4 ms·
Economy is pretty much a zero-sum game. The non-zero-sum game part (growth) is very small (2-3% even if that) if you consider a country's economy (or world econ
by fizixer 11y ago
Economy is pretty much a zero-sum game. The non-zero-sum game part (growth) is very small (2-3% even if that) if you consider a country's economy (or world economy) as a whole.
I like to say if your income is consistently growing at ~10% every year, when the economy is growing at 2-3%, you're likely making someone worse off. (Although that someone might be some billionaire in which case have at it).
- bendykstra 11y ago> I like to say if your income is consistently growing at ~10% every year, when the economy is growing at 2-3%, you're likely making someone worse off. That is like saying, "The average age of the country is growing at 0.1% per year while my age is growing at 4% per year, therefore I must be making someone else younger." Income usually increases over the course of a career, but in the end, people retire or die and stop contributing to the average.
- oli5679 11y agoWage-growth is conceptually different from the gains from trade within an economy. An isolated individual who doesn't trade(eg subsistence farmer) would produce goods of value of an order of magnitude less than current US GDP per capita. Similarly, your hypothetical individual who 'makes someone worse off' must by definition be inheriting some scarce asset, be lucky, deceptive, coercive or inflicting negative externalities. Otherwise why would anyone trade with him? This is not to say that inequality isn't a problem or greater redistribution would not be desirable. But you need to frame the problem correctly.
- yummyfajitas 11y agoHere is the actual graph of income growth, 1988-2008. Who were the middle class (specifically the 20'th-70'th percentile) making worse off? https://pbs.twimg.com/media/CUXo2NNUYAASTND.jpg:large https://pbs.twimg.com/media/CUXo2NNUYAASTND.jpg:large
- fizixer 11y agoMiddle class tends to rise off of the redistribution of rich class's wealth. Like I said, the second part of my original comment. (which is a good thing, so maybe "worse" is not the best word).
- msellout 11y agoSeems like a wealth transfer from "developed country" workers to "less-developed country" workers and capital owners. The exact dynamics are of course hidden from that chart. The labels on the axes say that the peaks are gaining relative to the valleys in that chart.
- yummyfajitas 11y agoA wealth transfer would cause at least one group to take losses, no? This graph shows growth for everyone.
- msellout 11y agoNo. There could be two phenomena occurring simultaneously: growth for everyone and layered on top of that a wealth transfer. The key term you're ignoring in my comment was relative: "peaks are gaining relative to the valleys". I know you're into finance. Are you familiar with the concept of a long-short hedge fund? If so, you should be comfortable with the idea of focusing on relative movement of two assets within an asset class, hedging against the absolute movement of the asset class as a whole.
- yummyfajitas 11y agoIf you want to declare a delta between some hypothetical distribution and the actual distribution "wealth transfer", have at it. That is certainly irrefutable, albeit mathematically vacuous.
- msellout 11y agoNot sure what you're getting at with "delta between some hypothetical... and the actual" but yes, I was describing something irrefutable. You'd asked what the chart meant. I looked at the axes labels and described the shape of the curve.