Friday, October 16, 2015

Zero Sum Games

As my son has decided he wants to become a scientist when he is older, he has started watching a number of nominally science-related videos on Youtube. Some, as you would expect, espouse pretty fringe ideas, but he is pretty good at spotting them by now, and when he doesn't I lend a hand.  However, even those which present relatively mainstream topics in neutral ways sometimes tread into somewhat controversial ground, usually not when discussing their main topic, but instead when making asides, or simply establishing points "everyone knows". For instance, today he was watching a video about the efforts to extend human life -- well, so it was a bit more fringe science than most -- but one point in particular struck me as troubling. In discussing the problems of immortality, the presenter mentioned the old canard about "1% of the world's population controls 50% of the wealth", and argued with immortality there would "be no redistribution", essentially asserting that wealth is a static quantity that must be redistributed, or, to be more blunt, that some people are poor because others are rich. And that, though a common, and popular belief, is, in truth, absolutely false.

Let me be clear here, there are zero-sum systems. Government favor, for example, is a zero sum system, as is government power. If I have control over decision X, no one else does. If you gain authority over something I control, you can only do it by diluting my authority. Or, in the realm of government favors and patronage, let us say, if X has caused the state to enact a quota system favorable to him, for anyone else to benefit form these quotas, it must be at the expense of X. For every benefit or favor paid to one, some other must lose. This is why I have argued repeatedly the omnipotent state, systems of patronage and favor, all of the things liberals believe create better conditions for people, actually lead to nothing but strife, instability, infighting, anger, hostility, even revolt, revolution and death1.  If I can only benefit at your expense, it is inevitable we will find ourselves in conflict. If every benefit you receive must come at the cost of someone else, you will find you can only win through deception or coercion. Force and fraud, infighting and power plays, those are the only reality of a system based on patronage, and that is because patronage is a zero sum game.

Oddly, while people imagine the free market and capitalist wealth is such a system, nothing could be farther from the truth2,3. Wealth may be unevenly "distributed", just as is political power, but in the case of wealth it is because it was never "distributed", where it is now held is the result of past wealth creation. Those who hold wealth, the supposed 1% who hold some large percentage of the nation's or world's wealth -- depending on which canard you believe -- hold it because they added that amount of wealth to the world, or their ancestors did, or because they created some other good or service for which those who created that wealth traded. In short, wealth exists where it does because someone made it. 

Let us make this simple. Wealth is created. All those things that were used to generate wealth always existed in the world, but it took someone clever to put them together in a way that was useful to people. In short, someone took worthless rocks and sticks and dirt and other "stuff", and turned it into a car or a plane or a television. Or took a bunch of idle people and turned them into a means of supplying hamburgers or auto parts or cable television. And in so doing, that person added to the net wealth of the world. And that is why some small percentage hold such a large part of the wealth, because it is a rare individual who can add a huge amount of value, and so, those who add a lot of wealth are a very small minority. But, the fact that they have that wealth, that they added that much value, does not make others poor. It does not prevent you or I from trying to do the same. (Government often does, but not wealth creators, at least not in a free market4.) They are rich because they brought more wealth into the world, wealth which also served to improve the lives of all those who bought those goods or services.

If you doubt that wealth creation is not the result of some privileged starting place, or some advantage, think of this, Russia, and later the USSR, and now Russia again, has tremendous material wealth, while Singapore is terribly ill-provided with resources, and yet, of the two, Singapore has a much higher percentage of millionaires. Why? Because under the Tsars and Communists, and even now under its intrusive, cliquish government, Russia/USSR did everything it could to discourage wealth creation. While many other nations, including the United Kingdom and most of its Commonwealth states, were much more friendly to wealth creation. As a result, these nations tend to have much more wealth.

Let me be clear, the US, UK and others do not have more wealth because they stole it from anyone. It is not making other nations poor. It is simply the result of government which allowed individuals to create wealth. As a result, wealth was created, and accumulated, was passed down, and now forms the basis of a much higher standard of living, and much greater personal wealth. But it is not a zero sum game. Anyone could start tomorrow in some other land, begin accumulating wealth, creating new goods and selling them, and become more wealthy than anyone in the US, UK or elsewhere. Wealth is not gained by expropriation of others -- except by thieves and bureaucrats -- in the free market it is created. And wealth creation does not make others poor, it makes us all a bit richer.

Now why is this so hard for so many to understand?


1. "The War of All Against All", "Patronage", "Patronage Versus Choice", "The Other 99%", "The Case for Small Government", "Power and Disorder", "The Road to Violence", "In The Most Favorable Light", "With Good Intentions", "Bureaucratic Management and Self-Policing", "Chaotic Government", "Madmen, Tyrants and Big Government", "Common Sense,Philosopher Kings, Arbitrary Law and Dictatorship", "The Inevitable Corruption of Protectionism", "Misunderstanding Democracy", "Elective Government Versus Monarchy".

2 This assumes the market is truly free. To the degree it is regulated, it becomes more and more a system of patronage, and thus more and more like the political world, where conflict is the ordinary state of affairs.

3. "Competition", "The Basics", "Greed Versus Evil", "The Free Market Solution", "Two Sided Processes and Claims of 'Unfair' Outcomes", "A New Look at Intervention", "Selfishness as Reason - 'Wants', 'Needs', 'Fairness' and Other Guises for Arbitrary Decisions", "Weasel Words and Hollow Words", "The Limits of "Scientific" Management", "The Case for Small Government", "Fairness and the Free Market", "Capitalism and Its Consequences", "Another Look At Exploitation", "Third Best Economy", "The Gadarene Swine Fallacy", "Denying Reality", "The Threat of Perfection", "Utopianism and Disaster", "Two Examples of "Inefficiency" in Capitalism", "Misunderstanding the Market", "The Secret of Success, or, Why Government Fails", "Imperfect Competition, Abstraction and Anti-Trust", "Technology and 'Natural Monopolies'", "Unfair Advantage and Foreign Trade", "The Importance of Error", "Adaptability and Government", "Redundancy as a Protective Measure".

4. "Anti-Business Businesses", "The Free Market Solution", "There Are Other Solutions", "The Gadarene Swine Fallacy", "Business Licensing and Regulation", "Consumer Protection", "Really Silly Fears", "Inspections, Regulations and Bans", "Paradoxical Outcome", "Government by Emotion", "The Bureaucrat Who Cried Wolf", "The Problems With "Safe and Effective"", "Oven Mitts and Safety Regulation", "Consumer Protection, Cartels and the Failure of Regulation", "The High Cost of Protection", "Warnings and More Warnings - Another Look at Consumer Protection", "Two Sided Processes and Claims of "Unfair" Outcomes", "GMO Revisited - As Well as Hormones, Soy, Phytoestrogens, and a Host of Other Food Scares", "Fighting the Wrong Fight", "Fighting the Wrong Fight, Part II", "How Wages Work", "Some Thoughts on Medicine", "The Problem With Regulation".

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