Copyright © 2018 jsd

The Real World is Not a Zero-Sum Game
In the real world, a typical deal is beneficial to both parties. Life is not a zero-sum game. This is super-important yet widely misunderstood.

1  Two Farmers Make a Deal

Once upon a time there were two farmers, namely Brown and McDonald. They lived next to each other, but far away from everybody else. Brown grew nothing but peas, while McDonald grew nothing but corn, i.e. maize.

McDonald learned the hard way that eating nothing but corn leads to horrible deficiency disease. It is an incomplete source of protein. Brown discovered, to his sorrow, that peas are also incomplete.

One day, before they became too gravely ill, they met along the fence line. Brown said: How about I give you half of my peas, and you give me half of your corn? McDonald readily agreed. Peas and beans are incomplete in different ways, and the combination of the two is complete.

Think about the economics of this transaction: Brown gave away something that was of zero value to him in exchange for something that was infinitely valuable to him. McDonald thought the same thing, from the opposite point of view. The transaction was enormously profitable for both parties.

This is the essence of commerce: Find something that is more valuable to the buyer than it is to the seller. The difference between the two valuations represents wealth that is created by the transaction. It’s not a zero-sum game. The two parties get to argue over who gets what fraction of the created wealth.

Let’s be clear: Most businesses are not predatory. You want your suppliers to make a profit when they sell to you. You want them to get some of the created wealth – not all of it, but some of it. Otherwise they will go bankrupt, or just refuse to deal with you. Let’s be clear: If you try to take all the created wealth, you’ll get none of it, because there’ll be no deal.

Some big-name economists – e.g. Adam Smith and Karl Marx – claimed each and every thing had a definite value, and they set forth elaborate theories and rules for determining “the” value. This strikes me as insane. In reality, there is no such thing as “the” value. All of commerce, indeed all of civilization, depends on the fact that Brown and McDonald value things differently.

By the way, a week later, the two farmers met again. They remarked on how profitable the previous transaction had been. Brown said, How about we do it again? I give you the second half of my peas, and you give me the second half of your corn. McDonald explained what a terrible idea that would be. Both parties would be immeasurably worse off. Each would be trading away something he needed for something he didn’t need.

This goes to show that value is not just different from person to person, but also different from time to time, depending on circumstances.

2  Application to Current Events

The #fakepresident touts himself as a great dealmaker, but in fact he doesn’t understand the first thing about deals. He views every interaction as a zero-sum game – or worse, as a fight – where the only way you can win is by injuring the other party.

This makes him unqualified to hold any position of trust or responsibility, anywhere in the civilized world. I wouldn’t trust him to run a hot-dog stand.

Authoritarian demagogues love to stir up fear. They depend on it to obtain and maintain power. As part of this program, they spread the idea that everything is a zero-sum game – or a fight – so their followers are afraid that literally everybody is out to screw them.

Figure 1: Predatory Zero-Sum Game : Not Normal

The idea that everything is a zero-sum game – or worse, a fight – is an attack on the foundations of civilization itself. This is not normal. We must put a stop to this. Now.

For a longer discussion along the same lines, see reference 1.

3  References

“The Real World is Not a Zero-Sum Game
“Come Join the Cool Kids”
David Honig with Ailsa Chang,
“Zero-Sum Tactics That Built Trump Inc. Could Backfire With World Leaders”
Copyright © 2018 jsd