The Deal: U.S vs the Indians

This post from Ross Mayfield’s blog absolutely blew my mind:

Do we really understand exponentials? In 1626 Peter Minuit bought Manhattan for $24 of trinkets. Who got the better deal, Peter or the Indians? If you invested in 7.5% interest it would be worth a hell of a lot more than all of Manhattan today.

I did the math: (24)*(1.075)^381. Manhattan compounded yearly would be worth $22,224,711,000,000. Or compounded quarterly: 4.73442004 × 10^13 ($47.3 trillion). To put it in perspective, the entire yearly GDP for the United States today is like 13 trillion. If you’d put that money in the account and then took it out in 1790 and invested it into the Philadelphia Stock Exchange, or the New York Stock Exchange two years later, we are looking at such an ungodly amount of money that it’s not really even worth doing the calculation for (although I’d like to see it).

Which brings me to my ultimate point. We are just not meant to consider numbers and concepts of this magnitude–or at least not with any sort of ease. The reason that it feels “good” to believe in God is the same impulse that drives you to believe right off the bat which side of the land deal was better. It could probably be debated either way–because 1) New York obviously wouldn’t have been industrialized by native peoples 2) The wealth that that has brought in returns each year probably needs to be added to it’s worth today–but I have gone my entire life not considering it from that perspective. And I imagine that you have too; it certainly wasn’t mentioned in any of my class textbooks. Is it then pretty understandable that people have all sorts of absurd superstitious beliefs, unreal political dogma or cling to heuristics that are often wrong? And I think that’s why you can’t always win by rational argument or the presentation of evidence.

Written by Ryan Holiday
Ryan Holiday is the bestselling author of Trust Me, I’m Lying, The Obstacle Is The Way, Ego Is The Enemy, and other books about marketing, culture, and the human condition. His work has been translated into thirty languages and has appeared everywhere from the Columbia Journalism Review to Fast Company. His company, Brass Check, has advised companies such as Google, TASER, and Complex, as well as Grammy Award winning musicians and some of the biggest authors in the world. He lives in Austin, Texas.