Money

With all the serious stuff going on in the world it seems high time for a light diversion onto a topic of relatively little relevance to current proceedings.

I’ve been reading Modern Railways again (dangerous habit) and in it the Informed Sources column makes comments about Railtrack kicking off in 1997 with debts equivalent to £790 million (£790,000,000) at 2014 prices. On the 1st of April this year, Network Rail (Railtrack’s successor) had debts of £31.7 billion (£31,700,000,000) – also at 2014 prices.

This is, within a small rounding error, an increase of £31,000,000,000.

This is for debts, not the entirety of current spending – along with debts, Network Rail has (and Railtrack had) income from Government and local authority grants, property rentals and of course track access fees.

This is a large number which for some reason I felt it would be interesting to try to boil down into something graspable.

Maths

Let us imagine that you earn £31,000 per annum. The odds are that you don’t earn that much, as the national median income last time I saw I figure that claimed to be the national median income and got committed to memory was £26,000, but let’s assume that you do.

Let us also imagine that for some remarkable reason you don’t have to spend any of this money and it all goes off into a bank account where it earns interest at the current Bank of England base rate minus 0.5% for your bank’s profit margin.

After 1,000 years you would have £31,000,000.

To place this into context, if William the Conqueror had received £31,000 every year from his date of birth and was still alive, he would reach £31,000,000 in 2028. (He would, however, have been a millionaire from 1060 onwards.) This is assuming that he didn’t blow his £31,000 per annum on raising armies, invading England, building military fortifications on greenfield sites, etc.

The wonders of compound inflation are of course such that in 1066 £31,000 would probably have gone a fair way to the entire conquest of England, whereas it will now get a moderate spender a mortgage on a £120,000 house – assuming they can find one.

Careful readers will however have noticed that the late Mr W. le Conqueror is still 3 zeros short of being able to pay off the debts laid down by Railtrack and Network Rail – which translates as meaning that he could only afford to pay off 0.1% of them. Obviously we need some more thrifty millenogenarians.

Maths II

So let us imagine that we have an ordinary secondary school laid out as follows:

  • 5 year groups (years 7-11)
  • 6 classes in each year, each of 30 pupils (6 x 5 x 30=900)
  • 1 class in each year, each of 20 more awkward pupils (5 x 20=100)

Let us take these 1,000 pupils and assume, for the purposes of cruelty, that they each work in a dedicated manner for 1,000 years and earn an average of £31,000 for each of those years. To give some grasp of context, if they were born in 1014 they would have seen:

  • Edward the Confessor build Westminster Abbey;
  • William the Conqueror invade;
  • The First Crusade;
  • Several subsequent Crusades;
  • The legal proceedings of the Millennium when the Order of the Temple was abolished to mark the end of the Crusades;
  • The Black Death;
  • The Wars of the Roses;
  • The Discovery of America;
  • The Dissolution of the Monasteries;
  • The English Civil War;
  • The Glorious Revolution;
  • The American War of Independence;
  • The Rise of Imperialism;
  • The Discovery of Evolution;
  • The Invention of the Computer;
  • Two World Wars;
  • The current Middle East crisis.

Alternatively, if they started out now they might just about have some sort of chance of discovering how the whole Middle Eastern Thing panned out in the end.

At the end of the 1,000 years (if we start now that will be in 3014) these 1,000 ex-schoolchildren on £31,o00 each would have between them 1,000 x 1,000 x £31,000 = £31,000,000,000.

Thanks to the ongoing wonders of compound inflation this should just about cover one year’s pension for one of them.

It is interesting to reflect that if someone is currently earning £31,000 they will pay around 30% of the “above £10,000” slice of this to the Government in direct taxation and National Insurance, which is around £6,000 per annum. Our 1,000 ex-schoolchildren will therefore (assuming no further changes to the tax structure) pay around £6,000,000,000 in taxes.

Over a 1,000 year period.

How the bananas does the Government afford to pay for anything when its working population of around 30,000,000 only work for 45 years each and mostly for nothing like £31,000?

(That’s presumably where that deficit-thingy came from.)

___…___

(Actually, in answer to that last question, I decided to multiply the figures up. 30 x 45 = 1350. Multiplied by 31, it comes out as (1350 x 10 x 3) + (1350 x 1) = (13500 x 3) + 1350 = 40500 + 1350 = 41850. The various zeros (all 9 of them) left off for reasons of tidiness are then all put back on to get 41,850,000,000,000 – or £41.8 trillion. This could be earned by a simple person on £31,000 per annum if they worked for a mere 1,350,000,000 years. Obviously there is either something badly wrong with my maths or it’s a good thing jellyfish didn’t begin their tenure of existence by inventing money. It also mildly inconveniences the silly point at the end of the article, though one must ask what sort of Government can’t survive on £41 trillion per year.)

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