# Why is wealth not a zero-sum game?

 4 One question I have had since reading Dr Peikoffs OPAR is about the idea that one persons accumulation of wealth does not "feed off" another persons loss, that wealth accumulation is not a zero-sum game. Now I am sure there is an easy explanation for this but for some reason I just cannot see how this is possible. If someone makes a profit, doesn't that mean that someone else losses? Could someone help me out with this concept because I cant seem to grasp it. asked Jan 01 '11 at 23:11 wolysoly 90●1●4 Just to provide one example: think of a car company that designs a new motor. This new motor consumes less gas than the older one. While the production of every single new motor costs less than in case of the old one, the car company sells the cars with the new motor for the same price as the cars with its predecessor. Every customer profits because of the milage and the company profits because the production of the new motors is cheaper. That's what's meant by making money. For more, I refer you to Francisco's money speech. (Jan 02 '11 at 10:30) Selfmadesoul ♦

 2 In a zero sum game, the "gain" of one player, is reflected in an identical "loss" in another. That is a false model of an economic transaction. Here's a specific example. An IPOD. Apple pays (this is a guess) about \$50 for all the parts, and labor that goes into making an Ipod. I want an Ipod. I estimate an Ipod is worth \$500 to me (based upon all the entertainment it will provide me over the lifetime of the device.) I can buy an Ipod for \$200. So, I have "gained" \$300 in value in this transaction, while Apple has gained \$150 in this transaction. Voluntary trade among equals is not a zero sum game, but a game in which the participants both win. If they didn't both win, they would not participate. answered Jan 02 '11 at 12:55 John Hoffman ♦ 190●1●5
 0 Wealth is never a zero sum game. This FACT of economics is easily demonstrated. If wealth were a zero sum game, why is the world wealthier today, than is was in say, King Tut's time? If wealth were a zero sum game, we would only have all the wealth of that time, to spread amongst the billions more people that exist today. The world would be poor beyond belief. Another demonstration can be made from a different angle: Oil has always existed as long as man has been on this earth. But oil's wealth was created by men who perceived and conceptualized how it could finally be used. They engaged their minds and in productive work to create things from it. These men brought together individual discoveries of metaphysics, i.e. Chemistry of Hyrdro-Carbons, Laws of Thermo-dynamics, Physics of motion etc, and realized what new wealth could be created if they combined these things in a certain new way. We all became wealthier because they have engaged themselves in these productive activities. How many lives have been saved because of their efforts? How much more sanitary is our world because of it? How much more information and trade happens because of it - including your viewing this post? All because individuals, one after the other in varying fields of interest, have found ways to create wealth from a black sticky substance that was avoided by humans for millenia. How much more wealthy (better off) is the world now because we can transport ourselves, our goods and services across vast spaces both on the ground and through the air? Men of Tut's time were limited to horses, boats on the Nile, and their own two feet. Wealth is created by man and his mind, it is NOT finite and distributed. There will hopefully always be people who use their minds and productive work, to create new forms of wealth. I would agree with the economic reading materials on the subject that CapitalistsWine has posted. answered Jan 11 '11 at 10:45 Chuck ♦ 50●1
 0 Here is a very simple example that can help illustrate this. Suppose I have two slices of pizza, and you have to cans of soda. If we don't trade, I will go thirsty, and you will go hungry. If I trade you a slice of pizza for a can of soda, we are both better off than we were before because now we both get to eat a slice of pizza and drink a can of soda. No physical goods were created or destroyed in this transaction, but we are both wealthier after the trade than before it because we both ended up in a situation that we preferred to the situation beforehand. We are both using the stuff around us to make ourselves as happy as possible, and after the trade the level of happiness we can attain is higher than before, so we are wealthier than before. answered Jan 11 '11 at 11:29 Francisco ♦ 160●6
 0 "Wealth" DOES NOT EQUAL "dollars in my pocket". If it did, than paying Apple \$200 for an iPhone would make Apple \$200 wealthier and you \$200 poorer. However, you now have an iPhone that is a higher value to you than the \$200, otherwise you would not have bought it! Wealth, we can therefore see, represents not money but the values that you act to gain in the course of living life. This leads us to an incredible understanding -- if you are running a business, the more profitable you are, the more value i.e. wealth you have created that did not exist before! Now consider what the left thinks about profit, and realize how evil their position really is. This also leads us to another incredible idea -- wealth is not limited by physical resources, but is rather created by man's mind. The iphone was worth more than \$200 to you because of the ingenuity and creativeness of it's creators -- not because of the amount of plastic and metal present. Therefore the wealth of humanity i.e. "the pie" will keep growing as long as there are men able to think and produce values. answered May 06 '11 at 18:45 Raman ♦ 548●1●10
 0 I answered this question in a recent episode of my Rationally Selfish Webcast.  An audio recording of my response is available as a podcast here: NoodleCast #75: Live Rationally Selfish Webcast. The discussion of this question runs from 52:40 to 58:24.  My Answer, In Brief: Values are not mere material things: they can be created and destroyed -- and they are increased by voluntary trade. As such, profits are the creation of value, not merely the extraction of values from other people. For my full answer, listen to the podcast! To catch all the Rationally Selfish Podcasts, subscribe to the podcast feeds in iTunes in enhanced M4A format (RSS) or standard MP3 format (RSS). Or better yet, join Greg Perkins and me for the live Rationally Selfish Webcast on Sundays at 8 am PT / 9 am MT / 10 am CT / 11 am ET. answered May 10 '11 at 15:36 Diana Hsieh ♦ 1000424●6

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