The following is a thought experiment wrapped in a story. While the idea seems unlikely, if it were to happen, most of us would not find it unbelievable. Nevertheless, you have to admit you’d like to know what would happen if someone actually did this. Despite the title, this is a story about economics. Not just local economics, but an the entire body of macro-economics as it exists in our country today. But please don’t let that boring subject scare you away. I promise there are no charts, no graphs, no math, and not single mention of left or right, Democrat or Republican, or anything else to bore you to tears. It’s just a story that will make you think.
The old man made his way from the rear of the noisy crowd down the center aisle toward the stage. He was dressed in a well tailored suit that had seen better days. His hair, what was left of it, was white, ruffled and arranged with a comb-over. Though no one left on earth knew his precise age, his wrinkled face and bent-over posture suggested he was in his final years. As he sauntered toward the front with a characteristic limp, he still managed an air of dignity. Halfway down the aisle, he stopped and wiped his brow with a handkerchief and switched the small suitcase he carried to his other hand.
Three days before, the mayor of the small community called the town meeting allowing time to get the word out to all citizens. The city council had announced plans to vote on a substantial tax increase and the public outcry had been beyond anyone’s expectations. Predictably, several boisterous factions emerged, but what was not expected was the animosity and vitriol present in the once peaceful community. Fights had broken out in the streets. Threats to personal safety had skyrocketed. Signs appeared on all public thoroughfares, many with vulgar messaging.
The once thriving little town, having lost most of its major employers, was struggling financially, but surviving. Most of its residents found work in the larger towns nearby. While some were on public assistance or otherwise relied on a fixed income such as social security, most would be planted firmly in the middle class, leading happy, healthy lives.
Their town had all the benefits of a rural community. Some described it as Mayberry, USA. Low crime, low cost of living, and no rush hour traffic, were the hallmark of the sleepy little town. Yet, its residents had access to all the culture and benefits found in big city life with a 45 minute drive to the large city of nearly 400 thousand 50 miles away. The total population was steady at approximately 21,000 people. It had a small police department, adequate fire protection, one high school and several middle and elementary schools.
The city council had recently come under pressure from some vocal activists demanding more services from the city. It seemed that for some, despite their relatively stable, but modest lifestyle, the local government wasn’t providing enough for its citizens. Most of the outspoken ones were relatively recent transplants from the larger city nearby. They had moved to this bedroom community seeking a quieter, less expensive, and safer lifestyle, but for some reason the trade-offs for these benefits escaped them. But even many of the long time, older residents were attracted to their message. The demands ranged from the modest to the absurd and typical in their way of seeking special consideration for their own little pet causes.
“We want parks to allow our children a safe place to stay and to walk our dogs.”
“We want sidewalks everywhere.”
“We want public transportation.”
“We need an an arts center.”
“We want free daycare for our kids and older citizens.”
“We want a dog park.”
“We have too many potholes. Fix them now!”
“Our street lights aren’t energy efficient. Replace them with LED lights to save energy.”
“We want trash pickup increased to twice per week.”
The town-hall meeting was arranged, not as a public debate, but as a platform for clearing up misinformation and stating the plans by the city to address the grievances of its citizens. Expecting a large crowd, the meeting was scheduled on a Friday evening at the high school football stadium, the only venue large enough to accommodate the expected crowd. The mayor had solicited help from all nearby law enforcement agencies to keep the peace during the meeting.
It had begun like other public meetings, with the mayor addressing the crowd, pleading with them to remain civil and to respectfully listen to their scheduled speakers. After the inevitable adjustment of the screeching PA system, each of the speakers approached the microphone to make their points. Council members pled their cases, both for and against the tax increase. As expected, the crowd was somewhat noisy, but generally respectful of the speakers. There were a few boos and some applause as they spoke, but the meeting remained orderly.
The mayor was hopeful that the meeting was educational and had relieved some unwarranted fears. He told the crowd that the vote for the tax increase would be held in one week. As he was thanking the crowd and about to dismiss them, he noticed the old man approaching the stage. Anyone who had been involved in the town government or civil organizations knew who he was. He had been the recipient of many awards and at times considered a pillar of the community. He had been a prominent businessman for most of his adult life. But due to his age, he hadn’t been involved in the last few years. The mayor was shocked to see him struggling to get to the stage. He hadn’t been invited nor had he asked him to speak. The mayor was a little embarrassed that he hadn’t thought to invite him, if nothing more than as an honored guest.
The mayor stopped his talk and gestured to his assistant to help the old man up the stairs to the stage. Just before gaining his first step on the stairs, he paused as he accepted an envelope from another old man in the crowd. This old man could not have offered a more stark contrast. Instead of a suit, he was clad in dirty old clothes. He was unshaven and clearly hadn’t bathed in recent times. His hair was unkempt. He was often seen around town asking for money with a sign indicating he was a homeless veteran. Taking the envelope and smiling at the old homeless veteran, he continued up the stairs to the stage. He smiled as he approached the mayor, with his hand out as a gesture of good faith. He said “Mr. Mayor, would you please allow me to speak. I promise I won’t take much time.”
“Of course sir, we would be honored to have you speak.”
“Thank you. Would you be so kind as to get me a drink of water. It’s hot out and this suit has me even hotter. That walk carrying this suitcase has caused me to be mighty thirsty.”
“Of course, but what’s in the suitcase sir?”
“Oh, don’t you worry young man. I can assure you there’s nothing to fear in this old suitcase.”
Motioning for his assistant to get the old man a bottle of water, he replied, “Of course sir. Allow me to introduce you to the crowd.”
“I’d prefer that you didn’t. There are plenty of people out there who know who I am. As for those that don’t, they will soon enough. So, if you don’t mind, I’ll just start talking if it’s okay with you.”
“Very well sir. Whenever you’re ready.”
The old man wiped his brow again and took long draught from the welcome bottle of cold water.
“Ladies and gentlemen, I hope you’ll grant me just a few minutes of your precious time. For those of you who know me, you’ll know I’ve been a citizen here all my life. I love this little town and I always will. For those of you who don’t know me, I beg your patience for just a few minutes.”
He took another drink from his bottle and watched as the restless crowd began to grow silent. It seems that everyone there could agree at least on one thing, giving the old man respect. His presence there on that stage somehow exuded confidence, dignity, and at least the deference allowed for people who commanded attention. And of course, the collective curiosity about the suitcase was nearly palpable.
“I’m 89 years old. I’m the last of my family, and though I was unable to have children, I’ve managed to be surrounded by some of the most amazing people any man could ask for. I’ve also been blessed with wealth and all its trimmings. As the owner of the last remaining car dealership in this town, I’ve had the good fortune to get to know many of you. I’ve always felt a call to help my fellow man so I’ve tried to do that. I’ve contributed both time and money in that quest. I’ve been in leadership positions in nearly every civil organization like Rotary, Optimist Club, and the Chamber of Commerce. I’ve served on the boards of many philanthropic organizations. As a wealthy businessman, I’ve often been the subject of solicitations for help in other ways too and I’ve nearly always contributed to those causes. I don’t tell you these things seeking praise or fame. Those of you who know me know that I’ve always remained humble. I do not seek fame or praise. I just want to give back. And today, I intend to do that again, but unlike all my contributions in the past, I will leave it up to you, the crowd here, to determine how I do it.”
The other speakers remained seated behind the old man. Their eyes were glued to him, anxiously waiting to hear his point. Most knew him well and they understood he rarely spoke without a purpose. They would not be disappointed. The crowd was the largest the town had ever had in a single event. The crowd was so silent that all anyone could hear was an occasional cough and the sound of the old man’s suitcase sliding as he pushed it forward with his foot. The old man still had a way of keeping the attention of an audience.
“As some of you know, I recently sold my car dealership. This week, as I witnessed with horror the behavior of this community as it contemplates how to govern itself in the future I made a decision. I decided to liquidate all of my assets, with the exception of my home. Some of you may know that I’ve lived in that house my entire life. Some of you often wondered why I didn’t sell it and move to something more “appropriate” for my level of wealth. My answer has always been the same. I never want to forget where I started.
After selling all of my stocks, bonds, and other assets, I was left with a sizable amount of cash. I set aside enough for me to live my remaining years in modest comfort. The rest is in this suitcase at my feet. This suitcase contains five million dollars in cash.”
There was a collective gasp from both the crowd and the speakers. The law enforcement officers, scattered among the crowed and the stage, shuffled with an enhanced level of attention toward the crowd as they all gazed at that little, scarred up, old fashioned suitcase, reminiscent of the 1950s, on the stage.
“I have one last contribution to make to this community, and as I said before, I’m going to let you decide how I do it. I will give you three choices. I can either give it to you all, I can invest it wisely as I have my own money in the past, but for the benefit of the city, or I can turn it over to your local government. It is up to you to decide. You see, I took a little extra money and before this meeting, I hired some local people who were out of work. I gave them one job, which was to count how many people were here. As I was walking toward the stage, they were among you, counting heads and making sure the count was as accurate as possible.”
The old man was a master at working crowds. He paused just long enough to allow the audience to absorb what he’d just said. Then he continued. “Now, I’m going to allow this crowd to determine what I do with this money — this small fortune sitting in front of us all. As I said, you have three choices, but before you decide, I ask that you hear me out for a few more minutes.”
Your choices are: First – I would re-invest this money as I always have, to grow but to use some of it on occasion to help this community. It would be an endowment to the city from a private foundation. The foundation would be managed by volunteers and absorb none of the principal or interest. Over the last forty years, I have managed to average over seven percent growth in my investments. This method would yield approximately $350,000 each year without losing any of the principal. It would in effect be a perpetual contribution. The money could only be used for municipal programs specifically identified by the foundation board volunteers.
The second option is this. There are exactly 4,976 of you here in this crowd. If I divide that up equally, that would be $1,004 dollars for each of you. Every man, woman, and child, can take home exactly $1,000 if this is your choice. There are many among you who could really use an extra $1,000. You could pay off a loan, maybe even a late mortgage or car payment. It would no doubt go to good use. Others of you might use it to by a new TV or some other gadget you’ve been wanting. I put no restrictions on how you would use that money.”
The third and final option is that I would simply donate all of the money to the city treasury and it would be up to your local governing officials to decide what to do with it. No restrictions at all. Those are your only options and I want this to be decided right here today.
He paused again for effect. This time there was a loud rumble erupting from both the stage as well as the audience. The police officers had grown decidedly more nervous and began to move closer to the stage in case they were needed. There were cheers, laughter, and delight as those less fortunate among the crowd imagined going home with $1,000 they did not expect. The old man allowed this to go on for nearly a minute, then raised both of his hands to quiet the crowd. Another minute and the crowd became silent once again.
“Now, before you decide what you want to do, you must humor this old man one last time and allow me to finish. Over the years, I contributed to this community in many ways. Sometimes, I gave cash to worthy causes like the Boy and Girl Scouts, Big Brothers Big Sisters, sports organizations, school bands, blood drives, children’s charities, food banks, homeless shelters, veterans groups – you name it, I’ve probably given some money to them.
Sometimes I give my time and advice by serving on boards or participated in other ways. Like most of you I’ve also contributed in indirect ways. I started or invested in over 12 local companies, each of which created jobs and put food on the tables of those who worked there. Some of those people were successful and went on to start their own businesses.
I’ve even contributed to government causes. But until now, I’ve never voluntarily offered money to any government entity. There are two reasons for this. One, because they didn’t ask. They simply took it without my permission, and two, because they are the least efficient of all methods of transfer of wealth known to man. And just so you know, if they’d have asked, I would have said no because I’d rather the money be spent wisely.
I have never once sought gratitude for my contributions. In fact, if you research the public archives, I dare say you won’t find a single picture of me handing a check to anyone or any organization.
Some might say I came about my wealth unfairly. This is nothing more than pure envy, particularly since those who make that claim don’t even know me or my story. No, I worked very hard for my success and it wasn’t at the expense of anyone. I swept floors, shined shoes, carried groceries, dug ditches, all while going to school. I learned much from my education but even more from my participation in business endeavors. I saved my money, and at each level of graduation in wealth, I risked nearly everything I had to make the new endeavors a success. I mortgaged that little house I live in more times than I’d like to admit. I was lucky though because most of those, though not all, were successful.
Now, as you ponder your decision about what to do with the five million dollars, think about the number of people that would have missed out on my help if I and others like me had simply spent all our money instead of carefully giving it and my time to others. How many would have gone without jobs? How many would have gone without meals and shelter? How many kids would have gone without a mentor and missed graduating from high school? How many people would have died or gotten sick without the health insurance I provided with the jobs I created? There are countless other questions I could ask you, but by now, you should be getting my drift. If not, I already know your answer. As for the rest of you there is more to consider.
You may be tempted to think that if I’d given my money to government instead, they would have been more diligent and precise and more fairly applied those resources more efficiently. You might suggest that my method of charity is simply unfair to those that didn’t benefit from my contributions. First, you should know that I banished the word fair from my vocabulary long ago. It’s an evil word that does nothing but promote envy. Any ten year old should have learned that life isn’t fair. Dwelling on a lack of fairness will only engender anger, envy, and fear and does nothing to to make things better.
Experience has always shown that governments are inherently inefficient. History is replete with the evidence. They are constrained by laws passed by those who do not have the public’s interest in mind, either by intention or by unintended and unforeseen circumstances. Always. Every dollar given to government will automatically have a thirty percent cost, just for overhead. After that, the inevitable fraud, waste, and abuse must be deducted. I’ll be generous in saying that is only ten percent. Then, it is usually left to an unelected bureaucrat to make critical decisions about which program to allocate those resources, many of which have their own pet programs. Because it isn’t their money, they’re more than willing to be generous to programs that likely can do without. It is for reasons like this that we have some people on public assistance who are perfectly able to work, but choose not to do so because they can get something for nothing. We cannot ignore human nature and its inevitable faults. No matter how much we legislate, humans will always find a way to circumvent obstacles to get what they want. Sometimes this if favorable, as in the case of entrepreneurs who succeed despite the obstacles put in play by governments. Sometimes it’s not favorable as is the case of those that seek to exploit the holes in government for their own enrichment.”
With that said, the old man paused yet again. He gazed out at the audience, somehow appearing to have made eye contact with everyone there. Then he turned around and looked at each of the people behind him. While some avoided his gaze, he made sure they all knew he saw them. It was as if he were staring directly into their souls and divining their intent. He finally turned back to the audience then reached down to pick up the suitcase. He could hear feet shuffling and people sniffling. Otherwise, the typical sounds of a large crowd were absent. Some were leaning toward others, whispering something in their ears. Others were just looking at one another, trying to glean what the other was thinking. It was an odd type of silence and it made nearly everyone there uncomfortable. He slowly pressed on the two buttons on the side to release the locks, slowly opened the lid, and held it up for the crowd to see. In it were stacks of bound uncirculated $100 bills, each representing $10,000. The suitcase was barely half full.
At last, the old man raised the microphone to his lips one last time. “So now you have it. You can decide right here and now. I have little doubt that each of my options has supporters among you, yet somehow you must come to a collective decision. You may be wondering how I intend to manage that. I’m not going to ask for a show of hands and count. I’m not going to ask my counters to pass out ballots. You see, if I ask for votes, that would be pure democracy, a method of which I’m not a fan. Democracy is the equivalent of two wolves and a sheep voting to see what’s for dinner. I could ask you to vote for a panel to decide for you, but you’ve already done that by electing these city council members behind me, so if I was in favor of that, I’d simply turn it over to them. But I’m not going to do any of that. I’m simply going to get up and walk away. I’ll leave one person whom I trust, to hand out bundles of $1,000. He will have a stamp to place on your hand to make sure some of you don’t try more than once.
If you all decide you want your $1,000 you can simply line up when I leave this stage, but please, not before. I will ask our law enforcement people here to make sure no one tries to walk off with the whole thing and to watch over suitcase until it is decided.
No doubt, some of you will choose the $1,000. But if you do, you must agree to have your photo taken so it can be published for the world to know that you chose yourself over your community. For those that want it, simply line up. For anything that is left afterward, I will leave it up to the rest of you to decide how to manage the remaining funds. Finally, I want to thank all of you who have contributed in your own ways to making this community a wonderful place to live. I hope and pray you do the right thing.”
With that comment, the old man closed the suitcase and put it back on the stage in front of him. He turned and waved to the crowd one last time as he approached the steps to leave the stage. He simply walked away as the crowd watched him in silence. He didn’t even turn his head. He simply left without further fanfare, leaving the crowd to determine the fate of the money. As he continued toward his car, he could not help but listen to the crowd to see how it would turn out. As he drove away, there was still silence in the stadium. He would wait until the evening news to find out.
It is interesting to contemplate the outcome, particularly considering human behavior as it it occurs in groups. Without an accepted mediator of some sort, what is the likely outcome? Perhaps it depends on your faith in humanity. Does mob mentality kick in where chaos and violence breaks out. Does someone capable of the respect of the crowd step up? If so, what if someone with their own agenda steps up and pushes it. Or could someone objective step up and attempt to gain a consensus of some sort?