Wealth Availability/Acquisition

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In summary, the conversation discusses the question of whether wealth is a zero-sum game, meaning that for one person to become richer, another must become poorer. While the discussion touches on various economic systems, the consensus is that wealth is not a zero-sum game due to the constant creation of new resources and innovations. However, there are some microcosms within economics, such as union negotiations, where wealth can be seen as a zero-sum game. The conversation also brings up the issue of how society views wealth and the potential for inequality, and the role of innovation in generating wealth.

Is wealth accumulation a zero-sum game?

  • Yes.

    Votes: 5 33.3%
  • No.

    Votes: 10 66.7%

  • Total voters
    15
  • #1
russ_watters
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This issue came up in another forum. The question is this:

Is wealth a zero-sum game?

By this, I mean is it required that in order for one person to get richer, another must get poorer in any economic system because the amount of wealth available is constant (at least with respect to population)?

Please note, though the discussion will inevitably turn to capitalism vs communism, the question is more broad and includes both. Certainly many people believe capitalism works this way in practice, but I want to know if all systems must work this way due to an inherrent limitation in the amount of wealth available.

I'll just let the poll go for a little while - naturally I have an opinion I wish to discuss and a point to make.
 
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  • #2
Yes...and no.
 
  • #3
absolutely not.
 
  • #4
No, because the amount of wealth is not constant. Unless if you are talking relative wealth...
 
  • #5
I mean, obviously, it is not required...but it can very easily happen.
 
  • #6
No. Imagine trying to gain wealth, having already 90% of the world's economy as opposed to .00000000001%. The efficiency of investment relies on the uncertainty it instills in the extremes of overall economy (among other factors). Moderate wealth encourages greater relative accumulation of value.
 
  • #7
There is obviously a limit to the amount of total available wealth, at any given moment, and also that the amount of wealth can change up or down. The real question is whether unlimited growth can be sustained indefinitely, and at what cost.
 
  • #8
Duh, is there any doubt?

Open an economics textbook, any textbook ...

Or, use a favourite technique of mathematicians, assume wealth accumulation is a zero sum game ... leads to manifestly absurd conclusions (or, blindingly false statements about the world), ergo ...

The tragedy is there are also well proven ways to destroy wealth, and they're always to hand whenever you feel envious or wish to emulate the dog in the manger ...
 
  • #9
Greetings !

My answer is mostly yes and partially no.
What I think the real issue in any society of
any level and "wealth" is - is what that society
THINKS of wealth and the various levels of it.
You could be a bushman in the desert with your little
clan and feel happy with what you are and you could
be living in a concrete house with incredibly complex
electronic devices all around and feel like ****
because your neighbour got more of'em electronic devices. :wink:
So the real question, I believe, should be - how
is society to be educated so that the maximum possible
amount of individuals is satisfied, without enforcing
anything or brainwashing people in a negative way in the
process (though "negative" is also a relative term).

Live long and prosper.
 
  • #10
I pretty much agree with Zero's and drag's posts.
 
  • #11
*whistles*

***waiting to see Russ's point***
 
  • #12
I say no for the sole reason that wealth can be created. You can have an original idea for a product or service that doesn't pull money away from other sectors.
 
  • #13
I think that any initial state of society will evolve into a stratified one where there are haves and have-nots. Whether you call that upper class "the rich" or "the party" or "the chiefs and shamans" it's the same story.
 
  • #14
I guess inflation could give a false sense of wealth (at least in the short term to pay off debts). William Jennings Bryan advocated unlimited coinage of silver at a ratio of 16:1 to gold. It never worked though, and America soon therafter passed the Gold Standard Act of 1900.
 
  • #15
In the long run, obviously not. Compare the net wealth of the world now to 1000 years ago. There are some microcosms in economics that are zero sum games, though. A union bargaining with management over salaries is an example. There are enough of these to justify the opinion that, quite often, the rich are rich because the poor are poor.

Njorl
 
  • #16
Well, this is encouraging, yet vaguely disappointing.

Yes, of course the quantity of wealth available can't remain constant unless resources are limited. The one thing many people forget though is that coal, oil, and other things we pull out of the ground aren't the only resources. The 40+ hours a week I work is a resource. Even the sun is a (underutilized) resource.
I guess inflation could give a false sense of wealth
That's true, inflation must always be taken into account. However, in the US anyway, all income groups have been increasing faster than inflation for at least the past 40 years.

And China, with stagnating (negative?) population growth and double-digit GDP growth is showing a similar trend (though those at the bottom in China are likely not seeing any of the benefit).
 
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  • #17
One big perception problem is how wealth is generated. Most wealth is generated by innovation. It is not just high tech stuff like lightbulbs or computers either, crop rotation was a fabulous, wealth-producing innovation.

The problem is, every innovation displaces people. The displaced suffer while the rest of society benefits. Innovators reap huge rewards if they can patent their work, the masses usually benefit modestly from lower prices, and a small segment suffers. We tend to blame those who suffer, but usually they are just the unlucky losers of a reverse lottery. In the past, these problems were solved by the displaced people dying out. Life was short, and innovation was slow.

Today, innovation comes at a rapid pace, and people live a long time. This means that a significant portion of society is displaced at any time. Fortunately, we are much better about what to do with people displaced now. There is a class though, who benefit disproprotionately from this state of affairs.

Those who make their living through investment are reaping ridiculous fortunes. I'm not talking about the entrepreneur who starts a business to fill a need that is not being provided. That person is just as much at risk of being "out-innovated" as anybody else. I'm talking about those who simply shop around for businesses to fund. Those who live solely by the work their wealth does for them prosper disproportionately from the state of affairs that causes significant hardship for many people. For this reason, capital gains taxes are amply justified. Income from labor is essentially just productive for society, while income from investment is both productive and destructive, essentially two steps forward and one step back.

Njorl
 
  • #18
I'll just let the poll go for a little while - naturally I have an opinion I wish to discuss and a point to make.
Can you make your point, now?
 
  • #19
Originally posted by Njorl
Those who live solely by the work their wealth does for them prosper disproportionately from the state of affairs that causes significant hardship for many people.

For this reason, capital gains taxes are amply justified.
"Old money." I'm not sure I see how that harms anyone (investments are what create businesses in the first place), but certainly it means they get a free ride through life. I'm not sure what, if anything, can/should be done about it though.

Capital gains are often seen as a way to stick it to the rich man, but to the type of person who you are talking about, that's relatively unimportant (and there are only a relative handful of "old money" types anyway). Bill Gates for example (yeah, he's "new money" but it just so happens most of his income is from the stock market too) is worth something like $50 billion depending on the stock market. Of that, he may spend 10% by the time he dies if he really works at it. As a result, only 10% gets taxed. The middle class retiree plans to spend most of what they saved up during their life in retirement. As a result, they end up paying capital gains taxes on most of their investments. I really think that for the benefit of the middle class retiree who was responsible enough to save his own money for retirement, there should be a cutoff under which capital gains do not apply. Somewhere in the neighborhood of $100k a year. Not only would that stimulate the economy by promoting investing by the middle class, it would give them an incentive to save for their future - making them less of a burden on government (and their children) when they are older.
Can you make your point, now?
Well actually, since this forum leans so far to the left, I expected more answers on the "yes" side. I also expected more of the anti-capitalism sentiment to manifest there, since for some reason there are a lot of people who think communism doesn't need to follow the laws of the universe. Basically, that was my hypothesis. And it was wrong.
 
  • #20
Russ: *SNIP I also expected more of the anti-capitalism sentiment to manifest there, since for some reason there are a lot of people who think communism doesn't need to follow the laws of the universe.
What was it that lead you to think that communists/socialists/Marxists/etc believe wealth acquisition is a zero sum game?

Even Mao Zedong (Mao Tse Tung?), at the height of one of his maddest schemes (the Great Leap Forward, 1958-1960) explicitly sought to overtake the UK in steel production (for example) by liberating the productive forces and genius of the people, which were otherwise being exploited and suppressed by the evils of wealth distribution and residual capitalist thinking (I'm skating over a dozen important details, but broadly is OK).

[Edit: corrected date for Great Leap Forward]
 
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  • #21
Originally posted by Nereid
What was it that lead you to think that communists/socialists/Marxists/etc believe wealth acquisition is a zero sum game?

To put things in perspective, I had Zero explain to me one time that working hard being directly proportional to one's success is a complete fallacy. The reason he explained was that anytime you go up, someone else goes down...thus a zero(no pun intended) sum scenario. This sentiment has been echoed in different threads since my joining, by different people. I'm surprised by the results of this poll myself.
 
  • #22
Originally posted by phatmonky
To put things in perspective, I had Zero explain to me one time that working hard being directly proportional to one's success is a complete fallacy. The reason he explained was that anytime you go up, someone else goes down...thus a zero(no pun intended) sum scenario. This sentiment has been echoed in different threads since my joining, by different people. I'm surprised by the results of this poll myself.
I see. Well, I can't speak for Zero, nor do I recall contributing to those other discussions, but the distribution of wealth is a different topic altogether. In many a colonial situation, wealth may have been created by the ruthless exploitation of the 'natives', but it certainly was distributed unequally.

Interestingly, IIRC, there are economic theories which show that, ceteris paribus, net wealth acquisition is better, faster, (etc) if wealth distribution isn't too extreme. Have you heard of the Gini coefficient? Maybe we should ask Nachtwolf what the correlation between the Gini coefficient and the wealth and poverty of nations is :wink:
 
  • #23
phat explained it quite well. Marxism implies a zero-sum game.

I can certainly see how an unequal distribution can sometimes be a bad thing: if the people you are selling your products to can't buy them, then the economy doesn't run. But there is a problem with that: the US has about the largest inequality of any developed nation, yet it also has relatively low poverty levels and high per capita incomes.

The resolution to that problem is that the very unequal wealth distribution is only really bad if you assume an equal average income between your examples. Other countries don't have a Bill Gates, but they also don't have so called "poor" people buying $100 Air Jordans.
 
  • #24
Originally posted by phatmonky
To put things in perspective, I had Zero explain to me one time that working hard being directly proportional to one's success is a complete fallacy. The reason he explained was that anytime you go up, someone else goes down...thus a zero(no pun intended) sum scenario. This sentiment has been echoed in different threads since my joining, by different people. I'm surprised by the results of this poll myself.
Well, you missed my point, which is probably why you are surprised, huh?

I'm not surprised, though...not a bit.
 
  • #25
Originally posted by russ_watters
phat explained it quite well. Marxism implies a zero-sum game.

I can certainly see how an unequal distribution can sometimes be a bad thing: if the people you are selling your products to can't buy them, then the economy doesn't run. But there is a problem with that: the US has about the largest inequality of any developed nation, yet it also has relatively low poverty levels and high per capita incomes.

The resolution to that problem is that the very unequal wealth distribution is only really bad if you assume an equal average income between your examples. Other countries don't have a Bill Gates, but they also don't have so called "poor" people buying $100 Air Jordans.
I don't think any of us define "poor people" as those who can only buy one pair of $100 shoes, Russ.
 
  • #26
Russ: phat explained it quite well. Marxism implies a zero-sum game.
Not wishing to defend Marxist economics (it would seem it's not a very good economic theory), and making no comment or implication on Marxism as political or sociological theory, I would be interested to see where you think the implication lies. Certainly such leading Marxist practitioners as V. I. Lenin and Mao Zedong acted as though they believed Marxism was NOT a zero sum game.
 
  • #27
Russ: The resolution to that problem is that the very unequal wealth distribution is only really bad if you assume an equal average income between your examples. Other countries don't have a Bill Gates, but they also don't have so called "poor" people buying $100 Air Jordans.
Actually, it matters far more than that.

Let's talk about percentiles within an economy ("country"), and convert to real, living humans later.

What's the gap between the richest and poorest 'rich' economy? We should take the 50th household income percentile (expressed in real PPP units); a proxy would be per capita GDP. This gap is ~2; the US' per capita GDP is ~2x that of the 'poorest' rich economy.

Next, relative incidences of 'poverty'. If the 50th percentile household income is 100, what is the 10th percentile, in the rich economies?

Then, take that table and scale by relative wealth of the economy (e.g. set the US' 50th percentile at 100; the poorest economy's then becomes ~50).

What do you find? Despite the fact that the US is the world's richest economy, the 10th percentile households in the US are among the poorest of the 'rich' economies.

And here's the real kicker: because the US has such a large population, relative to all other 'rich' countries, the poor folk in the US comprise much (most?) of all the rich world's poor!
 
  • #28
Not wishing to defend Marxist economics (it would seem it's not a very good economic theory), and making no comment or implication on Marxism as political or sociological theory, I would be interested to see where you think the implication lies. Certainly such leading Marxist practitioners as V. I. Lenin and Mao Zedong acted as though they believed Marxism was NOT a zero sum game.
Exactly, I don't see that either. The rhetoric was always that of "Let us go forward together", or "Controlling the means of production", or repeating the mantra of "modernisation" to improve the total wealth of the nation.
 
  • #29
Exactly. What was to be "expropriated from the expropriators" was not their wealth, which wouldn't make much difference after being spread around, but rather those "means of production" - the factories and such. I am afraid that many Marxist thinkers didn't reason too far beyond that takeover, to see the need for ever newer factories for ever newer production. That is where the USSR fell down, but the Chinese seem to have taken the point and to be very much into "creative destruction".
 
  • #30
Originally posted by Zero
I don't think any of us define "poor people" as those who can only buy one pair of $100 shoes, Russ.
Well, good point - those who are inclined to buy $100 shoes are likely to buy more than one pair, poor or not. The point is that the way we define "poor" in the US lacks perspective of what it really means to be in need.

Nereid - too late at night to respond to yours. Tomorrow...
 

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