[hmkpoker]

One of the things that I find very strange is that most people who do not know anything about economics (even the smart ones) tend to default to the position that the economy is zero-sum. I was talking to a friend of mine today who is an exceptionally bright fellow, but stays the heck out of politics and economics. The topic of the drastic increase of the number of billionaires came up, and he was quick to respond that this rise is bad for the middle class. "If these people have so much money, then obviously other people have to be lacking it." I explained to him that this is not the case, as most of a billionaire's "billions" are not locked away in a savings account, but are invested in productive capital; the actual money is still out there in circulation, and the "money" that the billionaire possesses is producing goods and services for others. He fell pensively silent (odd for this particular person), and said that he hadn't really thought it through very much.

I've met a LOT of people who simply have this default position. It's rather common to hear people who don't really know much about social science to say things like "if you're getting something so cheap at Wal-Mart, you know somebody else has to be getting screwed," and "if we don't stop big businesses, all the American jobs are just going to get shipped off to the third world," all strongly implying a sense of economic conservation. Even I remember thinking this (and arguing with my father, who didn't believe in a zero-sum economy) several years ago. This was before I took an active interest in politics and economics, it just seemed common sense.

Has anyone else noticed this? If so, what do you think the cause is? Before Nielsio says something crazy, I can say that I do not recall hearing anything about economic conservation or merchantilism during my period of involuntary statist indoctrination (school).