Umm, no.

Within 10 years, the Gates Foundation is projected to have a GDP bigger than 70 per cent of the world’s nations.

The Gates Foundation won\’t have a GDP of course.

But even if we were to compare the size of the fund to the size of a country\’s economy it would still be nonsense.

So, to set up, we\’ll say that the Gates Fund will have $70 billion in assets (Bill\’s plus Warren\’s). OK.

There are approx 200 nations so the one dividing the bottom 70% from the top 30% will be the 60th (this is all very rough of course).

Country 60 seems to be Qatar with a GDP of $84 billion.

So, clearly, the Gates Fund will not have as assets more than the GDP of the bottom 70% of nations. The 61st, Angola, on its own is nearly there.

But we should go further. Assets are a stock, GDP is a flow. What is the flow to the Gates Fund? 10% would be rather a high return for I doubt very much that it\’s heavily invested in stocks or commodities etc. Bonds, short term commercial paper, Treasuries, sounds much more likely. So let\’s assume a 5% return. We can wibble about that but it\’s somewhere near the truth.

$3.5 billion a year is now our number which should be compared to the flow of a country\’s GDP.

Hmm, country 147, Barbados, manages that on its own.

Umm, using one list we actually find that the bottom nine countries have a GDP, in toto, of $3.8 billion.

More than the Gates Fund.

So, far from the Gates Fund being larger than 70% of the world\’s nations it looks like it might be larger than the smallest 5% nations added together. Or, if they are to be counted individually, larger than 25% of the world\’s nations.

But wait! We can go further!

Berkshire Hathaway has some 233,000 employees, Microsoft 90,000. The wealth in the fund has been created off the back of them. Just because I can\’t be bothered to look it up let\’s say that it\’s 50% of the total stock of those companies. So, we\’re talking about the wealth made by some 160,000 people here….or the income made from the wealth of 160,000 people. But most societies only have about 50% of the population actually doing anything contributing to GDP so let\’s again, just for simplicity, say that this is equal to 400,000 people in a country.

400,000 puts us at around country 175 or so, Brunei, Bahamas sort of level. Oh, the Bahamas has a GDP of about $7.5 billion.

So, err, the income from the wealth of 400,000 rich world people equals about the income from the wealth of about 400,000 rich world people (assuming the Fund gets a 10% return).

Yes, yes, a lot of dodgy assumptions there but the general point is true. The Fund is simply not all that large in comparison to the GDP of countries, it\’s actually not all that far off the GDP we would expect from a similar number of rich world people whether they were working as a company or as a country.

Quelle surprise really. The productivity of rich world people seems to be the same as the productivity of rich world people…which of course is why they\’re all rich world people.


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