The Good Society Episode 3: The Zero Sum Game

The Good Society Episode 3: The Zero Sum Game


One of the mistakes we often
make when we think about trade is to view it as a win lose
proposition, instead of mutually beneficial. This is the idea that success
can only come at the expense of others; for every winner,
there must be a loser. This is the fallacy called “the
zero sum game”, where we imagine the economy
as a pie. And if one person has a bigger
piece, that leaves a smaller piece for someone else. While this is sometimes the
case it’s not the general rule. The problem with the zero sum
game is that it fails to acknowledge the mutual
benefit of trade, and that the pie can grow. As productivity increases,
or as new inventions or innovations take off, the pie can expand. This means that everyone’s
share can get bigger. And this is what we call
economic growth. Over the last two hundred fifty
years, we’ve seen the pie grow at a rate unmatched in
history. In fact, in just the last 30
years, we’ve seen life expectancy doubled,
and the poverty rate cut in half across the globe. Of course a growing pie doesn’t
mean that things are perfect, and that everyone benefits
equally. We still have issues with
global volatility, technological disruption, pollution, and
poverty and exclusion resulting from crony
capitalism and corrupt regimes. These are all problems that
we must address. But to do so well, we need to
avoid the fallacy of the zero sum game.

Comments

  1. Post
    Author
    Brian Millsap

    I haven't looked this up, but I'm going to go out on a limb and say there's no possible way that life expectancy has doubled in the last 30 years. I'd really like to see a citation on that.

  2. Post
    Author
    Brent Little farm

    Croney capitalism? capitalism was the direct result of lifting 800 million people out of poverty in china alone. there are bad eggs in the basket but you cannot say all chickens who lay eggs are croney.

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