[Martin Lewitt Jan 3, 2011 2323 MST]

[From Rick Marken (2011.01.03.1820)]

`Fred Nickols (2011.01.03.1310`

MST)–

`Aha!`

I see. And what I see is that you and I have very

different definitions of zero-sum. And what I

described is non-zero-sum.

`I agree. But I think it's not so much that we have different`

definitions of “zero sum” as we have different concepts of

where the “sum” – GNP or the “pie” that is the $ value of the

goods/services produced by the economy in some time period –

comes from.

```
I doubt we really have different definitions.
```

`Let's think of GNP as a pie (apple, if you please) of a`

particular size (let’s start with 10 oz). I see that pie as

the collective result of the efforts of the people who make up

the economy (let’s say there are just two people in the

economy, A and B).

```
Are you over simplifying a bit? As cumulative statistic is the
```

collective resultS of multiple collective and individual efforts or

people that make up the economy, who made varying contributions and

many of whose efforts were actually counter productive.

`So lets say that a 10 oz pie is available to be split by`

the two people who made it. Let’s say A (because he is a

competent CEO type who knows how to order people around) gets

9oz and B (who actually knows how to bake pies) gets 1oz.

Obviously at this point this is a zero sum game; if B demands

a larger piece, say 2 oz, then A gets a smaller piece, 8oz.

```
Obviously not, the pie is a lot more valuable than the ingredients
```

that he started with unless B is a very poor cook, the sum has

increased.

`Now suppose, after practice, A and B manage to bake a 20 oz`

pie. If they split it as they did the 10 oz pie then A gets

18oz and B gets 2 oz. B has gotten twice as much as the 1 oz

he got with the 10 oz pie but I see the situation as still

being zero sum. If B demands more than 2 oz then A will get

less (and vice versa). But you would see this as being a

non-zero sum situation because both A and B get an increase in

the absolute amount of pie. I would agree that this is a

non-zero sum increase if the increase B gets was all B’s doing

and the increase A gets is all As doing. In this case, B could

increase his portion independent of what A does; so the

increase that B gets does not depend on what A gets. This is

like the situation in the example you gave in your earlier

post:`FN: Let A = 90 and B = 10. GDP equals`

100

`If A increases to 95 and B decreases to 5, GDP still equals`

Ergo: zero

`sum.`

```
You forget that GDP stands for Gross Domestic PRODUCT, i.e., income
```

or production and not the pre-existing wealth, so it already

represents a nonzero sum game, there is MORE.

`However, if A increases to 100 and B increases to 15, GDP`

now equals 115.

`No zero sum.`

`Note that this assumes that A and B produce their increases`

independently. The sum increases as a side effect of the

increase in the size of the portion produced by A or B or

both. If an economy worked this way then I would agree that it

is a non-zero sum situation. But I don’t think economies do

work this way. I think the size of the pie (GNP) that is to

be divided at any instant by the population that makes up the

economy depends on the joint efforts of everyone in the

economy. So at any instant, the economic pie is like the

“reward” that is to be divided by players A and B in a zero

sum game. What A gets of this pie diminishes what B can get

and vice versa. At any instant the division of the economic

pie – GNP – is zero sum game.`I think conservatives like the non-zero sum notion of an`

economy because they think that individuals are independently

responsible for how much of the pie they produce and, thus,

get. So if the pie is 100 units and A gets 90 and B gets 10

they believe that B could get a larger postion if B just

worked harder and produced more. So if B stopped being so lazy

and started really pushing, Bs share of the pie could go from

10 to 20 units and the GNP would grow from 100 to 110

(assuming A keeps working just as hard as before and gets 90

units again). I think this view of the economy – this

non-zero sum view – is completely wrong. In a highly

specialized economy where many people contribute to the

production of every good and service that makes up GNP, size

of the “pie” depends on everyone working together. So how much

anyone gets of the pie depends not on just their own efforts

but also on the common effort that determined how much total

pie there is. So how much each person gets of that jointly

produced pie is a zero sum game.`At least, that's how I would incorporate distribution of GNP`

into my model economy. I haven’t included that yet but it’s

the next step, if I ever decide to work on it again.

```
I know you are enjoying this.
regards,
Martin L
```

## ···

On 1/3/2011 7:17 PM, Richard Marken wrote:

`Best regards Rick`

`I did a little research and my`

definition matches what I find “out there.” I don’t

know where you got your definition but it doesn’t fit

with what I know to be zero-sum.

`I guess we’ll just to agree to`

disagree.

Regards,

Fred Nickols

From:Control Systems Group

Network (CSGnet) [mailto:CSGNET@LISTSERV.ILLINOIS.EDU ]

On Behalf OfRichard Marken

Sent:Monday, January 03, 2011 11:30 AM`**To:** CSGNET@LISTSERV.ILLINOIS.EDU`

Subject:Re: Social reorganization

`[From`

Rick Marken (2011.01.03.1030)]

`> Fred Nickols (2011.01.03.0710 MST)-- >>Rick Marken (2011.01.02.2110)-- > >> It's all mathematical, >> and very simple math at that: GNP = A + B.`

If A increases, B must

>> decrease in order to preserve the sum

(GNP). Zero sum. And that is

>> true even if GNP is a variable.

>

> Let A = 90 and B = 10. GDP equals 100

>

> If A increases to 95 and B decreases to 5, GDP

still equals 100. Ergo: zero

> sum.

>

> However, if A increases to 100 and B increases

to 15, GDP now equals 115.

> No zero sum.`No, it's still zero sum with a new sum (115). If A's`

share increases then B’s must decrease in order to

maintain the sum.`> The zero sum view of GDP seems applicable only`

in terms of viewing GDP as a

> percentage so that A + B must equal 100. In

that case, GDP is not a

> variable; it is a constant of 100%.`No, it's zero sum whether GDP is represented as an`

absolute number or a percentage.

`> What I'm getting at, of course, is the notion`

of building a bigger pie, not

> simply cutting up an existing pie.`As I said in an earlier post, it's zero sum (by`

definition; an increase in the proportion of the sum

going to one “player” means a decrease in the

proportion going to another) whether the sum is

constant or variable. By increasing the sum (and

maintaining the relative portions of the sum going

to each “player”) you will increase the absolute

size of the portions of the sum going to each

player. This is what you did in your example. When

the sum was 100, 90 went to A and 10 went to B. When

the sum went to 115, 100 went to A and 15 went to B.

So both player A and B saw increases in the absolute

size of their share of the sum. But this has nothing

to do with the fact that, at any instant, the “game”

is zero sum.`Of course, in an economy the sum (GNP) is variable;`

it goes up

anddown. As Bill Powers

(2011.01.01.1025 MDT) noted, this fact is pointed

to by conservatives as evidence that the economy is

not zero sum. But this is just redefining the

meaning of “zero sum”. The fact is that, at any

point in time, an increase in the amount of GNP

going to one “player” means a decrease in the amount

going to the other. If the proportion of GNP going

to each player remains constant, then an increasing

GNP (sum) will, indeed, increase the absolute amount

of GNP going to each player. This is the “rising

tide lifts all boats” idea. (This “rising tide”

concept is true, by the way, only if both players

get more than 0% of the sum (GNP); if one player

gets 100% and the other gets 0% then a rising tide

lifts only the boats of the player who has boats,

the one with 100% of GNP. ). But this “rising tide

lifts all boats” notion is completely unrelated to

the fact that the economy at any instant is of

finite size (GNP) and that the more one player has

of GNP at any instant the less the othermust

have. That’s zero sum.`Independent of whether the economy is zero sum`

(which is it) Bill Powers (2010.01.03.0742 MDT) has

pointed out how inequitable is the idea that a

“rising tide lifts all boats”:

`BP: Yes, this is what I was`

saying. However, because the pie is divided 9:1, an

increase of 10% overall would, roughly speaking,

come out to a 1% improvement divided among 99% of

the population, or about 0.01% each, and 9% divided

among the remaining 1%, or 9% each. At the

individual level, the ratio is 900 to 1. So every

improvement simply widens the gap in absolute terms.

Did I do that arithmetic right?

`A rising tide does lift all boats (as long as you`

have a boat) but when the relative share of GNP

going to different portions of the population are

quite different, the size of the gain for each

portion is quite different as well.

`Best Rick -- Richard S. Marken PhD rsmarken@gmail.com [www.mindreadings.com](http://www.mindreadings.com)`

`-- Richard S. Marken PhD rsmarken@gmail.com [www.mindreadings.com](http://www.mindreadings.com)`