Camile.Bidan
Banned
2 million bucks right now, or $4,000 every week for the rest of your life?
75% of people polled here in the Coli picked 4K a week rather than an immediate 2 million payout. I am sure people are in the thread are trying to convince people why 2 million is the better deal. I haven't read through it and I don't care to. I'm not sure how much I want to get into to why the annuity isn't such a great deal but...
$2,000,000 at .08 market rate for a very generous 60 years (assuming the average coli poster is 20, and somehow they all will make it to 80, which is very unlikely) leads to a $202 million dollar future value.
$4K*52*60 =$12,480K or 12.5 million dollars. The present value of the annuity (using .2% interest per week and 3120 weeks) came out to be $1,996,075.91. A simple present value calculation will show anyone that annuity is worth less and has far less upside potential than the $2 million payout.
I am sure people understand inflation (whos to say we won't go into long periods of deflation?) will make $4K worth less in the future. But I don't think people understand that money in the future is always worth less than money in the present time without even considering inflation.
Why does this mean that Capitalism with fail?
Imagine a nation that chose capitalism with 100,000 people. 25% chose the 2 million dollar payout and 75% chose the annuity.
In 60 years, 75,000 people would have $12.5 million dollars each, and 25,000 would have $202 million dollars each with a total wealth of $937,500 million for the 75% and $5,050,000 million for the 25%. This means that 25% would control nearly 85% of all of the wealth in this imaginary nation.
This sort of inequity or imbalance will lead to immense social instability, rebellion, civil war and criminality.
Sure, this is only 1 poll, but it seems like most people don't understand basic financial math, or have time preferences that won't lead to wealth creation. You could just say "Education! Education!", but it goes a lot deeper than that. Most people don't have the mindset to create their own wealth. It takes discipline and foresight to create wealth. It takes less than 5 minutes to research financial math on google, but it seems most people aren't willing to do that in order to avoid a fatal mistake. A mistake that the natural human mind is prone to make because of its preference for predictability and safety. Taking the weekly $4K annuity seems like a better option because it is guaranteed and at face value, it seems like more money than the $2 million payout, but it is certainly not.
If this is just one simple and basic decision and most people can't seem to understand this, then how do libertarians and others expect the majority of people to behave in a Capitalist market society full of cost benefit decisions than are made every 5 minutes. Not just transactions, but how people spend their money and time is big part of the accumulation of wealth. Like Nas said, "A buck that bought a bottle, could have struck the lotto". How much wealth is someone with 50,000 posts on a message board accumulating with their obvious inefficient use of their time?
A socialist mixed economy seems like a much more viable options because the Government can protect the the 75% from their own stupidity by taking money from the 25% and distributing it to the 75%.
However, a much better option is the Eastern model of authoritarian capitalism or the "Singaporean" model. A nation can still receive the efficient allocation of resources to the right capital invesments via capitalism, but a Government can use its authoritarian powers to prevent the 75% from making the wrong decisions by laws, regulations and force. This way the 75% achieves the $202 million payout, and the whole nation has accumulated much more wealth than it would have under the purely capitalist society or the mixed socialist society.
75% of people polled here in the Coli picked 4K a week rather than an immediate 2 million payout. I am sure people are in the thread are trying to convince people why 2 million is the better deal. I haven't read through it and I don't care to. I'm not sure how much I want to get into to why the annuity isn't such a great deal but...
$2,000,000 at .08 market rate for a very generous 60 years (assuming the average coli poster is 20, and somehow they all will make it to 80, which is very unlikely) leads to a $202 million dollar future value.
$4K*52*60 =$12,480K or 12.5 million dollars. The present value of the annuity (using .2% interest per week and 3120 weeks) came out to be $1,996,075.91. A simple present value calculation will show anyone that annuity is worth less and has far less upside potential than the $2 million payout.
I am sure people understand inflation (whos to say we won't go into long periods of deflation?) will make $4K worth less in the future. But I don't think people understand that money in the future is always worth less than money in the present time without even considering inflation.
Why does this mean that Capitalism with fail?
Imagine a nation that chose capitalism with 100,000 people. 25% chose the 2 million dollar payout and 75% chose the annuity.
In 60 years, 75,000 people would have $12.5 million dollars each, and 25,000 would have $202 million dollars each with a total wealth of $937,500 million for the 75% and $5,050,000 million for the 25%. This means that 25% would control nearly 85% of all of the wealth in this imaginary nation.
This sort of inequity or imbalance will lead to immense social instability, rebellion, civil war and criminality.
Sure, this is only 1 poll, but it seems like most people don't understand basic financial math, or have time preferences that won't lead to wealth creation. You could just say "Education! Education!", but it goes a lot deeper than that. Most people don't have the mindset to create their own wealth. It takes discipline and foresight to create wealth. It takes less than 5 minutes to research financial math on google, but it seems most people aren't willing to do that in order to avoid a fatal mistake. A mistake that the natural human mind is prone to make because of its preference for predictability and safety. Taking the weekly $4K annuity seems like a better option because it is guaranteed and at face value, it seems like more money than the $2 million payout, but it is certainly not.
If this is just one simple and basic decision and most people can't seem to understand this, then how do libertarians and others expect the majority of people to behave in a Capitalist market society full of cost benefit decisions than are made every 5 minutes. Not just transactions, but how people spend their money and time is big part of the accumulation of wealth. Like Nas said, "A buck that bought a bottle, could have struck the lotto". How much wealth is someone with 50,000 posts on a message board accumulating with their obvious inefficient use of their time?
A socialist mixed economy seems like a much more viable options because the Government can protect the the 75% from their own stupidity by taking money from the 25% and distributing it to the 75%.
However, a much better option is the Eastern model of authoritarian capitalism or the "Singaporean" model. A nation can still receive the efficient allocation of resources to the right capital invesments via capitalism, but a Government can use its authoritarian powers to prevent the 75% from making the wrong decisions by laws, regulations and force. This way the 75% achieves the $202 million payout, and the whole nation has accumulated much more wealth than it would have under the purely capitalist society or the mixed socialist society.
you could also get hit by a car and die next month. anyone who didnt take the 2 mil is a fukkin herb 
