Wednesday, March 21, 2007

A little math for you

Which is better:  10% growth or 3% growth.

Answer:  It depends on what’s growing.

 

If you start with $1 and have 10% growth, you end up with $1.10.

If you start with $10 and have 3% growth, you end up with $10.30.

Which grew at a faster rate?  The first one did, clearly.

Which would you rather have?  The second one…  but maybe not so clearly.

 

The difference between $1 and $10 is $9.

The difference AFTER the growth is $9.20.  The “lower” growth RETURN is actually much more than the higher growth RETURN.

 

The thing is, if both continue to grow at the same pace, the gulf only gets bigger and bigger.  That’s simply how it goes.

 

The point?  It’s a lie to say that “the 10% growth of Nordic economies dwarfs that of the United States” or some similar economic line.  It’s just a lie.  We hear that about the Indian economy and China’s economy and others.  The numbers just don’t support the implication that the US economy will be overtaken by another any time soon.

Don’t believe percentage statistics.

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