Per Contra magazine recently interviewed me about Economic Freedom. The questions ranged from equity concerns to measuring economic freedom, to this question on the whether competition is zero or positive sum:
PC- Given the nature of competition, is it possible for all members of a society to benefit from economic freedom, or does it promote an imbalance that is deleterious to some members in a society?
SP- People sometimes think that competition in the economy is like a baseball game where someone wins and someone loses. This argument was made in the nineteenth century by the famous art critic, John Ruskin, who opposed free trade. But Ruskin's alternative was something like non-development -- art, furniture, etc., that were hand made but too expensive for the vast majority of people to enjoy. ...
Economic competition, trade and growth, aren't zero sum, aren't win/loss phenomena. Instead, they mean that more stuff is made so that there is the possibility of more stuff for everyone.
In spite of Ruskin's argument -- and it's sometimes used now to oppose free trade globally -- trade benefits both parties. You buy a watch from me and you value the watch more than the $10 you give me for it. I value the $10 more than the watch. We're both better off than we were before the trade. Now maybe you got a "better deal" out of the trade than I did: you benefit more from the trade than I do. This doesn't mean that I didn't benefit or that my envy of you should make me forego the trade.
The entire interview is here.
Economic competition, trade and growth, aren't zero sum, aren't win/loss phenomena.
Need not be zero sum surely? It is possible for them to be lose/lose if you screw them up badly enough.
Posted by: Colman | June 26, 2006 at 10:32 AM