Issue #29 - Why Wealth Is Not a Zero-Sum Game

Bitcoin Nov 27, 2023

Welcome to the latest issue of The Qi of Self-Sovereignty. The newsletter exploring what it means to be free in an increasingly not-so-free world.

Whether you're looking to locate your authentic self or investigate sovereignty, you're in the right place! In each post, with just a few minutes of reading, I aim to expand your awareness through a quote and a piece of content that made me go hmm...

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Thought-Provoking Quote:

"Too often we enjoy the comfort of opinion without the discomfort of thought." – John F Kennedy.

During a recent conversation, I found myself confronted by someone arguing that taking from the wealthy through theft or at least intervention is ethically justifiable, given that their wealth is "supposedly" obtained at our expense.

Have you ever found yourself presuming that one person's wealth is at the expense of another's?

It's a trap many of us stumble into. We believe that the bitter-sweet pie that is wealth is fixed in size— to obtain a larger slice of the pie, we must take from someone else.

Yet, here's the twist: Wealth isn't a fixed pie but a dynamic balloon, constantly expanding and contracting, with a prevailing tendency to expand over time.

At the core of this belief lies the Zero-Sum Fallacy— the notion that accumulating wealth is synonymous with pilfering it from another. This belief, deeply embedded in the foundations of socialist and communist ideologies, paints a picture of prosperity as a finite resource, a pie to be sliced and shared, with one person's gain coming directly at the expense of another. This belief drives immense disdain towards those with wealth.

However, it's crucial to separate fact from fiction. While instances like theft, extortion, and interventions—such as bailouts—can indeed extract wealth from others, these are outliers, not the norm. In a free market environment, the vast majority of wealth isn't snatched but crafted. It's a creation born out of innovation, enterprise, and the voluntary exchange of capital. And so, at the foundation of wealth isn't theft but rather value creation.

Let's dig a little deeper...

Picture a scenario where you find yourself grappling with financial pressures. But, under this struggle, you possess a skill. You're an expert in mobile app development. Faced with the need to improve your financial situation, you embark on a journey of contemplation. After numerous sleepless nights, you take the bold step of creating an app, and not just any app, but one that significantly streamlines various aspects of daily life.

Khyber (my pup) showing the world her app development skills.

Upon releasing this app to the world, a delightful surprise unfolds. People not only love it but are also willing to part with their hard-earned money in exchange for the convenience and efficiency your app offers. What I am trying to highlight is the essence of wealth creation. In this example, you haven't amassed capital through theft, coercion, or extortion— your wealth isn't at the expense of others. Instead, your wealth stems from the creation of value.

However, this isn't always the case...

Picture this scenario: A bank, driven by greed, takes undue risks with customer deposits in an attempt to generate outsized returns. When the government steps in to bail out said bank, wealth is now accumulated at the expense of another. Although depositors breathe a sigh of relief as their funds are safeguarded, lurking beneath the surface is a more complex story. While depositors find comfort, the general public shoulders the financial burden of rescuing the failing bank. The capital obtained via intervention comes at someone else's expense— the taxpayers and currency holders.

In a free-market scenario, the consequences are swift and severe when the depositors find out about the mismanagement of funds. A bank run often ensues, bankrupting the institution— they bear the full weight of their actions. In this environment, the repercussions of fiscal mismanagement play out organically, unfettered by external interventions.

This example underscores a fundamental truth: The introduction of intervention disrupts this natural order of expansion and contraction of wealth, creating an environment where wealth is built at the expense of someone else.

Visualizing Wealth Expansion

In an inflationary system, the ongoing erosion of purchasing power blurs our perception of wealth creation. Moreover, a lopsided reward system emerges, aiding asset holders over currency holders. This dynamic unfolds as individuals seek sanctuary from the depreciating currency by turning to assets. The resulting abnormal surge in demand for assets subsequently propels prices upward, all while the currency steadily depreciates. The outcome is mounting wealth inequality, which appears to occur at the detriment of others.

However, in a monetary landscape built upon a fixed supply of currency units—Bitcoin, for example, has a maximum supply of 21 million—the visualization of wealth expansion becomes discernible. Technological advancement, driven by the perpetual pursuit of achieving more with less, converges with value creation, resulting in a continual decline in prices. For instance, when we add value to society, such as in our app development example above, we intensify the competition between goods and services. This increase in the supply of valuable goods, while demand stays constant, initiates a downward price trajectory. Consequently, under a currency with a fixed supply, the manifestation of wealth becomes observable through declining prices. This wealth hasn't been stolen. It has been created!

If it's not already apparent, let's wrap up by answering the question: Why is intervention not the answer?

Intervention—let alone theft—turns the vibrant canvas of wealth creation into a dull black-and-white painting. Whether through subsidies, bailouts, or stimulus packages, intervening means taking from one part of society to support another.

The fixed pie we often experience, discussed in the opening lines, is precisely because of intervention. However, the solution doesn't lie in more intervention. It lies in less! Allowing the free market to function is the key. By embracing a free market, we enable wealth to ebb and flow with the rise and fall of value creation and technological advancement in society.

Having said all this, on a personal level, we may disagree with how someone may make money. However, as long as they're not relying on the fixed pie wealth accumulation methods mentioned, we cannot deny that their actions don't offer value. Why? Because there is demand for their services. People are willing to pay!

So to conclude...

Wealth is not a static pie but a dynamic balloon, expanding and contracting with the currents of value creation. So, let's discard the notion that one's prosperity must come at the expense of another. Instead, let's celebrate those with the gift of building—wealth without resorting to theft, extortion, or intervention—as this shows they are creating value.

Side Note: I recently stumbled upon an insightful article regarding this topic, but I can't for the life of me remember the author or find the article. If you come across an article along these lines, kindly drop a comment so I can properly cite this insightful article.

Before signing off, I wanted to mention that after over a year of putting pen to paper, The Hidden Cost of Money is nearly ready for release! In the words of @FossGregfoss:

“Anyone who cares about our future and the future of our kids should read this book.”

I feel humbled and eager to share it with you, and I just wanted to say thank you for your support. Without readers such as yourself, I wouldn't be here. If you're interested, you can check out the book via the below link.