Imagine that six people sit down to eat a twelve-slice pizza. If two people grab four slices each, four people and four slices remain. If one person grabs two slices and two others take one each, the last man standing gets nothing.
Dividing a pizza between six people is an example of what’s called a zero-sum game. In every zero-sum game, one person’s gain is always equal to another person’s loss. Poker is a zero-sum game. If somebody wins $10, somebody loses $10.
Thankfully, not everything in life is a zero-sum game. If grandma is head-over-heels in love with her newest grandchild, it doesn’t mean she can’t love every other grandchild with equal intensity. Grandma’s love is boundless. It’s not a zero-sum game.
Neither are inventions. If the engineers at Ford invent some new-fangled gadget, it doesn’t mean Chrysler and Toyota have to shorten their list of possible new inventions. Anybody can still invent dozens, hundreds, or even thousands of new and better products. There’s no limit to how many new things people can develop because inventing technology is not a zero-sum game.
Contrary to what some people believe, the economy isn’t a zero-sum game either. When a person or corporation grows wealthy, it doesn’t mean someone else grows poor. Human beings all over the world can use labour, investment capital (saved-up labour), and good management to add value to things, thereby prospering.
In the 19th century, Karl Marx developed a political philosophy based on the assumption that wealth is a zero-sum game. It’s called socialism. Marx believed that business owners and other capitalists grew wealthy by exploiting the labour of ordinary workers.
Marx’s mythological balloon got popped in the 20th century as the world watched “exploited” workers in capitalist countries grow increasingly prosperous, enjoying luxuries and advantages beyond the reach of history’s most famous kings.
So a new fallacy – an updated version of the economic zero-sum game – was hatched. “Yes,” the naysayers said, “workers in capitalist countries are growing wealthy, but only because rich countries are exploiting poor countries.”
In the 1950s and 1960s, victims of this supposed exploitation included South Korea, Singapore, Japan, and Hong Kong. Yet in short order, even the most stubborn proponents of the economic zero-sum game had to admit that ordinary people in these supposedly exploited countries were growing wealthy. Some of these nations had started by manufacturing trinkets or transistor radios, and ended up exporting things like high-tech computers and luxury automobiles.
Many politicians embrace the zero-sum game fallacy. Others don’t. Saskatchewan Premier Brad Wall has clearly stated that creating wealth is a higher priority for his province than accelerating government spending, piling on debt, or passing laws that hinder investment. He knows that the amount of wealth available to his province is not fixed, and he is working diligently to see that wealth expand and grow.
Alberta is headed in the opposite and even confusing direction. Rather than solidly committing itself to policies that facilitate wealth creation, Alberta has escalated corporate taxes, instituted carbon taxes, vilified industrial development, and dedicated itself to higher spending and staggering amounts of public debt.
This is unfortunate, because any government that deliberately puts itself deeply into debt while placing a low priority on industrial development, either doesn’t understand the creation of wealth, or completely ignores the fact that the economy is not a zero-sum game.
Kitchen Table Talk is a forum consisting of a small group of Official Opposition MLAs who each week, get together to talk through a legislative policy issue. As part of the process, a short commentary is compiled and edited. Editorial committee members include Grant Hunter (Cardston-Taber-Warner); Rick Strankman (Drumheller-Stettler); Don MacIntyre (Innisfail-Sylvan Lake); and Wes Taylor (Battle River-Wainwright).