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World economics are definitely NOT a zero-sum game. Were that truly the case, you'd still be sitting around your cave with your buddies Thak and Grunt, snacking on beetles and grubs. Clearly, the world economy is larger today than it was 25 years ago.
Let's return to our friends, Thak and Grunt. Our cavemen friends spend their days gathering and eating beetles and grubs. Then one day, Thak discovers that the blackberries on the bush outside their cave are plentiful and edible. Both Thak and Grunt are now better off. Their meals are tastier, and it takes less time for them to gather their daily food. Their simple economy has grown.
Man has done this many times throughout his history, from the discovery of agriculture, to the Industrial Revolution, to the electronic age. We broaden our horizons, and our entire economy grows.
Now let's look at something trickier. Let's say Thak discovers the blackberry bush, but keeps it a secret from Grunt (and Grunt is too dim-witted to figure out the myster). Does Grunt benefit?
First of all, it's pretty easy to see that Grunt can't be harmed. He can continue to gather exactly the same quantity of beetles and grubs as before.
Second, if we introduce the concept of trade, Grunt will certainly be better off. Perhaps Thak decides that eating nothing but blackberries is monotonous, and misses the crunch of beetle exoskeletons. He might trade some portion of his blueberries for some of Grunt's beetles. Thak wins.
But Grunt also wins. Grunt gets to benefit from Thak's blackberry discovery. And because trade is a voluntary transaction, by definition Grunt feels that he is better off swapping beetles for berries otherwise he wouldn't agree to the exchange.
So now we've seen that economics is not a zero-sum game, and that trade brings benefits to both parties. So why is it that there are so many bitter people in Ohio and Pennsylvania?
for that answer go to the webpage yerself
www.asktheharvardmba.com
