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Why the human species hasn't produced trillionaires yet?

I just did a quick computation. Let's say that you are born in extreme poverty, and your net worth (yearly revenue and assets) is just $1 by the time you reach 20 years old. Let's say you think and work (on average) 1% faster than the average guy - in short producing just 1% more valuable output than the average guy, each day. Let's say that you leverage half of this advantage for your own growth (to produce compound return), and the other half for your quality of life (nice restaurants and vacations, marry a girl with expensive tastes).

Wealth multiplier over time if you do just 1% better (daily) than average

You would think that you'll experience big ups and downs in terms of wealth, but on average, you should do well. Assuming you are smart - you work far less than your colleagues but still produce more value (allowing you to keep your high paying job for longer than expected), use your significant spare time to launch your company, and avoid truly bad investments.

Here's what should happen to you: after 5 years (x = 1,826 days on the X-axis), your net worth would have increased by a factor 10,000 (see Y-axis, see the red dot indeed), so your net worth should now be $10,000 if you started with $1 five years ago. This sounds very reasonable and even conservative. After 10 years (the rightmost dot on the X-axis), your net worth should be 100 million dollars. This seems quite possible too.

But if you started with 1 million dollars rather than 1 dollar (as tons of people did in US), the few that used my 0.5% rule should now be at 100 million times one million dollars, that is 100 trillion dollars. How is there not a single trillionaire on Earth? Is there a cap (dollar ceiling) to how much one can make, and the wealth must be measured using other metrics (not attached to a currency)?

Why did Bill Gates fail to become a trillionaire? Adverse or competitive forces? Not enough resources on Earth that are trully worth trillion of dollars - the wealth ceiling. Or maybe the dollar is not a linear metric, and possessing 1 billion dollars makes you 10,000 times more "wealthy" than someone possessing a mere 100 million dollars.

Just food for thoughts. Would love to read your opinion.

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Comment by Jonathan Seller on June 1, 2014 at 4:39pm

Is this in 'today dollars' and corrected for inflation? Surely the Rothschild or Rockefeller fortunes in the 19th century would be worth more that 1 trillion in 2014 dollars. If not, go back further to rulers of empires like Mansa Musa and Ali Khan. Those guys probably didn't even have an exact account know how much monetary wealth they actually had. Nor did they want to; disclosure of personal fortune (until somewhat recently) was generally hidden. 

Comment by Robert de Graaf on May 28, 2014 at 7:12am

Another commenter has mentioned Bill Gates, who embodies a couple of problems.

One is, at a certain size there is political fallout from letting you get bigger - remember the anti-trust actions taken against Microsoft  in the 1990s and other times.

Also, considering the GDP of the USA - the richest country in the world ever - is only $13 trillion, and that of, say, Germany is $3 trillion, concentrating that wealth in one place is going to be difficult. If you succeeded, I suspect that the existence of a trillionaire (in terms of power imbalance) is going to cause its own political problems likely to lead to governments trying to curtail you. 

Comment by Andreas Aabye on May 14, 2014 at 12:11pm

As John said, once you reach a certain level of wealth, it is not so much about how hard you work, rather, it is about how hard the people you pay work or how good you are at investing. Another reason for why there have been no trillionaires is the assumption that your wealth can increase by 1% per day always is most likely wrong. It can be done, but it is unlikely as the money that is made comes from someone else (assuming inflation is small - with inflation, eventually we'll get one). This would mean you'd have to be much better than not just the average, but the best, since the amounts the average could add would not anywhere close to as trillion. Currently according to Forbes, you'd need to combine the wealth of the 25 richest people on the planet to make more than a trillion. Let's just assume the money comes from regular people. Then you'd need to make 1000 off a billion people on average, which is a huge number considering that only about 1.5 billion people have assets worth more than 10000.

Comment by Danny W. Stout on May 13, 2014 at 12:44pm

It is interesting that you posted this question the weekend after I was talking about the same subject with a group of colleagues at a conference.  Personally, I think that it is due to a variety of reasons including diminishing returns, dimensionality and distribution of data to name three.  At a certain point, after you have accumulated enough wealth, accumulating more doesn't carry the continued power previously experienced.  While you posit a linear model for the sake of conversation, the accumulation of wealth really isn't linear.  It's hard to discuss something theoretically if it isn't within the paradigm.  I guess dimensionality falls within the same category as diminishing returns, so maybe my points were included in only two discussion points.

As a final point, one million dollars today isn't very impressive to some but a few decades ago it was impressive to almost anyone.  It wasn't even reachable a short time before that.  So while we aren't reaching a trillion dollars now, it is highly likely that we will reach it at some point in the near future.  Whether this is due to inflation or combined accumulation of wealth, I'm not sure.  However, it is an interesting question.

Comment by Alex Ignatius on May 10, 2014 at 11:56am

Solid food for thought.  You made me create an account just to post my thought.

How do you say that world has not produced a trillionaire yet?  By assuming a common measure such as currency ($) value right?  That’s like being in space and measuring distance by inches.  Not that an inch is no longer common or has lost its value or has changed its property but in the ‘space’ where you are, that unit of measure is no longer relevant.  Your measure of distance now is light years and not inches.

Is there a ‘point of no return’ in life where you challenge your scale of measure for success / value or get out of ‘common measure’ altogether? Someone referred to Bill Gates in their answer.  Try offering a trillion to Bill Gates to see if he’ll give up what he is doing and return back to his old life?  My guess is that he will not because he is in his own trillions now and wouldn’t trade it for the billions.  That’s growing backwards that smart people don’t do.

So, it is not about extrinsic measure of value but intrinsic shift in the measure of value within and that’s exactly what differentiates humans from machines.  No algorithm in the world can accurately predict when the intrinsic shift happens but when it happens, not that you lose drive or interest to grow in value further but it is just that you get out of the common measure / value system and you never fit back in there. 

So, the answer to your question is, without a common measure you lose track of growth / value and you can never say for sure if there was or there is a trillionaire or not!

Don’t we wish everything can be diluted down to an explainable equation, graph or an algorithm?!?

My .02 cents.

Comment by George Vander Meulen on May 8, 2014 at 5:05pm

What a fascinating question Vincent! Real food for thought. Bill gates and Microsoft are a good example of why there are no trillionaires yet. In order for a straight line graph to model the growth you describe, relative productivity advantage must must remain constant. Most people get a big enough pile of money and then turn their attention elsewhere. Bill Gates retired and went to work helping the poor. 

This behavior is probably logical. Going from living in poverty to a millionaire life style is obviously a real improvement but how much better is life with two billion dollars instead of one billion? I doubt that anyone would notice the difference. I can imagine where the hassle from jealous losers and small minded bureaucrats could create an overwhelming disincentive to a potential trillionaire. 

a millionaire makes a real difference in your life.

Comment by jaap karman on May 8, 2014 at 12:59pm

Vincent, You are back on a social question while focussing on the dollars in your eyes.
I will give you some comments: 
- The graph is assuming the value of the ammount is kept the same all years. This is wrong as it is changing, inflation is the normal one. What will happen with an inflation of 10%/year or 100%/day. It is possible as it has happened. https://en.wikipedia.org/wiki/Hyperinflation "At the height of the inflation, one US dollar was worth 4 trillion German marks." That is something like one bread to eat.

You certainly want to help to avoiding a similar situation with dollars. By the way, the only people not suffering for something like that are those with other kinds of property or holding some kind of positions.   

 You are back on social inequality.

Would you ask: is het possible one human to posses everything on the planet?

The answer likely would be no. Still there is always some flow from wealth from poor to rich.  I give some links:   http://en.wikipedia.org/wiki/Gini_coefficient , http://en.wikipedia.org/wiki/Peter_Turchinhttp://en.wikipedia.org/wiki/Thomas_Piketty

What can be the result of that all? Getting a lot people full of hate willing to sacrifice their life to achieve a new living world. You can see some symptons off that today. 

Getting to your question why should you want ever more to own?

++ At some point you may getting wealthier but not getting more enjoyed by your life.

++ For common sense, avoiding the apocalypse of social unequality it will give you better results to share/ give away some of your financial wealth to hold your best positions as "elite" longer.

            

Comment by Pawan Kumar on May 8, 2014 at 4:08am

I think the main reason for this is that beyond a certain point, there are no activities or work that you can do '1% better than average'. When you start with 1 million and keep growing 1% more than average, you will hit a ceiling in terms of activities or work which keep paying higher and higher.

Comment by MH on May 6, 2014 at 2:09am

Interesting thoughts.  I have a couple of ideas.

First, I am extremely dubious that working 1% faster than other people in your field has much to do with financial success in the modern world.  Even if we abstract it to producing 1% more "valuable output", almost no one's compensation works that way.  Sure, if I sell homemade jam at the farmer's market, I may make more money than someone who makes slightly less, slightly less tasty jam, but that doesn't translate very far into the world of even regular work, let alone mega-wealth. 

More importantly, I think one's financial situation depends on a vast array of variables that have nothing to do with how fast or hard you work or how much valuable output you produce.  Some of the hardest working people I know are musicians whose annual income is virtually non-existent.  In terms of technical skill, they are far more than 1% better than Justin Bieber at being musicians, yet he makes far, far more money in a year than they will in their entire lives.  I don't know anyone who would argue that Justin Bieber's wealth is due to any particular personal talent, but rather it's a function of the decisions of a bunch of music executives and marketing professionals.

Also, once you get beyond a relatively modest level of wealth, creating more wealth usually has little do  with your personal skill and a lot to do with how well you judge investment opportunities and/or how well a large number of other people do their jobs.  Lots of very skilled, smart people have been wiped out by global financial markets, and lots of average or even below-average people have become vastly wealthy due to blind luck or illicit manipulation of markets.  

Finally, as to why there are no trillionaires, I suspect there's a diminishing returns issue.  Once I have a billion dollars, or five billion dollars, is there really any incentive for me to keep working hard to get ten billion?  Or a trillion?   There is almost literally nothing you can't do as an individual with a couple of billion dollars.  I imagine the ability to do literally anything you want distracts from the drive to keep increasing your wealth.

Interesting to think about though.

Comment by Jean-Paul Rasson on May 5, 2014 at 10:14pm

Maybe laziness. At some point you don't care anymore, your growth curve becomes flat, or goes South as you are attacked by many enemies.

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