The Illusion of Zero-Sum Economics: How Misconceptions About the Economy Unite the Left and Right

The article argues that the economy is not zero-sum, meaning that one person's gain doesn't necessarily mean another person's loss. It cites the Industrial Revolution as a turning point when economic growth and innovation created a positive-sum view of the world. However, in recent decades, people have become skeptical about their children's economic prospects, leading to populism and nostalgia for the post-war US economy. The article warns that policies aimed at addressing zero-sum problems can actually make the economy more zero-sum.

The recent surge in populism and nostalgia for the post-war US economy has led to a resurgence of zero-sum thinking, the belief that one person's gain is another's loss. However, this perspective is increasingly outdated and misguided. The economy is not zero-sum; instead, it operates on a positive-sum principle, where cooperation, innovation, and growth benefit everyone.

The Industrial Revolution marked a turning point in economic thinking. Before this era, resources were finite, and economic growth was near zero, leading to a zero-sum economy. However, the Industrial Revolution brought about significant innovations that allowed for increased productivity and economic growth. This shift in economic thinking, which emerged during the Enlightenment, introduced the positive-sum view of the world [1].

Today, the developed world has known only growth since the Industrial Revolution. This growth has created a positive-sum view of the economy, reflected in many economic policies. However, recent decades have seen a shift in attitudes, with people doubting their children's economic prospects and questioning the economic system. This skepticism is driving populism on both the left and right and the rejection of neoliberalism more broadly [1].

While the overall economy is positive-sum, there are pockets where a zero-sum view prevails. For example, younger generations and those in high-productivity fields face a more cut-throat economy. Success in these fields often requires living in high-cost cities, leading to a widening wealth and income divide between the economic and cultural elite. Additionally, the pace of technological change introduces uncertainty, which can increase zero-sum thinking [1].

Policies aimed at addressing zero-sum problems can paradoxically make the economy more zero-sum. For instance, policies that aim to redistribute wealth from the rich to the poor or from foreigners to natives can exacerbate scarcity and competition, making the economy feel more zero-sum. It is crucial to think positively and recognize that, for the last several centuries, the positive-sum view has been true [1].

The upcoming gubernatorial elections in the United States, particularly in swing states, will be a test of these economic principles. Governors will be at the forefront of addressing economic challenges such as the rising cost of housing, federal workforce cuts, and immigration policies. The elections will also provide insights into the political future of the country and the effectiveness of policies aimed at addressing zero-sum problems [2].

In conclusion, while there are challenges and uncertainties in the economy, it is essential to maintain a positive-sum view. The economy is not zero-sum; it is a complex system where cooperation, innovation, and growth benefit everyone. Policymakers should focus on addressing the root causes of economic inequality and uncertainty rather than trying to redistribute wealth or restrict trade.

References:
[1] https://www.bloomberg.com/opinion/articles/2025-07-28/don-t-be-seduced-by-zero-sum-thinking-about-the-economy
[2] https://www.usatoday.com/story/news/politics/2025/07/27/governor-race-election-2025-2026-trump-democrats/85360175007/