The number $2800 has been popping up in a lot of my Internet feeds lately. That, allegedly is the amount by which Elon Musk could enrich every American if he gave his trillion dollars away. I conclude that a lot of people on the Internet are very bad at arithmetic.

Apparently what these people have done is to take a trillion dollars and divide it by 350 million Americans. That’s the wrong calculation. Here’s why:

I doubt very much that Mr. Musk plans to spend a trillion dollars before he dies. Suppose instead that he plans to spend, say, a hundred million. Now suppose he gives away all his money (or we confiscate it) and he reduces his lifetime consumption to zero. That leaves an extra hundred million dollars worth of food, clothing and fuel for the rest of us. Divide a hundred million dollars among three hundred and fifty million Americans and you get not $2800 per person, but 28 cents. That’s how much extra stuff the average American can now buy.

Whatever Elon gives to John, Paul and George must ultimately come from Elon. What’s available to others is capped by what he sacrifices.
In fact if you confiscated, say, half of Elon’s wealth and he chose to go right on consuming at the same rate, then the total value of what you could redistribute would be exactly zero.

What if you ignore all that, take Mr. Musk’s trillion dollars and redistribute it anyway? Or what if Elon himself ignores all that and decides to give a bunch of money away? The answer, in either case:: We all get $2800 checks, we all feel richer, we collectively try to buy an extra trillion dollars’ worth of stuff, there’s only an extra hundred million dollars’ worth available, so prices and/or interest rates adjust to the point where your $2800 check can purchase only about 28 cents worth of goodies.

Now we’re out of the realm of arithmetic and into the realm of economics. But even an economic illiterate ought to be able to recognize that you can’t create something out of nothing. Unless you’re simultaneously doing something to increase output (and if you have the secret to that, then why weren’t you doing it all along?) you simply can’t give away more than Elon forgoes. And what he forgoes is measured not in dollars but in goods and services.

In fact if you confiscated, say, half of Elon’s wealth and he chose not to cut his consumption at all in response, then the total value of what you could redistribute would be exactly zero.

Arithmetic tells most of the story; economics fills in the details. More economic literacy would be nice, but more literacy in arithmetic would suffice to curb a lot of nonsense.