There is No Pie

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The common cliché, “I’m going to get my piece of the pie” references the idea that there is a limited amount of resources, and unless I can get to those resources first others will eat them up so that I will lose out. However, there is no pie. Wealth is not a zero-sum game like the casino where the only way to succeed is at the expense of others.

The seeds of socialism, and the political divisions that exist in relation to governmental controls over economic freedom, can usually be traced to a single, fundamental misunderstanding about wealth. Contrary to popular belief, wealth is not a limited commodity; when one individual, or a group of people, accumulate wealth, it is not at the costs of another individual or other groups of people. Wealth may be scarce, but it is not a limited, finite resource.

Rather, wealth is infinite.

Politicians love the perceived disparity of wealth. Democrats use it to promote fear amongst their constituents that the wealthy are obtaining their wealth on the backs of the poor. Republicans use it to promote fear that the people that depend on the government are out to get their wealth from more successful taxpayers. But neither is fully correct: it is the government that is most responsible for draining wealth away.

Typically, people confuse wealth with currency and the currency value of physical assets, such as real estate, gold, securities, etc. However, wealth goes beyond intrinsic currency values. I might hold items that have a greater relative value to me than to others who hold the same items. I own a 1989 Mustang GT that I have had since it was brand new right off the showroom floor. There are a number of people who keep asking me if I would be willing to sell it. However, I know that the market value of the vehicle is not nearly as great as the silly sentimental value that I attach to it. Its sentimental value to me is greater than its currency value.

Similarly, people value time differently. If time represents a potential to earn money by performing work, then why do people want to sacrifice it for free time? There is a value beyond that which is represented by the economic opportunity costs of not earning money during those times. Time itself can represent additional wealth.

Due to this nuance, the growth of wealth is potentially infinite, and it does not come at the expense of others. People assign varying importance to all sorts of things, and it is impossible for someone to take away the importance of items from you. Personal wealth is not reliant on anyone else for its growth. Your potential to assign importance to the things that you have is not limited by anyone or anything.

There also the fallacy that currency accumulates at the expense of others by how things are valued, currency-wise, in the marketplace. For example, your boss is not earning more money than you at your expense. His value and skill set is compensated separately from yours. Corporations do not value their CEOs based upon the value of their other employees; they value CEOs based upon how well they can acquire similar values of what the CEO can bring to the company vs. available alternatives.

The fact that people earn different incomes, even for equivalent jobs, does not equate to the existence of unfairness. Rather, it represents millions of decisions of value by individual businesses in the marketplace. Nobody makes more money than another person at that other person’s expense.

It is entirely possible for wealth to grow for all people, all at once. If a pie exists, then the entire pie can grow in such a way that everyone can keep getting seconds. Wealth is not a limited resource that dwindles as people accumulate it. Your gains and losses in wealth do not represent direct gains and losses with others. There is no pie, and there is no conspiracy to acquire your wealth.

There is, however, an entity that does siphon wealth away from its constituents, often to redistribute it, and that entity is government. When government confiscates wealth, typically in the form of currency, that wealth is taken out of trade, and therefore represents a true loss of wealth for all market participants. Other people aren’t to blame for the loss of wealth. Government is. So, stop allowing politicians to play on your fears so that you believe that another group of people is out to steal your wealth. Instead, look to your government, for it is the only true cause of lost wealth.

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Danny Chabino

Danny Chabino has a background in operating small businesses. He has been involved in managing and/or owning the operations of multiple retail establishments, a sub-prime lending company, a small insurance company, a small telemarketing venture, and insurance consulting. In addition to these activities, he also has spent many years managing investments in stocks and stock options as a successful trader. He is the married parent of two adult children, living as a proud lifelong Oklahoman and a part-time redneck. Danny writes for the enjoyment and pleasure of sharing ideas and for the love of writing itself. His opinions skew libertarian, but he enjoys hearing open debate and listening to or reading of opposing ideas. As an odd confession, he personally detests politics, but enjoys writing about political ideals and philosophies.