Is zero-sum the default economic position?

[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).

[TomCollins]

I think the idea of a non-zero sum game is a lot more complicated to imagine, so thats why people assume non-zero sum. If I have a rock, you cannot have it. It's the same idea there. Combine that with the fact that people DO get screwed over sometimes, people don't realize that win-win situations happen. People have a competitive nature. There has to be a winner and loser in their minds.

[Kaj]

As long as we're talking economic equations, I hate when people think Ideas + Capital = Progress, without factoring in any costs to the environment, wildlife, etc. As if these things had zero value to current or future generations and were "free" inputs.

[hmkpoker]

[ QUOTE ]
I think the idea of a non-zero sum game is a lot more complicated to imagine, so thats why people assume non-zero sum. If I have a rock, you cannot have it. It's the same idea there. Combine that with the fact that people DO get screwed over sometimes, people don't realize that win-win situations happen. People have a competitive nature. There has to be a winner and loser in their minds.

[/ QUOTE ]

I'm inclined to agree. I think it's because we deal with so much microeconomic conservation in our day-to-day lives (i.e. dammit Bobby did you eat all the browines? Now there are none left for me!) that we unwittingly apply these principles to the macroeconomic world by default.

If this is the case, I fail to see why this isn't an excellent reason to be very critical of democracy.

[Nielsio]

The state IS a zero-sum game.

[hmkpoker]

[ QUOTE ]
The state IS a zero-sum game.

[/ QUOTE ]

How so?

[Nielsio]

Oh, and yes, we've been forced zero-sumo game myths down our throat.

I'm quite serious btw: aggression is a zero-sum game. It's the primary means of survival that people are familiarized with. It starts in the family of the parents and older siblings bullying the other ones (and the parents bullying the older siblings). And it builds from there.

[Copernicus]

Not surprising, (although its mildly surprising I agree with Nielsio on something, lol) because the nature of most of our day to day experiences are zero sum.

Until John Nash came along some very bright people didnt realize that you could prove that non-zero sum but non-cooperative games could reach an equilibrium, and if there were no such equilibrium there would be no win-win solutions.

[tehox]

[ QUOTE ]
Not surprising, (although its mildly surprising I agree with Nielsio on something, lol) because the nature of most of our day to day experiences are zero sum.

Until John Nash came along some very bright people didnt realize that you could prove that non-zero sum but non-cooperative games could reach an equilibrium, and if there were no such equilibrium there would be no win-win solutions.

[/ QUOTE ]

Well, I think the question is while the examples given by OP (increased number of billionares, Walmart), while they do not necessarily have to have a "loser", they don't necessarily have to be "win-win", and if you look at people that know what they are talking about criticize these things they don't do it from a zero sum perspective (though I agree you do hear stuff like what the OP referred to a lot)

[Copernicus]

[ QUOTE ]
[ QUOTE ]
Not surprising, (although its mildly surprising I agree with Nielsio on something, lol) because the nature of most of our day to day experiences are zero sum.

Until John Nash came along some very bright people didnt realize that you could prove that non-zero sum but non-cooperative games could reach an equilibrium, and if there were no such equilibrium there would be no win-win solutions.

[/ QUOTE ]

Well, I think the question is while the examples given by OP (increased number of billionares, Walmart), while they do not necessarily have to have a "loser", they don't necessarily have to be "win-win", and if you look at people that know what they are talking about criticize these things they don't do it from a zero sum perspective (though I agree you do hear stuff like what the OP referred to a lot)

[/ QUOTE ]

I think what youre saying is that while every non-cooperative situation has a Nash equilibrium, that equilibrium isnt always reached, which I think is true. Prisoner's dilemma as an example. One of the two criminals eventually is too stupid/gullible to keep his mouth shut.