Zero-Sum

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Is life a zero-sum game?

One of the first things you learn in basic economy classes is that international trade, when done correctly and well, is NOT a zero-sum game, and is all intents purposes, good for the economy and any participating countries.

Let me give a very basic example:

America is one of the most productive countries. So, for 1 hour of work, they can produce:

10 computers, OR

100 pairs of shoes.

China, on the other hand, is not as productive. For every 1 hour of work, they can produce

5 computers, OR

70 pairs of shoes.

Why would America ever trade with China, when they can produce both computers and shoes more efficiently and better than China? In economics, it’s called comparative advantage, and it proves that in certain cases, trading goods can be beneficial when countries specialize in what they are good at.

China is better at making shoes. Not better than America, but better than they are at making computers.

If China makes 70 pairs of shoes in one hour, and America makes 10 computers, I am willing to bet that China would trade their 70 pairs of shoes for just 6 computers from America. (Normally China could only make 5 computers in one hour. But in this case, they make 70 shoes in one hour and trade it for 6 computers.)

America, normally, could either make 1 computer or 10 shoes every 6 minutes. But, if they can trade 1 computer for 7 pairs of shoes from China, that’s a better deal than if they were to make the shoes themselves.

Of course, this is a very basic example, and there is a multitude of factors that affect whether or not this is good for participants. But at the end of the day, the world is becoming more and more globalized. Countries depend on each other more and more as the world integrates its people together.

This theory is just one basic theory we learn in economics, but it’s a theory that can be applied to all of life.

When you exchange value with someone, both of you can come out better. Life doesn’t have to be a zero-sum game, “I win, so you must lose”. Everyone can be winners in life.

Start exchanging value.

 

 

 

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