Friday, February 19, 2010

Exam 1 Comment 3: The World Is Not Zero-Sum

A zero-sum game is one in which there are winners and losers, but everything that is won by the winners is something that is lost by the losers.

Most games are not like that: even gambling in Las Vegas is not quite zero-sum because gamblers are walking away (often) having enjoyed what they were doing.

A game in which the sum of what the winners and losers get is positive is called positive-sum.

A lot of macroeconomic nonsense in purveyed by people who think that life is zero-sum: the poor are poor because the rich took something from them, and so on.

For most of human history, this may have been correct.

But … one of the big picture ideas that everyone needs to pick up in a college education is that economic growth is positive-sum: it is making people better off without making them worse off. Not on all counts, certainly, but on average, and very broadly.

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