Being for the Benefit of Mr. Kite (and Mr. Smith, and Ms. Jones, and Mr. Williams, and…..)

by Don Boudreaux on June 18, 2006

in Music, Standard of Living

Lots of media are noting that today Paul McCartney turns 64 – notable chiefly because McCartney wrote and sang, as a Beatle, the song “When I’m 64.” Of course, many of these reports also mention Paul’s recent separation from his second wife, Heather Mills, and the fact that she’ll get a sizeable share of his fortune of $1.5 billion.

I don’t care about McCartney’s personal life, but I do love Beatles’ music. I’ve loved it since, as a five-year-old boy on February 9, 1964, I sat in my grandmother’s lap and watched the Beatles’ first appearance on The Ed Sullivan Show.

When I read of McCartney’s fortune, I’m struck by how puny it is compared to the amount of pleasure he’s contributed to humankind. Consider:

If each viewer of only the Beatles’ first two appearances on The Ed Sullivan Show deposited $1 into an account in return for watching the Beatles on these telecasts, this account would have had in it, on February 16, 1964, $143.7 million. (The number of people who tuned in to the Beatles’ February 9, 1964, appearance was 73 million; the number who tuned in one week later for their second appearance was 70.7 million. These data are here.)

If this money were invested at the historical rate of return earned by U.S. stocks, it would have earned an annual return, on average, of eight percent. Today, this account would be worth about $3.5 billion.

Divided equally among John, Paul, George, and Ringo, Paul’s share today would be $875 million – more than half of his current net worth. And this from only a small payment made 42 years ago by each viewer of a mere two episodes of an American television show. Add the value of the pleasures McCartney helped to bring to us from the Beatles’ other appearances on The Ed Sullivan Show – the value of the Beatles’ many live performances around the globe – the value of their many albums that continue (now mostly in CD form) to be played – the value of the Beatles’ movies such as “A Hard Day’s Night” – the value that McCartney’s music post-Beatles brought to countless people.

And the man is worth only $1.5 billion!  Because no one forced him to write and perform and record music, I’ll certainly not argue that McCartney is undercompensated. But I do insist that his net worth of $1.5 billion is paltry, puny, insignificant compared to his contributions to humankind.

Quite a bargain.

Be Sociable, Share!

Comments

comments

50 comments    Share Share    Print    Email

{ 25 comments }

SK Peterson June 18, 2006 at 1:39 pm

Don't forget all the money that went to "The Taxman". Even in the 60's taxation was apparently such that it inspired George's little gem: "Here's one for you, nineteen for me." Paul's $1.5 billion is paltry, but amazing, given how many tax authorities there were that were after the considerably larger sum he actually did earn.

Trumpit June 19, 2006 at 1:42 am

I suggest we all take up a collection for Poor Paul because clearly he's been cheated of his rightful due. So do the right thing now! Send him a check for $1 and don't forget to include the compound interest for the past 40 years. If you use a 100% interest rate, he'll own everthing on the planet. This post of yours is one of the most intellectually and morally shallow that I seen in quite a while. Just how to do you come up with such fatuous drivel? I would just like to know how one goes about calculating the quantity of pleasure or misery that Sir Paul has produced in the world.

Suppose I told you that my mother committed suicide after listening to a McCartney song because she knew her love for him would never be reciprocated. She smashed the Abbey Road album then slit her throat with the vinyl shard. It was a horrible way to go. Mom, I still miss you! I tell you that Eleanor Rigby was an evil witch as well! Paul's satanic lyrics were well know to us true Beatle fanatics. I can't tell you how many times I play the White album backwards. The Devil I say! The damage caused by rap music is mild by comparison. Paul, donate your fortune to Scientology immediately. The mass reprogramming must take place, starting with Dr. Boudreaux! His brain has to be made a clean slate if it isn't already. This can easily be accomplished by making him listen to "I Want to Hold Your Hand," a thousand times in a row while having him actually hold Paul's real hand for hours on end. The anti-Beatle aversion therapy will produce the desired results: a man who realizes that both guys holding each other's hand and the Beatles are just plain wrong! Four squashable roaches is what those mop tops were! Paul owes us all big time! The amount due all of us is incalculable!

Slocum June 19, 2006 at 7:45 am

On the other hand, Paul's non-monetary compensation has been enormous, and in that sense, the mere act of tuning in to watch the Beatles on Ed Sullivan *was* the payment (and a far more valuable form of payment than a dollar would have been).

If you asked people, "How much money would you require at age 64 to be willing to have lead the life of Paul McCartney?", I think you'd find many, many people surveyed would would answer that they'd be very eager to lead such a life even if they found themselves suddenly bankrupt at 64.

doinkicarus June 19, 2006 at 9:21 am

"I would just like to know how one goes about calculating the quantity of pleasure or misery that Sir Paul has produced in the world."

Trumpit – I don't think he's being benthamite in his assessment. If he were, he'd probably suggest that your mother's (hypothetical) misery was far outweighed by the net feeling of joy that most people associate with the Beatles. All he's suggesting is that the sheer quantity and magnitude of the beatles' influence appears to be a bargain if it's only currently worth $1.5B

Timothy June 19, 2006 at 10:18 am

I submit that Trumpit needs to grow a sense of humor, maybe switch to decaff.

Also, remember, that Michael Jackson does (or at least did for a long period of time) own the rights to the Beatles' collection of songs, so a lot of the monetary compensation over the last few decades went to MJ rather than the actual band.

Go Mets June 19, 2006 at 10:27 am

Balderdash!

Your analysis disregards the countless American rock musicians who lost their jobs becuase of the outsourcing of musical entertainment. That $1.5 billion could have stayed in America. It should have been the Four Seasons on The Ed Sullivan Show. Surely, Pet Sounds would have been a seminal album even if Brian Wilson was not driven by competition with Lennon and McCartney. The substantial increase in the number of American rock bands during the 1964-1967 period could have been even greater if not for outsourcing.

mark adams June 19, 2006 at 11:21 am

But Don,

money can't buy you love…

xteve June 19, 2006 at 12:13 pm

I, too, love the Beatles (& several of Paul's solo albums), & the joy he brought to me & others is uncalculable. & it compounds when you consider how much better music (& not just music) came from his influence.

But I think the bulk of his fortune was obtained by buying & then licensing other people's songs.

bbartlog June 19, 2006 at 1:37 pm

I think this is just one example of the colossal consumer surplus that exists in modern times…

Jason Briggeman June 19, 2006 at 9:11 pm

I'm most amused that Trumpit, fresh off the authoring of one of the most hilarious comments in Cafe history, is advised to "grow a sense of humor". Maybe, Timothy, you should grow a second hand…

william June 20, 2006 at 7:16 am

@SK Peterson: Income tax was actually much higher in general in the 60s than it is now, both in the UK and in the US.

Timothy June 20, 2006 at 10:11 am

Bah, what would I need that for? Pesky thing would just get in the way.

Half Sigma June 20, 2006 at 10:22 am

This is ridiculous. Paul is just the lucky victor of a winner-takes-all contest. If he didn't exist, someone else would have taken his place at the top, so Paul didn't do anything at all to deserve $1.5 billion.

Donald A. Coffin Donald A. Coffin June 20, 2006 at 10:53 am

Of course, they got paid for all of that…

John Dewey June 20, 2006 at 12:43 pm

william: "Income tax was actually much higher in general in the 60s than it is now, both in the UK and in the US."

In the U.S., the highest income tax rate on adjusted income may have been higher. But the overall tax burden was lower. Income tax receipts throughout the 60's were below 8% of GDP. For the past ten years, income tax receipts have exceeded 9% of GDP. In the year 2000, before the Bush tax cuts, income tax receipts reached an all time high of 10.2% of GDP.

Even though the top rates were higher, the federal income tax has become more progressive over the past 40 years. That's due in part to the Earned Income Tax credit as well as elimination of numerous tax shields.

Income taxes are only part of the story. In the 60's, social security tax receipts averaged 3.4% of GDP. Those taxes have now doubled to 6.8% of GDP.

Go Mets June 20, 2006 at 1:30 pm

"Paul is just the lucky victor of a winner-takes-all contest. If he didn't exist, someone else would have taken his place at the top, so Paul didn't do anything at all to deserve $1.5 billion."

That sort of relates to my point. If not for globalization, would the money have been earned by the likes of Frankie Valli, Gene Pitney, The Rivieras, and Fabian?

I like this particular example of glabalization because the positive effects (including explosive growth of the popular music industry) are obvious, whereas most of the time they are hidden. It would be ridiculous to envision Lou Dobbs reporting on Frankie Avalon slinking back to Philadelphia with his broken dreams because of foreign competition.

happyjuggler0 June 20, 2006 at 4:47 pm

I submit that the song "Tax Man" was what allowed Thatcher to radically reduce marginal tax rates and allow the UK economy to recover from the socialists destruction of its economy.

She may well never have had the popular support she did without that jingle giving people an understanding of the absurdity of punitively high tax rates.

All of the Beatles are owed a debt of gratitude by all of us for that song.

John Dewey June 20, 2006 at 7:25 pm

"This is ridiculous. Paul is just the lucky victor of a winner-takes-all contest. If he didn't exist, someone else would have taken his place at the top, so Paul didn't do anything at all to deserve $1.5 billion."

Half sigma, is that your view about everyone who combines hard work and talent to become extremely successful? Would you say the same about Tiger Woods, Oprah Winfrey, Richard Branson, and Michael Dell?

eludom June 21, 2006 at 5:51 am

I must point out, as I'm sure you probably know
that the lyric quoted in the title was penned
(actually cribbed from a carnival poster) by John.
Ahh, "just another 'day" in the life' of a
songwriter.

billyshears June 23, 2006 at 12:05 pm

Maybe the thing is that Sir Paul was a great songwriter and singer, but a poorly gifted investor, so he never got the retuns assumed by the poster.
Good for us all that he stayed with the guitar instead of finances.

Ken June 23, 2006 at 4:50 pm

"This is ridiculous. Paul is just the lucky victor of a winner-takes-all contest. If he didn't exist, someone else would have taken his place at the top, so Paul didn't do anything at all to deserve $1.5 billion."

Yes, but would that someone else have attracted the number of fans that the Beatles did? Ed Sullivan had a hell of a lot of people on his show over the years, and most of them have been forgotten, for good reason. Most people today remember Ed Sullivan himself more for having the Beatles on rather than the other way around… if Ed had only brought on the second-best acts, it's likely that neither he nor they would have attracted the number of fans that Ed and the Beatles nor would he or they be remembered today.

Does anyone know who Ed brought on his show the day after the Beatles? If the Beatles hadn't showed up, would the people who came on the next day be likely to be more well-remembered? I think not.

Delete the handful of talented people, and you don't get people that seamlessly "take their place". You get a wasteland like we observe in pop music today.

james23912 June 24, 2006 at 12:00 pm

143,000,000 in 1964 would be 3.5 billion today, an increase of 2500%. the Dow in Feb. of 1964 was exactly 800, so it should be 20,000 today. also, Paul may have spent some money over the years.

Ari June 25, 2006 at 2:29 am

But hang on, Don, we did pay for the honour of watching the Beatles on those episodes of the Ed Sullivan show way back when? – there were regular advertisements interupting my viewing pleasure (okay, so I was 18 years short of being born at the time, but the point stands). I've already 'paid' for the performance once.

You don't want to charge me again for the same service, do you?

Presumably also John, Paul, George and Ringo were paid for their performance. If they struck a poor deal at the time, then that's tough luck for them. Perhaps they should have held out for $73 million an episode. Then again, perhaps not. It is possible, of course, that they performed without charge in order to boost sales of their records, in which case they benefitted through their slice of sales.

Either way, we can be sure they haven't been short changed. "Hard Day's Night" my arse!

bsurkan July 3, 2006 at 5:30 pm

I think the greater tragedy is not that his contributions are only worth $1.5 billion, but that he has squandered the full rewards of his labours.

On the other hand, perhaps he has simply been more effective at hiding his savings from the tax man and the prying eyes of the public. Or, perhaps he is appropriately savouring his money while he still can, planning on spending it all by the day he dies.

Monsieur Legrandfromage January 31, 2008 at 12:54 am

Enough with the inane bickering, kids!
Here's a story for you:

Today I happened upon a lone goose, while walking around my neighborhood. I smiled, bid the goose a good day, then went on with my walk. I hadn't taken more than ten steps when, all of a sudden, the goose farted and suddenly exploded. I threw up on the ground and wrote "lucky" in it with a stick.

Oddly enough, the goose's fart smelled like olive loaf.

If there's a deeper meaning here, it eludes me to this very day.

Previous post:

Next post: