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February 14, 2015

Fundamental Concepts - Less Than Zero(sum) [Weirddave]

Someone last week requested this near the end of the fundamental concepts thread. I've never gotten a request before, but this is a good one, zero sum thinking defines one of the basic divisions between Progressive economic thought and reality. It's really quite simple.


Almost all Progressive economic theory is built upon the idea that economics is about how to divide a finite amount of resources, the analogy used is usually a pie. I like pizza better. Suppose you and I have a pizza, cut into 8 pieces, and we're splitting it. If I take 3 slices, you get 5. If I take 4 slices, I'm taking a slice from you, because you now only have 4, and so on (I get 6, 2 for you. You take 7, I'm left with 1. Et. Frickin' cetera). Progressive economics is all about how to "fairly" distribute the pizza slices. The sum of slices is finite, so we're just squabbling over their distribution.

Nonsense. If you understand free market economics even a little bit, you understand that we, you and I, may be standing over a single pizza, but we're standing in a pizzeria. The oven is hot, there's a bucket of sauce right in front of us, a zillion crusts are already rolled out on pans in the walk in box and there's a mound of shredded mozzarella cheese right over there. You want to take the entire pizza? Fine. Have it. I'll make 2 more, giving me 16 slices. If you don't like that, you'll make more pizzas, and then I'll make more, and so on and so on and so on. We're in a world of (for practical purposes) infinite resources, which gives each of us the opportunity to make as many pizzas as we want (create wealth).

Simplified: Suppose there is a village of 10 people. They're farmers, and each farmer has to grow one sheaf of wheat to make enough bread to live on. They work eight hours a day tending their farms, and each grows the sheaf of wheat needed to survive. One day, one of the farmers gets tired of the nothing but bread diet and decides to put in an extra hour of work each day planting and tending broccoli in addition to his wheat. Shortly thereafter he harvests 2 bushels of broccoli. Now, in addition to the sheaf of wheat that all the farmers have, the tenth farmer also has 2 bushels of broccoli. He's rich! And he got rich by taking advantage of his fellow farmers, right? He must have!

Nu-uh. Before the tenth farmer got entrepreneurial, the total wealth of the village was 10 sheafs of wheat. Now the wealth of the village is 10 sheafs and 2 bushels of broccoli. Where did that extra wealth come from? The tenth farmer created it out of thin air by putting in an extra hour of work each day! Seeing this, the other farmers pester him to trade wheat for his broccoli. He agrees, and splits one of his bushels of broccoli into 9 equal parts, and then trades each part to all of the other farmers for 1/9 of a sheaf of wheat each. Now we have 9 farmers with 8/9 of a sheaf of wheat and 1/9 of a bushel of broccoli, and one farmer with 2 sheafs of wheat and 1 bushel of broccoli. The wealth is distributed differently, and the tenth farmer is "rich" compared to the other farmers, but there are no losers in this scenario, because all of the transactions were voluntary (another fundamental principal of free markets). The tenth farmer has a little extra to put away against a rainy day, or to use to pay wages to a wandering man to grow even more food, or just to roll around in and say "WHEEEEEEE!". It doesn't matter. He created wealth. He grew the size of the pie. He baked another pizza.

Well sure Dave, you might say, that's a simplistic example, but we live in a world of 7 billion people, they can't all grow broccoli. Yes they can. The principle scales to infinity. Whatever it is that an individual creates, through his labor, through his imagination, through his art (it's not just physical labor that creates wealth, writing a book and selling it does the same thing, so does proposing a new theory or painting a picture), all of it is wealth created. Hell, a prostitute creates wealth. She creates a fuck that didn't exist before for a john who wants an orgasm. That fuck is worth something, and the john wants it so he pays for it with wealth he has accumulated by working an extra hour a day growing broccoli. Value is exchanged for value, through the medium of money.

It really is that simple.

Look at the world. Vast cities, sprawling farms, technological marvels, billions of cars, phones, computers and dollars. If life really is a zero sum game, where did it all come from? According to Progressive theory, none of this is possible. They'll say it was stolen from some victim or other, but follow that thought to it's logical conclusion. If the western world stole it's wealth from Africa, or from Indians, or from Whomever, than the Africans or Indians or Whomever still had to create that wealth in the first place. The fact that they could do so puts lie to the zero sum idea. The western world has removed coercion from the table, yet wealth is still being created voluntarily, by the Africans, and the Indians, and Whomever, and by the citizens of the west. Pizzas are flying off of the end of the oven's conveyer belt, and the Left is still trying to claim that those eating pizza are somehow stealing pizza from someone else. It's utter hokum.

Are you beginning to see how stupid an idea zero sum is?

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posted by Open Blogger at 10:32 AM

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