This morning, I had a simple, but I think profound realization. Wealth creation is not a zero-sum game. For me to be wealthier, I do not need to make you poorer. Now, I’ve known this before. You probably have too. But sometimes it feels like it, because of the exchange of money, and the erroneous conflation of money with wealth.
Wealth has been in the back of my mind for some time. While I’ve not read Secrets of the Millionaire Mind and haven’t finished Think and Grow Rich, I’ve still been thinking about wealth, economics and the stock market in a background way. I’ve also recently read this Wired article on the current state of the market and the AI that runs it. I’m about half way through True Names by the esteemed Cory Doctorow. Finally, I am the unexpected anarchist. Or at least I’ve been well exposed to the fundamental tenets of Austrian Economics.
I had a rather basic revelation this morning, namely that the creation of wealth is not a zero-sum game. As in this oft-quoted exchange between Tom Sawyer and Huck Finn:
“Sho, there’s ticks a plenty. I could have a thousand of ’em if I wanted to.”
“Well, why don’t you? Becuz you know mighty well you can’t. This is a pretty early tick, I reckon. It’s the first one I’ve seen this year.”
“Say, Huck — I’ll give you my tooth for him.”
“Less see it.”
Tom got out a bit of paper and carefully unrolled it. Huckleberry viewed it wistfully. The temptation was very strong. At last he said:
“Is it genuwyne?”
Tom lifted his lip and showed the vacancy.
“Well, all right,” said Huckleberry, “it’s a trade.”
Tom enclosed the tick in the percussion-cap box that had lately been the pinchbug’s prison, and the boys separated, each feeling wealthier than before.
Wealth is created in the exchange.
All of this feels like it would be a virtuous circle of wealth generation. Ever accelerating through innovation, efficiency, and labor until we have reformed every atom into its market-optimal configuration for the moment. And while there are plenty of pundits pointing at the impending singularity, looking around at everything from violence and protest in Egypt, Tunisia, to those hawking the Big Issue on street corners, it doesn’t feel like we’re in a run-away, exothermic reaction of creation of wealth, intelligence. Indeed, the first Google suggestion for the continuation of the phrase “Global Financial” is “Crisis”.
Some might say it’s all drained away in a “cognitive surplus” (that hates pigs).
Others might claim that the wealth-destroying state is the control rod dampening the reaction.
One possibility, of course, is that we are in the middle of an explosion of global wealth – and it’s just hard to see. Having been recently “made redundant,” I have a strong sense of financial retrenchment myself. But, I recently bought a 10-year old car (’01 Outback) which is “better” in many ways (comfort, AWD, fuel economy, etc.) than the car it replaced (’94 4-Runner) that I bought only 3 years old. Which was already in a whole ‘nother league from the car I’d previously owned (’73 Bug). The new (to me) car though, of course pales in comparison to today’s state of the automotive art. So our collective condition improves, but we aclimate readily. It’s easy to marvel at the opulence on display in castles of antiquity. But the kings that lived there would have marveled at the comfort of beat up, old recliner, or the ability to take a hot shower. Admittedly not something everyone has today, but remarkable progress, regardless.
In the maelstrom of daily life, it’s easy to see the local minima and maxima. I think I simply need to continue to be mindful of the simple fact that wealth creation is not zero-sum. For me to be wealthier, I do not need to make you poorer. Indeed, it may be that the only way to make me wealthier is to make us all wealthier.