But the Occupiers are wrong about something much more important. They believe in the Zero Sum Fallacy — the idea that there is a fixed amount of the good things in life. Anything I get, I’m taking from you. If I have too many slices of pizza, you have to eat the Dominos box. The Zero Sum Fallacy is a bad idea — dangerous to economics, politics, and world peace. It means any time we want good things we have to fight with each other to get them. We don’t. We can make more good things. We can make more pizza — or more tofu, windmills and solar panels, if you like.
Even if the Zero Sum Fallacy were true, redistribution would not solve it. Imagine this scenario:
- One person has 100 dollars. Ninety-Nine people have a dollar each.
- If you take 70 dollars from the rich person, as Paul Krugman dreams, he has 30 dollars.
- If you distribute the 70 dollars among the 99, they end up with $1.71 each.
This is before we add in the costs of the redistributors taking their cut. So all you’ve managed to do is make one person very much poorer, 99 people infinitesimally richer, and changed no one’s disposition toward the other. The rich guy will resent the loss of his wealth and make efforts to hide future wealth for redistribution. The 99 poor, having seized the wealth once, will be unsatisfied with their take and want more.