Friday, May 8, 2015

Crunching Productivity Numbers For America

Athrelon's post at More Right had me fooling around with the calculator again:

The hypothesis is that only a relatively small proportion of the population is actually causally responsible for economic growth. Unlike the original John Galt, I don’t think these people are so few in number they could hide a tiny village in Colorado. In fact I’m probably a little less extreme than Michael Vassar, who claims that about 1% of the population could run the entire economy. But it certainly seems that income inequality understates how much people vary in the ability to create value. Conservatively, one might estimate that a third of the population is necessary to run the economy.

Since I found that paper- Metcalfe's Law Is Wrong, and realized what was contained within it could be applied to real populations long ago, I suddenly realized I had an equation with which to evaluate this Weak Galt Hypothesis:

n * log(n)=319,000,000 (google currently places the American population at 318.9 million)

Unfortunately, there are huge gaps in my knowledge. Instead of simply and cleanly solving this equation, I had to do some ball park guessing and then hone in on an answer with my calculator program. If you know how to just solve this equation, please let me know in the comments. Anyway, I did come up with a number:


Or just about 15% of the American population.

Arguably the actual percentage of productive citizens in America may be lower, since the global dominance of the dollar and American finance tends to recruit all the productive people in the world to prop up our standard of living. There is a limitation to how far it can drop even with global support- we need productive people in proximity to us to actually provide us with stuff. I don't know if the shipyard strikes are still going on on the West Coast, but as far as I know, ships full of other people's products have been languishing upon the seas, and not getting to us, which provides some evidence that you need people at least functional enough to move the stuff.

What I find interesting about 15% is, although it is a low percentage, it would still be the same percentage if we were at the same population and doing quite well. Today, we can tell a huge chunk of us aren't the 15%, and a huge chunk of the 85% is downright destructive, but in a healthy society the 85% would be engaged in various forms of experimentation, and no doubt there would be a huge market in intangibles. Indeed, if one were to look to the past, and remember all the monasteries of the past, not as some means of oppression, but as providing certain intangible goods, one could begin to understand that the productive class may well stay small in relation to the overall population even in a healthy society.

So, if the larger, seemingly superfluous group innovates, then it becomes quite worth it to the smaller productive class, assuming those innovations provide improvements to one's quality of life. One can tell rioting does not provide much in the way of innovation. I do realize a lot of poorly educated people don't understand what the monks, or religion had to do with innovation, but if the historians of the future are honest, they draw a strong correlation between the loss of Christianity and the faltering of innovation, and strongly imply a causation.

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