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Zero-Sum Game Economic Fallacy
Zero-Sum Game Economic Fallacy
Jan 7, 2025 9:56 PM

Imagine this: a teacher tells her high school students that they are going to enjoy a chocolate cake, while learning about food distribution and economics. (As a former high school teacher, I assure you, most of the students heard nothing past the word, “cake”.)

The teacher then divides the students into three groups. In her class of 30 students, one group is made up of 4 students, a second group is 10 students and the third group is 16. The teacher then sets the cake before them, and announces that she will divide the cake according to food distribution norms among “first, second and third world countries”.

The group of four students will then enjoy half the cake. The second group of students will get about three-quarters of the remaining cake, and the smallest piece will go to the group of 16 students. Of course, protests will follow, along with a discussion of how unfair it all is.

The goal of the teacher will be, of course, to see if the students with the most cake will share their cake with the other two groups. If they don’t, that choice will be discussed as well. The students e away with the idea that everyone will have an equal piece of cake if only those with more share what they have.

This is a noble lesson, and we should of course share what we have, regardless of how much that is. (After all, Scripture doesn’t encourage only the rich to tithe.) Unfortunately, the lesson is wrong: it’s based on the idea that there is only one cake, and we can’t possibly get any more.

I have to admit, that as a teacher, I used lessons similar to this one. And never once, did I or any of my students suggest a most obvious answer: bake another cake.

We have the same problem, writ large, in today’s economic outlook: poor nations are poor because rich nations are hoarding what they have and not sharing. If only the rich nations would “share the cake”, everyone would have enough. It also reinforces the notion that poor countries have to sit around and wait for some noble rich nation to divvy up cake for them; they couldn’t possibly create one on their own. That type of paternalistic attitude is both dangerous and wrong. The “cake game” also supports the erroneous notion that large groups of poor people are going to take stuff from richer folks; therefore, we need to reduce the numbers of poor people in order to keep our “cake”.

This “zero-sum game” fallacy is only one problem with today’s economic policies, but it is a deeply-entrenched one. We all need to know that there isn’t just one “cake”, and that by enabling people to create their own food sources, create their own wealth and create their own stable economies, it won’t cost us our “cake”. We will, in fact, all have more cake – and what better reason to celebrate?

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