Column on OWS & Zero Sum Economics

Markets aren’t Zero Sum Games

Tibor R. Machan

The more I read about “Occupy Wall Street,” including the pundits who apologize for it, the more I find that people still believe that market exchanges are zero-sum games wherein for someone to gain, someone must lose. But this is plain bunk, as economists since Adam Smith have shown conclusively.

But consider–is a marathon race a zero-sum game? Does someone’s running really fast make all others run slow? Clearly not. How fast the winner runs doesn’t slow down or speed up the losers. When a person buys a watch at the mall, both the merchant and the costumer are getting what they want from the other, no one is being ripped off. And the same applies to all honest deals on Wall Street. I buy some shares in a company and it is doing well with its products or services and so the monetary value of the shares increases. Those who didn’t buy these shares do not make the gains I did but not because I prevented them from doing so, only because the purchasing public didn’t want the services or products of the companies in which they bought shares, unlike in the case of my choice of company.

Like marathon races, market processes do not involve what happens in a boxing ring–no one is knocked out so that another may be triumphant. Yet it seems nearly all those who sympathize with the people marching in the Occupy Wall Street parades, as well as the people who speak up for them in their midst, fail to see the difference.

Put bluntly, Bill Gates billions do not make me or anyone else poor. In fact, his billions make it possible for a lot of folks to improve on their economic circumstances. Bill goes out and buys a lot of stuff or just gives his money away in Africa and people will then go out and make standard purchases with these funds. No one has lost anything, not a dime.

All the wealthy folks in my neighborhood who live on lakes in fancy homes and have yachts and Bentleys aren’t making anyone poor. So resenting them is nothing but sheer envy, a filthy vice! Like hating someone with a great voice when one cannot carry a tune! Or a tall basketball star when one is too short to play the game.

We are often very different from one another–indeed we are all individuals and then gather into groups–and some of this means that what we have stuff and opportunities that others do not, whether they badly want it and even need it. But those who have it aren’t guilty of any wrongdoing except in the fantasy world of egalitarians which is, being a fantasy world, a distortion of the real world in which problems need to be solved. This is, however, a welcome thing to most of us who give it but even a little thought. After all, since you aren’t like me, you will want different stuff from what I will and that way we can trade quite fruitfully, with both of us ahead once the trade is done. Yes, sometimes the market value of what you get from the trade is much lower than of that which I get from it. But so what? If I badly want to have your worn out gloves and am willing to give you my fabulous sunglasses for them, some will see this as a huge rip off but who are they to tell? In most cases they wouldn’t know and in any case they have no business butting in. (They may offer some advice but that’s all.)

Ever since I arrived on these shores many, many moons ago, I have had zero sympathy for people who insisted that we should all enjoy equal wealth, equal advantages, etc. Why? No reason. Maybe what such folks missed out in their education is the study of Orwell’s Animal Farm, Vonegut’s Harrison Bergeron, and Rand’s Anthem. I see get thee back to the classroom and off the streets, especially Wall Street.

This entry was posted in Uncategorized and tagged , , , , , . Bookmark the permalink.

2 Responses to Column on OWS & Zero Sum Economics

  1. anielamb says:

    What some people are upset about is the fact that large corporations are often using unethical practices that hurt thousands of people and they are not held accountable for their actions. Examples would be hydraulic fracturing to acquire natural gas, adding butane and other chemicals to our food without informing us, false marketing on food labels, and the many techniques that Chase uses to take financial advantage of those who are not in a position to fight back. We do have some power to affect these problems by boycotting (we have taken our business away from Chase, stopped using natural gas, and stopped buying industrialized food products), but that only works if many people do it together. We could boycot corporations that use unethical practices, but they still may ruin our drinking water by fracking, continue creating 8,000 square mile dead zones through chemical fertilizers and pesticides, and hurt the value of our home in the housing market. We need to stand up as a people and only put our money into the pockets of those who are using ethical and healthy practices. Read The Omnivore’s Dilemma by Michael Pollan.

    • szatyor2693 says:

      Groups of people, be they corporations, partnerships, choirs, teams, universities or whatever are just as capable of unethical conduct as individuals. But nothing much can be done about it other than be vigilant and dodge the impact. There is no device that will fix human nature so as to live in a risk free world. Governments are the worst offenders when it comes to malpractice, so going to them for help is useless, indeed, counterproductive.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s