Slice the Pie

When the rich get richer, the poor must get poorer, right? Well, as with many of the assertions of the sound bite era, this is simply not true. It is, instead, an oversimplified summarization of economics used to push an agenda. The argument can be generally described as a zero sum gain view of economics where a finite amount of wealth exists and the only means for one group within the system to increase their wealth is to somehow take it from others. It is the basis on which much of the social engineering arguments are built. Wealth cannot be created, they’d have us believe. Instead, it can only be displaced from somewhere else. So, in order to bring fairness to all, money from the wealthy must be taken and distributed to the poor.

In fact, wealth is created every day. In simple terms, every time someone invents something new, they’ve created wealth. If we consider the iPod (or any such MP3 device) we can see how this works. Before the iPod, there were any number of gadgets used to carry music around. These included both tape and compact disc devices specially designed to increase convenience. The iPod supplanted each of these devices by bringing a smaller, more stable format to the industry.

On the surface, this would seem to have proven the position of the zero sum gain camp: iPod stole market share from other products, thereby shifting wealth from one party to another. However, what iPod also did was enable other media industries. For example, the new generation of devices carried ever greater volume of music, both helping the environment by lessening the need for compact discs and increasing the choice of the user. Additionally, a burgeoning medium, podcasts, was given a new, more convenient vehicle by which to spread. On top of these came the ability to add audio books and video, again increasing both availability and convenience. So the iPod increased the number of products available to consumers, thereby increasing wealth potential. Yet none of this was done at the expense of the poor.