Zero-Sum Game: Is the Pie getting bigger?
Are the actions you make affecting what actions others may be able to make? When you take a piece of the pie, does that leave less for the person behind you? All of these questions relate to the idea of a “zero sum game”; an aggregate of all the gains and losses made and then summed will be equal zero.
So, if you take a larger piece of pie at a party or an office event, the person behind you really is affected. There will be less pie for someone else. Your gain is someone else’s loss. However, what if when you take a larger piece of pie, the pie actually gets larger? This idea gets fuzzy when talking about an actual pie, or any thing tangible.
However, in economics, rarely will there be a situation where a willing seller and a willing buyer will enter into a transaction where they are not somehow marginally, or fractionally better off when they were before the transaction. Back to the pie example, an individual who takes a larger piece may get more pie, but it may be at the benefit of the other stakeholders (their officemates). It may have been determined that someone did not want a piece of pie because they are allergic to strawberries (I'm using strawberry pie for this example). Or someone is on a diet or had more pie the last time.
This clearly supports, that one officemate gets more pie, but the other two are healthier because of it! The literal "pie" has gotten larger, while the figurative one has remained the same.
Zero sum games are much harder to find then you would think. It is not very often that even what appears to be negative for everyone actually leaves everyone worse off. Markets work in such a way that ceteris paribus, (latin: all things remain constant ) that in order for anyone to actually consent to such an unfair or disproportionate other market factors have to limited or inhibited.
Let's take a look at a recent event that has been all over the new recently, the BP deepwater oil spill. Sounds like a total loss for everyone, right? Shareholders have lost billions in accrued profits (money carried forward from previous quarters) and even more in future profits. Anyone who makes a living on the wildlife in that area clearly has been negatively affected.
So how can this make the pie larger? Well for starters, we have to take present and future surplus into account. Without an oil spill like this, additional oil wells were going to be allowed under the Obama Administration ( Obama's timing couldn't have been worse, but it will only be a temporary setback for his administration). The spill caused a reversal of the opening of offshore drilling. It also forced other wells to be closed due to environmental concerns. Obviously, in the short term it has been a nightmare for environmentalists, however on a longer, larger scale it will be boon to environmentalists the world over.
Clean up crews being paid by BP are obvious winners here, creating jobs in an area otherwise without jobs. Even some of the boats used to fish before are being used in the clean up effort, so the pie has shifted, replacing those who were originally displaced. Deep water oil technology will be forced to improve, benefiting future generations. As well as the regulations in place regarding deep water oil drilling, which will have long lasting effects for hundreds of millions in the United States (especially those living in a coastal area).
Clearly, we all want such horrible events not to occur, however when they do, they do seem to shape public policy and thought. Environmentalists were having a hard time "selling" the general public on the need for environmental regulations. It was much easier in the 60's and 70's when there were rivers of fire and such, but now most of our pollution is invisible to the naked eye. This has created a much easier form of pollution that ties in directly with public concern.
So it may appear the pie is getting smaller, but really it's benefiting us all in a round-a-bout way!
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