Economies are zero sum. Your statement is a fallacy I see touted everywhere.
All economic products cost energy to generate and all energy is limited in totality by the available energy on earth.
When someone uses this energy, another person cannot use it.
This holds true even for the most abstract product. Say the economic product of poetry produced/sung by a poet.
The poet needs energy to sustain himself and the time needed to produce the poem. When he uses that energy, entropy increases and someone else now cannot use it.
That is zero sum.
The transaction you are describing is the equivalent of two people taking gold from limited reserves and trading that gold. The fact of the matter is, the gold is still missing from the shared reserve regardless of how fair the trade was.
Just because the transaction balances doesn’t mean there wasn’t ‘winners’. If I stroll down the beach and purchase a frozen treat for $4, I am sated and the merchant gets to make a profit, pay their taxes, and sustain their supply chain. Who loses? The other sellers lose a potential customer, I gain some weight, and probably generate waste and carbon in the act. As we plod ever towards our future as dust, we’ll transact a stream of everything, making and taking and leaving our wake along the way. As it goes, it’s hard to ascribe goodness or badness or winners or losers without omission of some part of the transaction. Yet in that moment when my lips meet their first chilly bite, the universe might reveal a shimmer of its majesty, and I’ll call that good.
The point I am making is that the people making the transaction are not the losers in the game. You have to trace the origin of the product back to how it was produced and what limited resource was used to produce it.
The loser here is other person who could've potentially used that limited resource for his own gain.
No. Net gain is extracted from a pool of limited energy. All participants in such an exchange must lower the entropy of the universe to produce either a concrete or abstract product. This costs energy.
As long as the rate of extraction of energy is lower than the rate of replenishment of energy then that net transaction seemingly produces a net gain.
However the minute Rate of extraction of energy exceeds the rate of replenishment someone loses because the energy you use cannot be used by someone else. For example the entire population of the world using as much energy as the people in the United States is unsustainable.
In short the participants in the transaction didn't lose. Someone else outside of the transaction lost.
It's true that entropy eventually wins and in a hundred billion billion billion billion years the universe will run out, but in the meantime there's an incredible amount of energy all around us and we get more efficient at extracting it all the time. What does this viewpoint mean in a practical sense?
You talk as if the incredible amount of energy around us is unlimited. We pay for energy and we spend an inordinate amount of consideration towards thinking on how to "save energy"
Energy is therefore limited and, as illustrated above, a highly practical concept.
Energy on the earth isn’t limited. There is tremendous energy entering and leaving our sphere at all times. There are forms of energy stored in ways that we don’t understand how to harvest and distribute, yet lay latent. You could theorize that the total energy in the universe is fixed, yet incomprehensible vast and largely inaccessible.
You are correct that the about of energy available for human consumption is finite in a given moment in time. Every choice for how energy is distributed collapses other possibilities. Yet, the ability of humans to capture and direct energy ever grows with the passage of time.
Up until about 3-4 generations ago, our species depended on beating other creatures to move us around, and burning trees for warmth. Now the same planet with the same or less resources is able to provide ~250 times more usable energy.
But none of that energy is available to use. The only metric that matters is available energy. If all the energy you’re describing was available for use nobody would be paying for energy and we’d never have huge power outages.
Technological growth is luck and also likely limited. The zero sum nature of the economy comes from the context of a transaction.
Transactions and exchanges are zero sum, technological growth is not. But increasing technology is both a combination of luck and arguably limited.
You’re assuming all energy will have a productive use though and nothing is wasted. If 2 people decide to carpool they can save money on gas, and that’s not a zero sum transaction even if one party pays the other. Just because energy is expended doesn’t mean there was a productive use, after all the universe will burn up one day no matter how well or poorly humans treat it, entropy can only increase.
Are the stars' gases foolish to burn and radiate energy to the universe because they could have used that limited resource for their own gain?
It seems simpler to consider that those who give are more likely to receive. Even a primordial entity in nature understands that the act of helping others helps itself.
That degree of pedantry doesn't lead to useful analysis, though, especially since most of those factors don't end up weighing in to the human consequences, which are what are being considered.
"The universe is a zero-sum system" is a true statement, but utterly useless - a tautology that has no relevance to the discussion.
I highly disagree with this. It may seem to you what I'm saying is pedantic but it is not.
The entire culture of the United States from all the art, to all the technology, to all the food to all the music is sustained by this same energy.
It is not sustainable for everyone in the world to use the same amount of energy that is used by the United States. This is literally the definition of zero sum.
In fact it is well known that entire civilizations have fallen because they've used up all available energy reservoirs. The most famous example is the Rapa Nui people on Easter Island. Easter Island collapsed because the situation was not only zero sum but even negative as high entropy energy is not useful to any participant in the game.
What people don't realize is that the economy is limited by physical actuality. It is not simply supply, demand and your limitless "imagination" on what you can potentially deem as "valuable". Supply and demand alone is a short sighted measure. The better metric for intrinsic value must include energy/entropy in the equation.
There is a limit and that limit practically effects everything around you.
No civilization has fallen because they depleted the available energy. Some have failed because their use of energy outpaced their ability to extract available energy. The amount of energy available on just our planet is unfathomably large (e=mc2). The entire planet could run for 100 years on just the toxic waste from a single US nuclear plant. We could run the entire world for millions of years just on nuclear material filtered from sea water. And that is just using current nuclear technology.
We are not really energy constrained and simply using the available energy more efficiently can leave all parties better off on all but maybe billion year timelines.
>No civilization has fallen because they depleted the available energy.
What available energy means is energy "available" for extraction. Not total energy that exists in the earth.
>Some have failed because their use of energy outpaced their ability to extract available energy.
This is just word play. You know what I mean. But we can still play the game if you want.
Basically if the civilization can't extract energy then the energy isn't "available." That's what the word available means.
> The entire planet could run for 100 years on just the toxic waste from a single US nuclear plant.
Uh no. If we replaced all current world power with copies nuclear plants running in the US we'd be out of nuclear resources in a year.
With breeder reactors and ocean water we have about 60,000 years available. A far cry from "millions of years"
If nuclear power becomes this common and available in our lifetimes then yes energy can be in a practical sense unlimited and negligible foot note in the economic equation.
However this power is not yet "available" (keyword) so until then energy is a huge part of the economic equation.
>We are not really energy constrained and simply using the available energy more efficiently can leave all parties better off on all but maybe billion year timelines.
You're talking about potential and things that are currently unavailable. I'm talking about history, the status quo and "available energy."
So we're not at odds here, just talking about different things.
Nuclear power becoming common is a choice though, it's not that we don't know how. Isn't in that sense it's already available if needed, so we've already reached the tipping point where this line of reasoning is no longer relevant?
Nuclear power has a bunch of controversy and politics behind it. It's not clear whether it will be the future. The existence of nuclear power doesn't make the energy variable negligble. Energy is still a huge limited resource in our world because of this.
Why would governments and scientists spend so much money on Fusion if Nuclear was the definitive answer? It doesn't matter. Whatever your stance is on the topic you can't change the fact that there exists huge political opposition against Nuclear power. The political opposition if anything makes the line of reasoning completely relevant.
I've sort of lost track of the point of these different subthreads, you seem to be taking on everyone individually to debate various semantic elements, but how does all this debate about sunburns, nuclear energy, and everything else in all these replies tie back to history being written by the victors? I'm not sure how to make sense or your argument.
We could argue whether fusion is nuclear or not, but I'm wondering where all this is headed.
Yeah it’s ok if you’re confused and don’t have the ability to keep track. I have a firm grasp on the main point in all sub threads. I’ll center the topic for you. Ignore the other threads if it’s confusing you.
The main point for this specific thread is that the economy is zero sum because everything relies on energy and energy is limited. Nuclear energy as it currently exists and what it potentially could or could not be does not change the equation.
The root post is another topic, I was simply responding to someone who said the economy was not zero sum and telling him that, that statement is categorically wrong. Then it spawned an avalanche of replies from people who disagree. What was just a small tangential reply is now a giant sub thread.
Usually HN is much more collaborative but you seem to have taken a combative approach to interacting with everyone, and I'd assume thats why you are finding yourself in a situation where you are arguing with everyone when that isn't what typically happens here.
> It is not sustainable for everyone in the world to use the same amount of energy that is used by the United States. This is literally the definition of zero sum.
It's worth pointing out that the energy consumption of the US (and other developed economies) per capita has been decreasing for decades[0], and, moreover, the World Energy Council predicted that global demand for energy will peak in 2030.[1]
This is a strangely mechanistic view of the economy not allowing for human joy (which economists would lump in as utility.) I get a great amount of satisfaction from great food or art far beyond the costs required to produce them. I don't see how that isn't creating value beyond the simple energy equation.
The amount of satisfaction you have is arbitrary and your own personal opinion. It's valid to you but not a valid part of the discussion because it's so arbitrary.
It could be that in reality the satisfaction I gain from art is worth 999 trillion dollars. If it's true then it's true but is it worth discussing? No.
The critical point here is that even things of value that people believe to be seemingly abstract are connected to a physical and limited resource.
This is not just pedantry. Art such as Opera or symphonies or blockbuster movies require a huge energy hungry economy to produce.
You can't get most of the art you "enjoy" from human powered economies like tribals still living in the Amazon rain forest. None of the "art" mentioned above can ever come out of economies like that. You can't even get children's drawings (art) like you do from modern economies because tribal economies can't even produce crayons or paper.
There is a huge correlation between the quality of the abstract things you enjoy and the energy required to produce it. It's just a general correlation but it's a correlation nonetheless.
So rather then call it strange. Take it as new insight. You once considered "art" to some abstract concept that you "enjoy". Now you know that art is also a low entropy configuration of paint. Lowering entropy costs energy therefore most abstract things are always related to energy. You can still enjoy a painting, but now you are armed with additional knowledge.
Greater knowledge means things that were previously mysterious can now be viewed in a more technical light. You can call it strange or you can call it learning something new. It's up to you.
Either way you are still free to enjoy your art as if it was worth 999 trillion dollars.
Sorry for the late reply, I don't entirely agree but thank you for laying out your argument point by point, it has certainly given me a different way to look at things.
I do agree that the quality of art is roughly proportional to the size of the economy that "spins it off" so to speak. Obviously hunter gatherers are not going to produce great art without surplus goods or division of labor.
At base I think we can't just write off human pleasure because some of it varies based on the individual. Economists estimate things like this all the time. I enjoy my favorite music albums very much, much more than say a $10 album cost, but if it cost instead $300 and my choice was between an album or a bicycle you can bet I would buy fewer albums no matter how much I liked them, so we can at least bound my enjoyment at $10 - $300 and realistically much narrower.
I do admit most of my favorite poetry and literature was produced by great imperial powers, even if by relatively impoverished or humble members of that society. There is something to this- whether Rome, Song China or Colonial Britain lots of good art and luxury is created by conquest.
The sun hitting the planet at a given moment is on the order of 100 petawatts. Human energy utilization is on the order of 15 terawatts. It's a really good thing that it isn't zero sum.
Nah this is still zero sum. It's limited by the amount of watts we can reasonably extract from the 100 petawatts per day.
We use a fraction of the energy hitting the earth because we can only extract a fraction of it. In this case rate of replenishment functions as a limit. If our rate of usage exceeds the rate in which we can viably extract useful energy from the sun then that means not everyone can have access to this energy. This is a limit. Zero Sum.
If Energy truly was unlimited nobody would be paying for it.
It's a complex equation when you involve the discovery of new resources and increases in technology. Let me illustrate to you what's going on with pet fish example:
So I have 5 fish. I put a fish flake in the tank. The game the fish play with the flakes is zero sum. Only one fish can get the flake. Next time, I put two flakes in the fish tank. The economy has increased by 2x! But only two fish get a flake so the game is still zero sum.
What if I put 30 flakes into the tank? The biggest fish beats up all the other fish and eats all 30 flakes. The game is still zero sum.
Increasing the size of the economy does not change the nature of the zero sum game.
Sure but in the fish tank is fish vs. resources and given that nothing else exists in the “fish tank universe” the flakes therefore function as the total amount of resources and also the entire economy at the same time.
I can triple the size and value of the fish tank economy just like how Reddit can increase the value of GameStop. The fact of the matter is it’s all still a zero sum game.
It’s ok if you’re not convinced. The fact of the matter is I showed you an example of how a growing economy still constitutes as a zero sum game. You haven’t shown otherwise.
How do you think GDP grows? If you have land and money and I have water, I can sell you water to grow crops while using the money for expanding my business. Do you really not see winners on either side of any trade?
You have to go deeper and trace the products to the source of creation. Land, Water and Sun is limited if not by total supply then by rate of availability.
Simply by obtaining these resources others are deprived. The people who are deprived are the losers, the people who aren't are the winners.
We need different things at different times. Left foot right foot moves you forward at a sustainable pace. Night and day, and on and on. Things have different value at different times, it's too narrow to only regard energy as a source of development. We need rest too. You're not "losing" when you sleep.
Even sleep costs energy. You need to build a shelter and be alive in order to sleep. Both the shelter and being alive costs energy.
It doesn't matter if you need things at different times. When you the trace the source of everything you that "need" you will find that at the root of it all is a limited resource.
You miss my point. Darkness does not cost energy. You can't stand in sunlight 24/7, neither can a tree. Everyone puts a different personalized value on things. You are able to sleep at night because the light is not there.
The air you breath is limited but the limit is so insanely high you don't have to pay a dime for it.
You pay for energy. So just how high is the limit practically speaking? Think about it. It'd be pedantry if I argued with you over oxygen, but Energy is nowhere near as seemingly limitless as oxygen.
I didn’t read that. I was simply responding to the someone saying the economy was not zero sum and saying that, that specific statement is categorically wrong.
The origin of energy in the universe is not known and the beauty of the universe is your opinion and not relevant to this conversation.
There are several things about energy that are always true as far as we know:
1. We cannot created or destroy it.
2. There seems to be a fixed amount of energy in the universe.
3. As energy rises in entropy either through inevitably or usage it becomes unusable to us. You can heat your room with a heater but you can never recapture that heat to reheat your room again. Therefore “available energy” is limited.
All of my statements can be derived from the “axioms” above. Concepts like beauty or the origin of energy is not derivable from anything we currently know.
some transactions are zero some (pareto optimal) and some are not (nash equilibria).
The easiest observable way to see that the economy is not zero sum once you take into account delta T (time) is that the economy grows and can grow both faster or slower than population growth. If it was truly zero-sum in aggregate, the size of the economy and wealth would always be strictly proportional to population.
2) What you are espousing here really isn’t all that useful other than as a way of playing “ooh gotcha” in arguments with others
3) Energy is only zero sum in closed systems and the earth is not a closed system. The overwhelming majority of our energy comes from a source outside our ecosystem and a non-zero amount also escapes from our planet. Ergo, it’s not a closed system and your zero sum notions do not necessarily always apply.
1. Except your model is missing an extremely important figure. Modern economies thrive off of the energy variable. This is not some missing detail, it is critical.
3. Energy is limited in the amount that arrives from the sun per day and the amount we have the ability to extract from the earth and the sun and the wind per day. The limit is evident by the fact you have to pay for it. If it were unlimited, your energy bill would be zero.
There does exist products on earth that while not technically unlimited can be practically considered unlimited. One such example is the air you breath. Energy is NOT an example of this.
I want to chip in here and say that accouting for limited resources in an economic model is definitely useful, because the negate ( not accounting for limited resources ) has led to the environmental disaster that we find ourselves in right now.
That’s an eminently reasonable proposition but that is far far from insisting on dogmatic application of a zero-sum rule where it demonstrably does not apply.
One of the most interesting proofs of this is the measurable change in the Earth’s albedo due to climate change (and the downward spiral that creates). If we can demonstrate notable changes in how much energy is retained or lost, globally, that destroys the notion of this being a closed system. Similarly, the sun itself is known to be variable in its total energy output so there is no reasonable assurance of a constant amount of energy into or out of our global system. We can’t really control how much energy is produced but it is false to assert that all energy is used as well - there is notable margin for good or for bad here - and because of that, the zero-sum claim is just silly.
What confuses people is the fact that for many things if energy isn’t used it is actually completely lost, hence people believe that this “lost” energy constitutes a possible unlimited potential supply. Sure it can constitute such a thing if you can find a way to utilize this lost energy. Currently there’s no way to utilize hence it’s not a factor.
Ephemeral supply and wasted energy only limits supply even further. Here’s a very simple way to think about it that gets rid of the associated complexities :
The fact that you pay for energy and the fact that energy outages can occur when usage exceeds supply means that energy is limited and therefore zero sum. In fact the attempt to try to reason your way to another conclusion is the silly endeavor.
The economy is zero sum because the actual key measurement of all economic goods is the lowering of entropy which is directly done by energy utilization which is directly limited.
The economy is a concept that exists strictly on Earth (until someone like Musk colonizes Mars). A huge portion of our energy comes from the Sun both in the form of plant matter from agriculture and from solar power as we increasingly build solar panels to harvest the Sun's energy. The simple fact that we can take this exogenous source of energy and feed it into our economy to grow it means that yes, it's zero sum if you consider the Universe, but from the perspective of the economy here on Planet Earth, that economy getting energy for free and grow in excess of your zero sum thinking.
No. First off net useable energy is constantly decreasing in the universe. Entropy will always increase until all energy available for use in the universe is zero. The universe is not a zero sum game. It is negative and in the end everyone loses.
The earth receives energy from the sun at a limited rate. The limit on the rate and limits on our technology in order to extract this energy functions as a practical limit.
Zero sum games are used colloquially in the context of transactional games. When a resource is limited in this context the game is zero sum. Someone loses during the creation and exchange of an economic product.
The context of increasing technology or resource discovery is separate from this topic and not what people mean when they say the economy is “not zero sum”. People are referring to the transaction and creation of said economic product and the economic actors in the economy at the current point in time. What they mean is a “transaction” in the game where I trade you an extra pizza for your extra shoe results in both of us receiving a net gain. My claim is that this transaction does not result in a net gain because both products are tied to a limited resource whether it be material or energy. You took a piece of the energy pie now someone else has no pie.
This is some time cube level self rationalizing wackiness. Seriously - If energy is lost, that contradicts your previous claims.
You like you use language reminiscent of thermodynamics but you seem to suffer significant misapprehension of the laws of thermodynamics.
Energy is never lost in a universal sense or within a closed system. So, for you to say energy is lost if not used is either a violation of the laws of thermodynamics or admission that the earth’s ecosystem and all human endeavors therein are not a closed system. Just as energy can be lost from that system, it can be added from external sources (primarily the sun). So for any resource/bit of energy, unlike your previous statements, either I use it, you or anyone else not me uses it, or it’s lost to waste/eventually leaked from the system or it’s stored and used later (or likely some combination of all four of those). If it were zero-sum, it would be 1&2 only and no energy would ever be added to the system. That’s not the case for earth and human endeavors.
Your first sentence is a rude insult. There’s no need for that on HN.
I’m using entropy in terms of statistical mechanics. Probability is the more viable explanation for entropy, not some random thermodynamic law. Those laws are archaic explanations of what entropy is.
I’m also not talking about just energy. I’m talking about available energy. Energy can’t be created or destroyed but it can increase in entropy and become unusable and unavailable.
The limit I’m referring to here is rate of available energy. Energy on the earth is constantly being rendered unusable through entropy increasing naturally or through the transfer of low entropy from energy to low entropy economic products. Energy is also being replenished by the sun at a fixed rate.
The usage rate and replenishment rate form an effective limit on aggregate available energy as a limited rate, making its rate of usage in an economic transaction effectively capped and therefore zero sum by definition.
There’s no time cube antics here that’s just rude. The real antic here is how you can think that people can just play the economic game and continuously benefit from repeated transactions to infinite without any actual physical price that was paid. Physical limits exist and that is not wackiness... that is common sense. Although, your reply that will follow this statement will be 100% wackiness if you want any chance at vindicating yourself.
> Does this model include energy that continuously decays into higher entropy states?
Nope, it doesn't. You're not wrong. You're just being pedantic. For all intents and purposes for the discussion we're having here this continuous decay into higher entropy states is a non-issue. Within the sphere of the humans involved in free exchange, it's not zero sum even if it is zero sum when you take into account the entirety of the physical world.
I think it's reasonable to involve all humans effected by an exchange.
If a corporation purchases water rights in an area from the government and suddenly deprives the poor farmers in the area from using the water to grow their food does this make the farmers a negligible part of the equation? In my opinion: No.
You can create your box so that it only fits the participants of the transaction but that would be a fantasy. There are great real world zero sum costs to almost everything in an economy.
No. That’s just one example in response to your attempted boxing of all economic consequences into the “participants” of a transaction. The example falsifies your claim from ever being true.
My claim is that all economic activity is tied to energy and that energy is limited and usage of said limited energy in one place prevents usage elsewhere. Try to find an example that falsifies my claim. You can’t.
Pareto improvements are theoretical concept. neonological argues here, that those are impossible in reality. I think this is pretty hard to argue one or other way, because side effects of our activities aren't always obvious. Things like tumbleweed in northern america or any accidentally imported plant/animal is good example about costs, that arrive later and for other people.
Though I think there is possible to construct some clear Pareto improvement cases, like early improvements of internal combustion engine, where I don't see possibility of negative effects, only additional power out of same amount of fuel.
From certain perspectives increasing available energy or increasing energy efficiency is a net positive. But the modus operandi of humans is to pay for goods because of limited supply.
The game is basically zero sum but occasionally you roll some dice and if it lands on a 6 you can increase the total sum. However the game in between the dice rolls is zero sum. To frame it in a real world example: you still pay for energy as if it was limited even though nuclear fusion has the potential to make it unlimited.
Growth in terms of resource discovery and better technology is not zero sum. But exchanges and transactions in terms of current available resources and technology is zero sum.
That should help setup a dichotomy and clarify things.
My understanding is that pareto improvements are positive sum by definition.
>> Given an initial situation, a Pareto improvement is a new situation where some agents will gain, and no agents will lose. [0]
Neonological seems to believe that pareto improvements are not possible because of negative externalities. Maybe they are right but positive externalities also need to be accounted for.
One way to see that the externality is overall negative is to make a small model of the economy with even tighter limits on the energy resource. You can literally hold this model in your head. We both agree that energy is a limited resource and that usage of a limited resource prevents others from using that resource and is thus zero sum.
Just replace all available energy with a free triple A battery gifted to you by the government per day. That battery can’t even push your car 100 meters. If you can’t drive then the suburban layout of US cities can’t even function. Every aspect of the economy will grind to a near standstill.
Energy is the primary resource that drives everything in an economy, everything. Because energy is limited the game in every economy is in actuality overall zero sum.
Because energy is relatively abundant right now, certain models of the economy sort of do work for certain scenarios when they don’t account for energy. But I think these models are still bad because, practically, even differences in energy utilization correlate with how technically advanced an economy is.
Once energy is used up, then all economies are basically dead. There is no positive externality here. Every economic transaction involves energy and is thus zero sum. If the United States uses up all the oil in the world to build its advanced economy then other countries and people in the future and past cannot build that same economy because there is no oil. Zero sum.
