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March 5th, 2019

USSR vs. Wal-Mart


1989 GDP: $2.7 trillion in 1989 dollars. By this calculator that would be $5.4 trillion today, and that's not touching nominal/PPP issues (or fake Soviet statistics issues).

1990 population: 291 million, with 152 million workers.

Economic activity: everything from farming to space probes.


2018 sales: $500 billion in 2018 dollars. Or $514 billion, for the fiscal year ending in Jan 2019.

2019 employees: 2.2 million.

Economic activity: a whole lot of super-sized grocery stores and distribution trucks.

Why am I posting this? Because people are praising some book that one reviewer says claims "we are now surrounded by companies and organisations that are as large or larger than the USSR at its apex", and I want to inoculate people against bad ideas. Given that 10% of my USSR GDP is still bigger than Wal-Mart...

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USSR vs. Wal-Mart, botec take 2

I like doing botecs or Fermi estimates, and I also like doing them in reverse, framing a number I already know. I'll be doing the latter here.

Say I want to estimate the GDP of the USSR, not trusting their numbers. I'll posit some facts: population of 290 million, rounded to 300 million (I assume they're less likely to lie about numbers of people.) Subsistence agriculture GDP/capita of $500/year. Modern US GDP $50,000/capita -- but we're talking about 1991, 30 years ago. I know US productivity growth has been meh, so let's say the US was $30,000 back then.

So, Soviet GDP will be a GDP/capita (equivalent) estimate times population. From childhood reading I think I also know something about the Soviet lifestyle and economy: concrete apartment buildings with steam heat and electricity, supermarkets, subways, cars, aircraft carriers. Also expenses like ICBMs and a space program. Yeah, they often had the inferior version of things, but an ugly clunky concrete apartment is still a lot of resources.

So what are some GDP/capita estimates? $1000 seems too low, barely above African poverty, if that. $5000? Sure. $15,000? That's half the US of the time -- we also know the Soviets were a lot poorer than America, so it shouldn't be *higher* than that. So 5k-15k, for a GDP of $1.5 trillion to $4.5 trillion. And for a single figure, I like taking the geometric mean, so $8660/capita, and GDP of $2.5-2.6 trillion.

Wiki says $9200 for the USSR, and Trading Economics gives $36-37K for the US of the time.

As for Wal-Mart, how much could it be making? How many people does it sell to, and how much? I know it started in the US, and failed to expand into Germany, which suggests it has tried to expand. It sells to lots of people, but not everyone. Famously it sells to poor people, so they can't be spending *that* much on it. Many people may go there for groceries and regular household expenses, which suggests $200-400 per person, or $2000-5000/year. How many such regular shoppers? 50 million is certainly a lot in US terms. The US alone can't be 300 million, but maybe it they expanded a lot abroad it could be.

So, 50 million * 2000 = $100 billion/year. 300 million * 5000 = $1.5 trillion. That's a big range! But unavoidable when you don't much. Geometric mean is $390 billion. Actual number is $514 billion. Not bad. The real figure suggests, at $3000/year per person, 171 million people. Wiki says it's in 27 countries and multiple brands like Asda... though this raises the question of whether the $514 billion was for the whole conglomerate or just "Walmart". Wiki suggests the former, whew!

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Damien Sullivan

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