Getting a Piece of the Pie

[Danoff]

Sound like a reasonable statement to you? Sound like something that describes getting a good job and a growing bank account? If so, you might want to consider studying economics a bit.

How many times have you heard of economies referred to as a pie, as though everyone is fighting for whatever scraps they can get. What this implies, of course, is that if you get a scrap you take it from someone else. It implies that if you never try to take some of the pie, someone else gets more. Likewise, if you didn't get as much as you wanted, it's because someone else took it.

This is probably one of the oldest economic fallacies out there - that economies are zero-sum, like a pie. The reality is that this is about as far from the truth as possible. Wealth is created from nothing. Yes, wealth can be stolen, but economies are not based on a strict principle of redistribution.

Don't believe me? Don't believe that wealth is created? Don't believe me that generally speaking the rich don't get rich off of the backs of the poor? Consider the following thought experiment.

Dan, Bob, and John are the only people on an island.

Dan grows watermelons. He grows enough to sell 2 per day.
Bob grows apples. He grows enough to sell 2 bunches per day.
John grows cantelopes. He grows enough to sell 2 per day.


In this economy, let us assume that cantelopes, bunches of apples, and watermelons trade evenly. As in the price of 1 cantelope = 1 bunch of apples = 1 watermelon.

At the market:
Dan trades a watermelon to bob for 1 bunch of apples.
Bob trades his remaining bunch of apples to John for 1 cantelope.
John trades his remaining cantelope to Dan for his remaining watermelon.

Total wealth of the system: 2 watermelons + 2 cantelopes + 2 bunches of apples = 6 units

Dan's total wealth = 2 units (1 apple, 1 cantelope)
Bob's total wealth = 2 units (1 watermelon, 1 cantelope)
John's total wealth = 2 units (1 watermelon, 1 apple)

Ok, everyone's with me so far right? Perfect system, everyone has equal wealth, everyone trades evenly etc. etc.

Now, let's say Dan developes a technique to make watermelons more efficiently (my thought experiment, I get to be the smart one). Suddenly, he grows enough to sell 3 per day. Dan's total wealth just went up to 3 units. Let's observe what happens.

Dan sells 2 watermelons to John in exchange for his cantelopes.
John sells 1 watermelon to Bob in exchange for an apple bunch.
Dan sells his remaining watermelon to bob in exchange for an apple bunch.

Total wealth of the system: 7 units

Dan's total wealth = 3 units (1 apple, 2 cantelopes)
Bob's total wealth = 2 units (2 watermelons)
John's total wealth = 2 units (1 watermelon, 1 apple)

Bob still has the same wealth he did before. John has the same wealth he did before, but Dan has increased his wealth. He didn't take it from anyone, he created it where it previously didn't exist.

Let's say that the way dan managed to get his 3rd watermelon was because he invented a wheelbarrow. He decides to build another wheelbarrow (reduces his crop to 2 for that day), and sell the first one at a price of 2, which he correctly thinks that the market will pay. At the opening of the market, here's the rundown.

Dan: 1 wheelbarrow, 2 watermelons
Bob: 2 apples
John: 2 cantelopes

Bob buys the wheelbarrow with his apples.
Dan trades an apple and a watermelon to john for his cantelopes.

At the end of the day here's the breakdown of wealth takehome for the day:

Dan: 4
Bob: 2
John: 2

Next day. Dan has his new wheelbarrow. Bob also has a wheelbarrow. John does not.

Dan sells 3 watermelons
Bob sells 3 apples
John sells 2 cantelopes

Dan buys: 2 apple, 1 cantelope
Bob buys: 2 watermelons, 1 cantelope
John buys: 1 watermelon, 1 apple

Notice that John is not losing money? He's still taking home exactly the same thing he did in the beginning, even though wealth is growing around him.

The wealth distribution of the system is no longer equal, but that's because wealth has been created, not because it has been swindled/stolen/extorted etc.

This is a simplistic example, but I think it effectively conveys how capitalism works and how economies grow over time. It shows that to make more money, you don't need to take more from someone else.


Up for discussion:
Why is this a difficult concept to understand?
Am I full of it?
How pervasive do you think the notion of a fixed economy is?
Is this fixed economy fallacy the basis of socialism?
etc.

 

[TheCracker]

My brain aches even thinking about attempting to read that

 

[Danoff]

My brain aches even thinking about attempting to read that

Maybe I should make a diagram of some sort.

 

[Famine]

Dan, Bob, and John are the only people on an island.

Dan grows watermelons. He grows enough to sell 2 per day.
Bob grows apples. He grows enough to sell 2 bunches per day.
John grows cantelopes. He grows enough to sell 2 per day.

In this economy, let us assume that cantelopes, bunches of apples, and watermelons trade evenly. As in the price of 1 cantelope = 1 bunch of apples = 1 watermelon.

At the market:
Dan trades a watermelon to bob for 1 bunch of apples.
Bob trades his remaining bunch of apples to John for 1 cantelope.
John trades his remaining cantelope to Dan for his remaining watermelon.

Total wealth of the system: 2 watermelons + 2 cantelopes + 2 bunches of apples = 6 units

Dan's total wealth = 2 units (1 apple, 1 cantelope)
Bob's total wealth = 2 units (1 watermelon, 1 cantelope)
John's total wealth = 2 units (1 watermelon, 1 apple)

Ok, everyone's with me so far right? Perfect system, everyone has equal wealth, everyone trades evenly etc. etc.

Now, let's say Dan developes a technique to make watermelons more efficiently (my thought experiment, I get to be the smart one). Suddenly, he grows enough to sell 3 per day. Dan's total wealth just went up to 3 units. Let's observe what happens.

Dan sells 2 watermelons to John in exchange for his cantelopes.
John sells 1 watermelon to Bob in exchange for an apple bunch.
Dan sells his remaining watermelon to bob in exchange for an apple bunch.

Total wealth of the system: 7 units

Dan's total wealth = 3 units (1 apple, 2 cantelopes)
Bob's total wealth = 2 units (2 watermelons)
John's total wealth = 2 units (1 watermelon, 1 apple)

Bob still has the same wealth he did before. John has the same wealth he did before, but Dan has increased his wealth. He didn't take it from anyone, he created it where it previously didn't exist.

6 unit system: 6 units = 100% of available wealth

Dan's wealth: 33%
Bob's wealth: 33%
John's wealth: 33%

7 unit system: 7 units = 100% of available wealth

Dan's wealth: ~42.8% (I hate dividing by 7)
Bob's wealth: ~28.6%
John's wealth: ~28.6%

Dan's wealth has gone up, by dint of his hard work, but inflationary forces have reduced the wealth of the others - they have the same raw wealth they had before, but that wealth is no longer worth as much.


Like if I take £10,000 and bury it for 3 years. It'll still be £10,000 when I dig it up, but it'll be worth the equivalent that £8,700 was at the start of the 3 years.

Notice that John is not losing money? He's still taking home exactly the same thing he did in the beginning, even though wealth is growing around him.

The wealth distribution of the system is no longer equal, but that's because wealth has been created, not because it has been swindled/stolen/extorted etc.

This is a simplistic example, but I think it effectively conveys how capitalism works and how economies grow over time. It shows that to make more money, you don't need to take more from someone else.

I don't think it quite shows that - you're certainly not taking money from someone by increasing your wealth, but you are taking value - but it does show that innovation is and ought to be an asset to be valued and rewarded.


Incidentally, I can't abide cantaloupes.

 

[opelgt1969]

Day 5 Bob gets smart and realizes that man can not live on mellons or lopes along ; has brainstorm either starts trading 1/2 bushel instead (raises price) at a time or just lets the others die and then he has all food.Bob's not always stupid like in GT4.

 

[Philly]

So I think I get what you are getting at. It makes sense that the strength of a nation's economy is based on their actions, and that there is not a fixed amount of wealth between them. That as one nation grows, others will not necessarily suffer, unless they play their cards wrong.

However, I'm having a hard time grasping this for the 300 million people in the US, the 500 million in Western Europe, the billions in China and India. Maybe the hard part is just realizing what we are talking about. I guess wealth can be boundless, but wealth is changeable for capital (? Or do I want currency?), and there isn't an infinite amound of that. I just can't get over the fact that if I make $20 per hour versus $15, that extra five doesn't come out of somebody else's pocket.

Great theory. I'm just going to need a little explaining to be conviced. Everything just isn't adding up.

 

[Danoff]

6 unit system: 6 units = 100% of available wealth

Dan's wealth: 33%
Bob's wealth: 33%
John's wealth: 33%

7 unit system: 7 units = 100% of available wealth

Dan's wealth: ~42.8% (I hate dividing by 7)
Bob's wealth: ~28.6%
John's wealth: ~28.6%

Dan's wealth has gone up, by dint of his hard work, but inflationary forces have reduced the wealth of the others - they have the same raw wealth they had before, but that wealth is no longer worth as much.

The percentage of total wealth that each person has is irrelevant. The only thing that matters is what products or services their goods buy - and that hasn't changed. Wealth is measured in purchasing power, and john hasn't lost purchasing power.

Deflation plays a role eventually (I didn't want to get into it). At some point dan and bob's increased productivity cause deflation in John's products... it actually benefits John, and in this way John can benefit from Dan's extra work and Bob's increased productivity without doing anything at all. Bob and Dan will eventually start undercutting each other and offering him 2-1 deals. But this is a higher order effect, the basics remain.

Of course, deflation is a bad thing. But the bottom line is that it's the watermelons and apples that will buy less, not the cantelopes.

 

[Touring Mars]

Maybe I should make a diagram of some sort.

How about a pie chart?

 

[Famine]

The percentage of total wealth that each person has is irrelevant. The only thing that matters is what products or services their goods buy - and that hasn't changed.

Deflation plays a role eventually (I didn't want to get into it). At some point dan and bob's increased productivity cause deflation John's products... it actually benefits John, and in this way John can benefit from Dan's extra work and Bob's increased productivity without doing anything at all.

Of course, deflation is a bad thing. But the bottom line is that it's the watermelons and apples that will buy less, not the cantelopes.

Someone had to get the ball rolling though...


Also, if you want to do anything bad to Valandil, feel free to let me know.

 

[Philly]

I think the difference here might be the difference between wealth and currency. If I make money, but everybody else makes money faster, my portion will actually be worth less and less as time goes on.

Wealth does not necessarily have to be limited. Wealth is how much you you are worth. Other people's actions cannot rob you of wealth, unless they actually take it from you.

 

[Danoff]

So I think I get what you are getting at. It makes sense that the strength of a nation's economy is based on their actions, and that there is not a fixed amount of wealth between them. That as one nation grows, others will not necessarily suffer, unless they play their cards wrong.

However, I'm having a hard time grasping this for the 300 million people in the US, the 500 million in Western Europe, the billions in China and India. Maybe the hard part is just realizing what we are talking about. I guess wealth can be boundless, but wealth is changeable for capital (? Or do I want currency?), and there isn't an infinite amound of that. I just can't get over the fact that if I make $20 per hour versus $15, that extra five doesn't come out of somebody else's pocket.

Great theory. I'm just going to need a little explaining to be conviced. Everything just isn't adding up.

Grounding these principles in our current economy requires a little more work. I didn't introduce currency, and Famine touched on the concept of inflation/deflation, which I also left out.

But consider for a moment what happened when dan made his 3rd watermelon. He bought two apples and a cantelope with it. Those apples and cantelopes did come out of someoen else's pocket (just like your extra $5 did). But they got something in return. Their products bought the same amount they always did... those people weren't slighted.

So when your pay goes up, in theory it's because you're actually producing more. People aren't paying you more for the same thing (if they are, you were underpaid before).

I think the difference here might be the difference between wealth and currency. If I make money, but everybody else makes money faster, my portion will actually be worth less and less as time goes on.

Not quite. Growing economies actually cause deflation, which would increase your money's worth over time. I'll post about that in a minute.

 

[Philly]

But consider for a moment what happened when dan made his 3rd watermelon. He bought two apples and a cantelope with it. Those apples and cantelopes did come out of someoen else's pocket (just like your extra $5 did). But they got something in return. Their products bought the same amount they always did... those people weren't slighted.

So when your pay goes up, in theory it's because you're actually producing more. People aren't paying you more for the same thing (if they are, you were underpaid before).

Ok. I think I've got it now. So the robbery redistribution would occur when somebody is under/overcharged for their services.

Not quite. Growing economies actually cause deflation, which would increase your money's worth over time. I'll post about that in a minute.

I'm no economist, so all of the pieces might fall better into place once this is explained.

 

[Danoff]

Ok. I think I've got it now. So the robbery redistribution would occur when somebody is under/overcharged for their services.

I don't think I'd call it that really, because it's still a voluntary exchange. But yes, you left some money that you could have had with someone else if you don't extract full market value for your services. At that point, someone else is getting an extra piece of your productivity.

I'm no economist, so all of the pieces might fall better into place once this is explained.

Ok, let's expand on the example from above:

Wealth Breakdown:

Dan: 2
Bob: 2
John: 2

Let's say there are dollars in the system. Let's say that 1 dollar corresponds to 1 unit of wealth.

So Dan's wealth = John's = Bob's = $2

Now, there is only $6 in currency. There are only 6 physical dollars in existance.

Now let's assume Dan introduces an additionl product.

Now Dan's wealth should be = $3, but there isn't enough currency to reflect that. The 7th dollar doesn't exist.

You have the same amount of currency spread out over a different number of products. What that means is that the same currency must now buy more than it used to. Now $1 no longer buys 1 cantelope, or 1 watermelon, it has to buy 1 and a fraction. This is deflation - the purchasing power of currency increasing to reflect the growing economy.

To counteract this, new currency has to be added to the system. This is where the government can come into play, but that's not entirely necessary.

The fundamental concept, though, is that to prevent deflation of the currency supply, the currency supply must adjust to compensate for economic growth.... and that's how wealth (created from nothing) creates currency (from nothing).

 

[FoolKiller]

Up for discussion:
Why is this a difficult concept to understand?
Am I full of it?
How pervasive do you think the notion of a fixed economy is?
Is this fixed economy fallacy the basis of socialism?
etc.

First, what brought this on?


It is a difficult concept to understand because most people don't learn economics unless they go to college. So, the people who are most likely to understand this system will be the ones best suited to take advantage. Those who don't understand it are the ones who are most likely to be left holding their melons while everyone else produces more fruit. And because they don't understand it they think they got screwed and then demand the government too intervene and at regulate that someone provide them with more fruit at a minimum.

No you are not full of it.

The idea of a fixed economy is very pervasive because those who don't understand economics are more than those who don't. Some people have trouble grasping the concepts. For example: my mom couldn't understand economics if it had pictures and arrows, but accounting is straightforward and solid enough that she does it with no problem. I on the otherhand am very abstract and understand the ideas of economics and even their long standing effects as opposed to just the here and now, but accounting is so boring and I am so ADD that I can't focus long enough to crunch all the numbers. Her checkbook is balanced and mine never is, but I know how to keep positive income flowing into it in ever increasing amounts. Because of this my mom's gut reaction to anything is emotional because She just sees people with less as "suffering." I usually explain it to her over time and she comes around to my point of view. As accounting uses simple math most people can do that enough to understand that someone suddenly has more than them, but the abstract principle of increased overall wealth escapes them and so they think they were screwed over.

While the fallacy of a fixed economy may partially lead to socialism you know as well as I do that what ultimately leads to socialism is also its downfall, greed. The "have nots" want to be "haves" (greed) and as they outnumber "haves" they push for more and more socialized policies until the "haves" are also "have nots" and then when everyone is equal people still want more, thus counterbalancing the system.

 

[Danoff]

First, what brought this on?

Honestly, I was listening to a song in which the singer was talking about getting finances together and getting a "piece of the pie". That and I've had a bunch of discussions with co-workers and folks on GTPlanet about economics and I constantly run into this incorrect notion of economies.

oh... and the opinions board was getting dusty.

 

[FoolKiller]

Honestly, I was listening to a song in which the singer was talking about getting finances together and getting a "piece of the pie".

Was it The Jefferson's theme song?

That and I've had a bunch of discussions with co-workers and folks on GTPlanet about economics and I constantly run into this incorrect notion of economies.

Really? You? Next my wife is going to tell me I talk about taxes and welfare too much.

oh... and the opinions board was getting dusty.

I noticed. I got busy with life for a while and there were no new threads when I got back. My first thought was, "I'm not opinionated and outspoken enough to move that board along by myself, am I?"

 

[vladimir]

is it just me or did you forget supply and demand in your system?

 

[Danoff]

Not forgotten, simplified. Do you think it changes something?

 

[vladimir]

in fact, i do.

if you've got a limited customerbase like in this example a higher production won't do you any good as it will only decrease the value of your product.

 

[Danoff]

in fact, i do.

if you've got a limited customerbase like in this example a higher production won't do you any good as it will only decrease the value of your product.

Well, strictly speaking, each party has a monopoly on their particular goods - so they can set the price at whatever they want.

So higher productivity is still valuable as long as the demand is not being completely met. If Bob and John have all the watermelon they could possibly want, I agree that Dan shouldn't make any more. The first few times I presented this scenario I had Dan introduce a completely different product, so that it would be clear that demand existed - but that seemed a bit confusing. In this case I keep the product the same, and assume that Bob and John want another watermelon just as much as they want a cantelope or an apple.

In reality, Dan would need to do a market study ahead of time before devoting his resources to wheelbarrow development. But I think that's getting a little beyond the scope of this example.

 

[Kylehnat]

Why is it that "Dan" seems to be the best-off in your example?

I agree with you that wealth is not a conserved quantity. If it were, society would not advance; we'd still live in caves, and GTP would be nothing more than a few crudely placed marks in the dirt. Perhaps the saying should not be "piece of the pie", but rather "piece of pie". Maybe there are actually two pies. The notion that for one person to become wealthier, someone else must become poorer stems from the fact that oftentimes, a company will layoff a hundred workers (usually low-paid), while the CEO gets another 7-figure bonus, which would pay the salary of most of those workers. Or, the notion goes back to olden times, when the wealthiest people were factory owners who exploited their workers, allowing them to pocket more of the revenue.

Now if you'll excuse me, I'm going to the grocery store to buy every single pie they have.

 

[YSSMAN]

I think I'm getting a hold of the idea here, but I'm not sure where we're leading this discussion.

Are we deciding that there is plenty of pie to go around, and therefore we must take advantage of the situation in order to progress financially? Or are we deciding that our American capitalist system is better than that of another?

Personally speaking, I'd subscribe to the idea that while there is plenty of pie to be had for everyone, it largely comes down to one's ability to take advantage of what they have in order to increase their pie count, or to let it slip away. Or depending on what you like, being content with what pie you have. I'm personally in the "content with what I have" phase at the moment, going by with what I can in college.

The United States must, therefore, be a pretty interesting place to observe the ideas of capitalism at its best (or worst). I constantly hear complaints at school about why people should have this "advantage" over poorer people, and simply put, I always remind them it is a question of being able to apply ones self in order to get to where they need or want to be. It doesn't matter if you're from Harlem or Hollywood, life has an interesting way of working things out, and quite frankly, just because you start wealthy doesn't mean you end that way.

Leave it to America to figure that one out I guess. We're the only country I know of that is so dependent on vast consumerism to drive the economy forward, it has to create some kind of economic vacuum unseen anywhere else in the world.

 

[Omnis]

I think the real point is that people (especially poor people) think that their pie is being eaten up, and therefore vote for redistributive policies, etc. What they would otherwise see is that such policies do them more harm than good, and that they would be better off, through policy and action, encouraging the growth of their "slice".

 

[YSSMAN]

Ah, I see now. I was a bit confused.

All the liberals, and those uneducated folks seem to think that they are "entitled" to everything, not realizing that they may actually have to work for something in their lifetime.

...Someone needs to remind the rest of the world that one of these days...

 

[niky]

I think the example might be oversimplified.

This may hold true at the point where supply does not exceed demand, or where the numbers are too small to affect currency valuation and service valuation.

And granted that the raw material required to produce... uhh... produce is not limited. In other words, limitless farming land, sunlight, etcetera. And that all players enter the arena at exactly the same time, with the same market share and technology.

What if watermelons taste better? What is the point of selling them to everyone else if all you'll get in exchange is food? That's the reason for currency in the first place. You can't trade one watermelon for one apple. You can trade one watermelon for twenty pebbles, then pay five pebbles for an apple.

And then, when you've made a ton of pebbles off of watermelons, you can afford more land, at about a thousand pebbles. With the new land, you go on to attack the apple market, with a vengeance. Bob only makes so much off of apples, he's still in the process of saving up for his extra land.

John goes into the wheelbarrow business instead. It's a hundred pebbles per wheelbarrow, he doesn't need to grow canteloupes anymore. The market goes unserved on that end. People have to buy watermelons and apples instead.

Dan finally gets his apple orchard running. He's selling so many watermelons, he becomes a brand-name. Dan's Fruits, Inc.. He ventures into canteloupes, too. John becomes a full-time wheelbarrow maker. Bob, making nothing but fruits, can't compete, and simply doesn't make enough pebbles to support his operation. Fine, he's still making a dandy lot of pebbles.

Enter Farmer Pacho. He wants to sell watermelons, too. But he doesn't have land or wheelbarrows or seeds. He'd like to buy some, but Dan's already paying so much for land (he's rich, so people charge him a lot of pebbles for land) and wheelbarrows (ditto), Pacho can't afford to pay so much... not off of what he makes growing just two watermelons a day. He can feed himself, yes, but that's before taxes. Oh, yeah. You can't just plow and till any land you want to, not anymore. You have to find a fertile plot that no one else is using... and you still have to contend with whatever government or bandit group is taxing the local constituents.

Granted, I don't believe in communism, simply because it creates equality and equanimity artificially, and does not tend to reward innovation or hard work. But I don't see things as being so simple. Thanks to the current state of affairs, "Dan" is selling tons of grain at prices most third world farmers can't meet.

And it's not a strictly capitalistic valuation, either. His government, created in part by contributions from his produce, returns the favor by granting him a subsidy which lowers his operating costs in pebbles. In the meantime, Farmer Pacho has to contend with the fact that tending a field by hand, without those fancy new wheelbarrows he can't afford, will never make him enough money to go to College, buy a tractor or a water pump, afford Penicillin or even a pair of new Nikes. Simply because there isn't much demand for his puny, diseased and discolored Watermelons. He'll eat okay, yes, but the moment there's a drought, famine, or a plague, he's doomed.

-----

No, you don't have to build a business on the backs of poor people. But historically, modern First Wolrd countries have exploited the resources and manpower of Third World countries to build their empires. They don't do this so bluntly anymore, but people's memories are long, and whether they're deserving of it or not, they all want compensation.

And the way you do business, in the end, will affect them, simply because it isn't a level-playing field, anyway, due to afore-mentioned circumstances.

Not to say that there isn't any inequity in a socialist or communist system. Just that they don't reward the same kind of traits that a capitalistic system rewards. The rewards in such systems always go to the bureaucrats instead of the innovators. In a capitalistic system, initially, the rewards will go to those who work harder or who innovate, but down the line, rewards are created for those who don't earn them.

Like me. I didn't work for everything I have. Although I get just compensation for what work I do, I receive bonuses of wealth by virtue of birth, family association, and the like. I've got brains, but I've had the benefit of good education (due to family and money) that helped me develop into what I am, now. I've got a decent personality, and great speaking skills, but doors that open to me are often opened due to my social class and name.

-----

It's great to be alive in the USA, or to be one of the throng of the worldwide middle class, with opportunities open to you if you want to work hard enough to get them. Those opportunities might be available to some in the worker/farmer/proletariat class... but stories of people rising out of the muck of poverty to become successful are the exception rather than the rule. Especially when your bootstrapping job may be to work at the local Mickey D's, which, in this country, requires that you be a tuition-paying college student to work there. Of course, you can't afford college unless you have a job in the first place... oh, the irony!

But the key in these stories is education and opportunity. If you're lucky, you're third-class in a first-world country (like the USA) or even a city in a third-world country (like Manila), that offers decent, free education, and economic opportunities (limited as they are) to take advantage of that.

Given enough education and opportunity, Farmer Pacho will, at the very least, learn enough agricultural science not to starve. He'll learn crop rotation (so as not to use up the land if he can't afford fertilizer) and irrigation. Maybe he'll grow enough watermelons to support himself, instead of going off to the city as a beggar or a vagrant, where you can make hundreds of pebbles a day, begging, instead of having to till a field to grow small and unappealing watermelons.

------

It's an oversimplification by rich westerners and communist academics, who think that redistributing wealth itself is the answer. And an oversimplification on your parts, too. Lack of wealth is a symptom. The underlying cause is lack of economic opportunities and the uneven distribution of such. In an ideal world, we're all given a bag of seeds, a shovel, and a plot of land. In the real world, there are lots of people who don't have any of the above. But that's the way the world is... and as populations grow, that's the way it'll continue to be.

 

[FoolKiller]

You do realize that the monet you brought in government subsidies and taxes affecting how someone else is able to compete you just proved Danoff's point? Anyone who supports what Danoff is saying will believe that the government should stay out of the process altogether. The government shouldn't subsidize business anymore than it should give handouts to individuals.

Your problem is that you described the American capitalist system wholely, but the American system is not precisely what Danoff is trying to support. Why would you think that he would support government fiddling here when he doesn't support it anywhere else, ever?

Your bandits are also a part of the problem. They are worse than people taking welfare, because those taking welfare don't realize they are stealing and I will give them the benefit of ignorance, but a bandit will arm themselves with the full intent of stealing. Once again they are part of the problem Danoff is describing because they want a piece of pie without using their oven or paying the cook.


And Pacho coming in to try and start up his own business ina market that is saturated and has its supply met, whose fault is it that he struggled? Pacho sounds like a bad businessman to me. I give him credit for trying, but their is no guarantee that he will succeed, as it should be, and anyone helping him succeed out of kindness is only hurting him, and the market, in the long run. Pacho should have checked out the market first to see if he would be able to provide a service/product not yet met. If Pacho were smart he would have switched to growing the now unmet cantaloupe market or found a different marketplace to sell his watermelons.

And I guess Pacho couldn't have gotten a loan to buy the better land? The term business loan is fairly common.

Basically, you have tried to throw off the system by adding things that would be part of the problem Danoff wishes to avoid and by introducing a bad businessman who has no more guarantee of success than any of the other three. If you guarantee Pacho any kind of success you throw off the system and give him an unfair advantage that he didn't earn, which is the whole point.

 

[UnoMOTO]

Wouldn't the "pie" be considered the amount of dollars in current circulation that has been issued by the Federal Reserve? It seems like that might have been where the saying came from. It doesn't really matter who is taking it from whom or where an individual is getting it. There are just so many "real" dollars that could be had. And I'm not talking about unrealized money such as in stock trading that is just based on paper numbers.

 

[Danoff]

Wouldn't the "pie" be considered the amount of dollars in current circulation that has been issued by the Federal Reserve? It seems like that might have been where the saying came from. It doesn't really matter who is taking it from whom or where an individual is getting it. There are just so many "real" dollars that could be had. And I'm not talking about unrealized money such as in stock trading that is just based on paper numbers.

The number of dollars in circulation is in flux. If you produce, your actions increase the number of dollars in flux because the Fed compensates for the growing economy to prevent deflation. So the pie (of circulating currency) grows as you produce. Actually, it grows slightly faster than that because the government enjoys the ability to print itself money - which leads to inflation.


(BTW, thanks FK for fielding niky's post)

 

[Mrs. Famine]

The temptation to post the 'percentage of pie chart which resembles pac man' picture is almost overwhelming...

 

[UnoMOTO]

The number of dollars in circulation is in flux. If you produce, your actions increase the number of dollars in flux because the Fed compensates for the growing economy to prevent deflation. So the pie (of circulating currency) grows as you produce. Actually, it grows slightly faster than that because the government enjoys the ability to print itself money - which leads to inflation.

Understood...I was just commenting on how the phrase may have gotten started. Who knows?