest of the pie we have $1.25 trillion for the middle class and $314 billion for the poor. Add that all up and we get a shade under 3.14. Remember pi is a long number so...

So what happens if we grow the pie? Which you don't hear a single socialist running for office recommending?

So here is a bigger pie which I'll call "large pie":

Let's assume that the radius is exactly 2X the small pie. And no, economies do not grow 2X just like that. Again we're keeping it simple for the math. So let's go back to our maths. By growing the pie to 2R we find the total wealth is; 3.14 *(2*2)= 12.56

Huge increase in overall wealth eh?

Now let's assume that the slices "owned" by each respective group stay the same (it doesn't but that's another discussion). How much does each group have?

Rich: 12.56/2= $6.28 trillion. Nice jump. Yuge even.

Middle class: 12.56*.4 -= $5.024 trillion. An almost 5 fold increase in wealth.

Poor= 12.56*.1= $1.2 trillion. Well damn. The rich get richer and the poor....get richer. Well I'll be.

So simple math tells us that rather than what the Sander's, Warrens, Cortez's and media elites of the world tell us, it is possible to increase the wealth of the poor without taking from the rich or middle class.

Who knew?