Improspectives

On January 23, 2014, the International Monetary Fund (IMF) released a paper citing income inequality as a threat to economic security in developed and developing countries. In part, they found that:

• Income inequality has increased in both advanced and developing economies in recent decades.
• There is growing evidence that high income inequality can be detrimental to achieving macroeconomic stability and growth.
• Fiscal policy is the primary tool for governments to affect income distribution.

Unfortunately, the IMF declined to offer a solution, stating that “[t]his paper does not advocate any particular redistributive goal or policy instrument for fiscal redistribution.”

That’s where I come in.

Gettin’ Rich Ain’t Easy

Warren Buffett once remarked that if a person won $1 million flipping coins, he could sell a book entitled How to Make One Million Dollars Flipping Coins. His point is that some investors, regardless of how unskilled they are, will get lucky every now and then. We should not attribute everyone’s gains to great skill.

That said, there is a general pattern we can follow. People get rich by combining two abilities: making money and keeping money. The problem is that when you keep money it doesn’t flow through the system. Trickle-down economics in an age of hyper efficiency doesn’t work as well as it might. What we need is a low-impact system for wealth redistribution.

In the interest of creating up to 334 new millionaires every day, I propose a National Coin Flip Lottery. All 350 million Americans, regardless of age or income, must contribute one dollar per day to the lottery. We all need car insurance if we want to drive and we all need health insurance if we want to live, so this slight imposition is little more than an annoyance. If you have a Social Security number, you have to pony up.

Every morning at 5 AM Eastern time, a computer divides the database of American citizens into two groups: Heads and Tails. A representative flips a coin, probably a virtual coin because quarters come up heads slightly more often than tails, and eliminates the losers. The computer then randomly re-divides the population into halves and continues until we have 334 winners. That’s correct: after just 20 flips we will have 334 lucky millionaires.

The system collects $350 million every day, but the excess can fund lottery operations, reduce the national debt, and support a special lottery held every February 29. Let’s say we hold back $1 million of the $16 million excess from each drawing. There are 1,460 days between leap days, so we could give away enough money to create 1,460 new millionaires on that day alone.

Supporting the Public Interest

Just think about the positive social impact that creating 334 new millionaires every day could have on society. Yes, the less socially responsible winners would just blow their newfound riches and hope to win again, but quite a few of the lucky individuals will redistribute the wealth among their family and community. That level of liquidity would free up small-scale investments, provide competitive pressure for traditional lending institutions, and relieve poverty for a small percentage of the population every day.

It would be cruel for citizens to win 19 straight coin tosses and lose when they are on the cusp of being a millionaire. Therefore, I propose that individuals may enter a preference to split their prize at the $32,768 level or higher. If two individuals who are willing to split meet at a given level, they both automatically get the prize.

Given the raging expansion of gambling across the United States, with the quaint exceptions of Hawaii and Utah, this modest proposal fits comfortably into the American zeitgeist. Next February 29, join me in celebrating our new national holiday: Millionaires Day!