The Zero-Sum Bias: When people think that everything is a competition • Hacker News Board

Re: The Zero-Sum Bias: When people think that everything is a competition

#31

Post by Droobfest » Sat, Jul 06, 2019, 6:55 PM UTC

umvi wrote: post #6

This will be controversial, but this is true everytime there is a pitchfork-inducing "the rich got richer in 20XX" thread. But it's not that the rich stole from the poor in order to become richer (though undoubtedly people will argue this). If I stick a million dollars in an index fund and passively get richer, am I stealing from the poor? Wealth is not zero sum, yet we seem to treat it like it is (in order for poor…

Say the top 1% increase their proportion of wealth from 20% to 40% of the money supply. Since there's only a finite amount of stuff to buy (productivity), this means the rich can also buy a proportionally bigger amount of stuff. Now, yes, this money gets in the hands of whoever is selling but in our current world this is increasingly also the rich. They're slowly buying up all real estate, companies, securities etc. capturing an ever increasing slice of economic surplus. This capture is exactly how the proportion of their wealth gets bigger and bigger, while wages are under pressure and haven't increased at all.

It's not entirely zero sum, some investments increase productivity and thus create actual wealth. Unfortunately investment in stocks and real estate don't increase productivity at all while rent-seeking only directs an ever increasing proportion of available wealth towards rich people.

Re: The Zero-Sum Bias: When people think that everything is a competition

#32

Post by whatshisface » Sat, Jul 06, 2019, 7:05 PM UTC

zwkrt wrote: post #2

I see people interpret personal comfort as zero sum and it drives me nuts. Like somehow other people being safe and comfortable devalues ones own safety and comfort.

Could you give some examples?

Re: The Zero-Sum Bias: When people think that everything is a competition

#33

Post by whatshisface » Sat, Jul 06, 2019, 7:06 PM UTC

gravypod wrote: post #19

gnicholas wrote: post #17

> people tend to assume that if a product is superior in one dimension then it must be inferior in other dimensions. Assuming price is one of the dimensions, this is generally a true statement. Otherwise we'd have a bunch of best-in-class products that are cheaper than inferior competitors. This can occur for products sold at massive scale and with large tooling costs. This dynamic enables the producers of premium pr…

Would this be dissimilar to undercutting a competitor? For example Ryzen 3rd gen chips seem to out perform, and undercut the price, of Intel chips with a similar feature set. Maybe brand is a dimension?

Wait until tomorrow until you say that, the third party benchmarks aren't out yet. ;)

Re: The Zero-Sum Bias: When people think that everything is a competition

#34

Post by neaden » Sat, Jul 06, 2019, 7:06 PM UTC

gnicholas wrote: post #26

gravypod wrote: post #19

Earlier quoted context omitted.

Would this be dissimilar to undercutting a competitor? For example Ryzen 3rd gen chips seem to out perform, and undercut the price, of Intel chips with a similar feature set. Maybe brand is a dimension?

Sometimes this happens for a period of time, but in the medium- or long-run, the manufacturer of the superior product will raise prices. Undercutting is just a way of getting attention in the short-term.

The other alternative is that the inferior and more expensive version simply stops being produced.

Re: The Zero-Sum Bias: When people think that everything is a competition

#35

Post by xondono » Sat, Jul 06, 2019, 7:13 PM UTC

The textbook example of zero-sum thinking is how most people (specially those involved in politics) talk about imports and exports.

Re: The Zero-Sum Bias: When people think that everything is a competition

#36

Post by nostrademons » Sat, Jul 06, 2019, 7:18 PM UTC

gnicholas wrote: post #17

> people tend to assume that if a product is superior in one dimension then it must be inferior in other dimensions. Assuming price is one of the dimensions, this is generally a true statement. Otherwise we'd have a bunch of best-in-class products that are cheaper than inferior competitors. This can occur for products sold at massive scale and with large tooling costs. This dynamic enables the producers of premium pr…

In a way this is a restatement of the efficient-market hypothesis. If the market is efficient, then a product that is inferior in most or all dimensions will be forced out of the market by one that is superior. Therefore, if you believe in efficient markets and observe that both products are still offered for sale, it's a reasonable inference that the superior product must be inferior in some way that you haven't yet observed.

Usually where this heuristic fails is on the margins, when markets are not efficient and you're observing a change in technology or production techniques. In this case, the correct inference isn't that the product is inferior in some way you haven't observed, it's that the superior product will eventually end up winning and taking over the marketplace.

Re: The Zero-Sum Bias: When people think that everything is a competition

#37

Post by BurningFrog » Sat, Jul 06, 2019, 7:19 PM UTC

xondono wrote: post #35

The textbook example of zero-sum thinking is how most people (specially those involved in politics) talk about imports and exports.

All trade is a victim of this.

In reality, trade always creates value, and you can argue that all wealth in the world is created from trade, most of it interpersonal.

But people still feel instinctually that each transaction has a winner and a loser.

Re: The Zero-Sum Bias: When people think that everything is a competition

#38

Post by twanvl » Sat, Jul 06, 2019, 7:21 PM UTC

davesmith1983 wrote: post #14

gamegoblin wrote: post #8

Earlier quoted context omitted.

Not that I necessarily agree with them, but some people would say that your index fund is stealing from the poor in a sense, because corporate profits (distributed to you, the shareholder, as dividends) are derived from exploiting the working class, when they could be raising wages instead. This is obviously not the entire story, because the economy certainly has grown historically and continues to grow, and that gro…

Well labour prices (for whatever the industry is) is driven by market forces. The Salary / Rate has to match the market expectations. If the market rate is artificially inflated (minimum hourly wage) then companies will find a way to automate those jobs away. I am sure people will say that this would have happened anyway with certain unskilled labour jobs but you could argue that this only further incentivises them.…

Raising wages are not the only way to make the poor relatively richer. There is also all kinds of taxation and welfare programs.

Re: The Zero-Sum Bias: When people think that everything is a competition

#39

Post by noego » Sat, Jul 06, 2019, 7:22 PM UTC

umvi wrote: post #6

This will be controversial, but this is true everytime there is a pitchfork-inducing "the rich got richer in 20XX" thread. But it's not that the rich stole from the poor in order to become richer (though undoubtedly people will argue this). If I stick a million dollars in an index fund and passively get richer, am I stealing from the poor? Wealth is not zero sum, yet we seem to treat it like it is (in order for poor…

The subtext of most "rich got richer" articles, is that there's a missed opportunity to make everyone richer by raising taxes on the wealthy, and lowering taxes on everyone else. The rich would still get richer, but at least everyone else will get to share in the spoils as well.

Re: The Zero-Sum Bias: When people think that everything is a competition

#40

Post by ABCLAW » Sat, Jul 06, 2019, 7:31 PM UTC

davesmith1983 wrote: post #14

gamegoblin wrote: post #8

Earlier quoted context omitted.

Not that I necessarily agree with them, but some people would say that your index fund is stealing from the poor in a sense, because corporate profits (distributed to you, the shareholder, as dividends) are derived from exploiting the working class, when they could be raising wages instead. This is obviously not the entire story, because the economy certainly has grown historically and continues to grow, and that gro…

Well labour prices (for whatever the industry is) is driven by market forces. The Salary / Rate has to match the market expectations. If the market rate is artificially inflated (minimum hourly wage) then companies will find a way to automate those jobs away. I am sure people will say that this would have happened anyway with certain unskilled labour jobs but you could argue that this only further incentivises them.…

>Well labour prices (for whatever the industry is) is driven by market forces. [...] If the market rate is artificially inflated [...]

First, are all markets just markets?

Second, what if the market rate is artificially depressed - what if it is systemically artificially depressed?

Do market expectations align with an appropriate distribution of wealth to labour under conditions where the first is false or the second is true?