Monday, December 14, 2015

The economy is not a Zero Sum Game

A zero Sum Game is a situation where one person's gain is another person's loss.  Poker is a good example of this, considering the sum total of the winnings of one player equals the losses of all the other players.  It's any game, according to Dictionary.com, where the winnings minus the losses always equals zero.  Many people believe that the economy is a Zero Sum Game. This is a myth, and I would like to explain why.

Many people think the economy is a Zero Sum Game.  They believe if you have a rich person like Donald Trump, that every dollar he makes is a dollar taken away from someone else, or a dollar that is not available to someone else.  They believe that the rich do not need to spend their money, so it just sits in savings,and investments.  They have it invested in their million dollar houses and their boats.  It is not available for anyone else.

They believe if one person, or group of people (the rich, the 1%) has the money, if one person is hoarding it, that there's no money left for those who are looking for jobs; that there's no money to be distributed. They believe is the top 1% have 40% of all the wealth, that the rest of the population has to fight over the remaining 60%.

It is for this reason that progressives, liberals, socialists or fascists justify taking from the rich and giving to the poor, or redistributing wealth.  They do it to equal the playing field. They do it to give the poor an equal opportunity to have some of the money that the rich otherwise are hoarding.  This is why they constantly attack the rich as greedy and selfish.

The truth is, however, that the economy is not a zero sum game.  In order for the rich to enjoy their money, they have to constantly spend this money.  They have large houses, and so they must hire people, often at higher wages, to clean and maintain these houses.  They have airplanes, and they have to hire people to maintain them. So they are providing jobs for many people. They are creating work.

They are also constantly cycling money into the economy.  They are spending money on fuel to heat their homes, businesses, and planes.  They buy food.  They buy wedding rings.  They buy furniture.  They buy electronics, such as televisions and iphones.

Their money is not sitting in a lock box.  It is constantly being circulated in the economy.  This money is available to anyone who has a service, or a talent, that can be tapped into. This money is not distributed. If you want some of it, you have to earn it.  How much money you make is completely up to you.  If you work hard, if you are willing to relocate, if you have a talent, then you will make as much money as you want.

A good example here is the CEO of a hospital.  He makes triple digits.  I hear people complaining about this all the time.  They say things like, "It's not fair.  I make so little, and they make so much."  But it is fair, if you think about it.

One of my coworkers, I'll call him Dave, was a nurse.  While other nurses were content to just be nurses, and live on nurses wages, Dave was ambitious.  He went back to school.  He obtained a bachelor's degree in nursing.  Instead of stopping there, he went on to become a physician's assistant (PA). The next time I saw him he was a PA for a surgeon.

He didn't stop there.  He applied for and obtained a job as supervisor of surgery.  Then he applied for and obtained a job as vice president of the hospital.  He could have stopped there, but he didn't.  He applied for CEO of another hospital, and he got that job.  He was ambitious, he was willing to relocate.  Most people are not willing to do this. So it only makes sense that Dave should be rewarded.  He had a talent, mainly ambition, that should be rewarded.  He now makes triple digits.

You see, there is money available, and plenty of it.  If economics were a Zero Sum Game, people like Dave wouldn't be able to tap into the system.  They might as well just remain as nurses or respiratory therapists. But it is not a Zero Sum Game.  If you want to be like Dave, if you want to make more money, you have to have the talent, the desire, the ambition, of Dave.

You also have to be willing to take risks.  Dave took lots of risks.  He spend thousands of dollars to become educated, and the gamble was that this would pay off.  For Dave it did pay off.  Dave is now in the top 1%. Dave is now the envy of the poor.  Dave, and Donald Trump, and people like them, ought to be put up on a pedestal as examples of what can happen in America. They are examples of the American Dream.

This is what conservatives do.  This is what capitalism does.  Sure some people who take the risk, some with talent, will fall flat on their faces.  This is the risk. But many others will become the Donald Trumps and the Daves of the world.  The opportunity is there, you just have to tap into it.  The money is there, you just have to tap into it.

Liberals, however, and progressives, and socialists, and communists, and fascists believe, and falsely so, the economy is a zero sum game.  By teaching this, people develop an "it's not fair" attitude toward the rich, or toward those who achieve.  They think there is no money available, so they might as not even try to obtain it. So they become content to just be nurses and respiratory therapists. Some don't even try to get those jobs, and they sit around their homes waiting for a check to come from the government through government redistribution of wealth policies.

Look, I'm not mocking nurses and respiratory therapists or any other hard working American.  All those jobs are essential for the economic prosperity of the nation.  After all, I am a respiratory therapist.  I am not content with my job nor the money that I make, but I also don't have the ambition of Dave.  I also do not have the desire to sacrifice many years of schooling.  I am also not a risk taker. So it is my own fault that I am where I am in life.  And I am content with my lot in life.

Regardless, for those who want to tap into it, the money is available.  The economy is not a Zero Sum Game.