It's fairly easy to figure out who the wealthiest person in the United States is. Just look at the Forbes 100, and you see it's Bill Gates, worth $67 billion. Carlos Slim, the Mexican titan, is worth $73 billion, a measly nine percent more. And with a bit of Googling, you could find similar answers for people across history. The famous Roman politician Marcus Crassus was thought to be among the republic's wealthiest, with a net worth of 200 million sesterces. Fast forward through time, and John D. Rockefeller is said to have had a peak of $1.4 billion in 1937.
Comparing these fortunes across time and geography poses plentiful problems, though. It's obviously a big challenge to convert sesterces to dollars. But it's also difficult to compare Rockefeller's wealth with Gates' and Gates' with Slim's. The essential question is not how much money you have, but what can you buy with it, where you live and when you live. Slim can buy a lot more in his home of Mexico than Gates can in the United States. Not an easy thing to compare.
Branko Milanovic, a top inequality economist, has come up with a smart idea to make sense of this conundrum in his new book, "The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality." He writes:
We do not have an exchange rate that would convert Roman sesterces or asses or Castellan seventeenth-century pesos into dollars of equal purchasing power today. Even more, what 'equal purchasing power' might mean in that case is far from clear. 'Equal purchasing power' should mean that one is able to buy with X Roman sesterces the same bundle of goods and services as with Y U.S. dollars today. But not only have the bundles changed (no DVDs in Roman times), but were we to constrain the bundle to cover only the goods that existed both then and now, we would soon find that the relative prices have changed substantially. Services then were relatively cheap (because wages were low); nowadays, services in rich countries are expensive. The reverse would be true for bread or olive oil.
Thus, to compare the wealth and income of the richissime in several historical periods, the most reasonable approach is to situate them in their historical context and measure their economic power in terms of their ability to purchase human labor (of average skill) at that time and place.
So for Crassus, Milanovic estimates that given his wealth of 200 million sesterces, his annual income, at a 6 percent interest rate, was 12 million sesterces. The average annual income of a Roman at the time was roughly 380 sesterces, so Crassus' income equaled 32,000 Romans.
In Rockefeller's case, his assets of $1.4 billion, assuming the same rate of return, would yield an income equal to 116,000 Americans in 1937. And in Gates' case, his wealth (in 2005) was $50 billion, or $3 billion annually, which when divided by 2005 gross domestic product per capita of $40,000 yields 75,000 workers.
Milanovic concludes that Slim is, by this definition, the richest of all.
"His wealth, also according to Forbes magazine, prior to the global financial crisis in 2009, was estimated at more than $53 billion. Using the same calculation as before, we find that Slim could command ...some 440,000 Mexicans. So he appears to have been, locally, the richest of all! No stadium in Mexico, not even the famous Azteca, would come close to accommodating all the compatriots Mr. Slim could hire with his annual income."