The Zero Sum Death Spiral
What causes societies to fail? One possibility is that they enter a zero sum death spiral. Here’s the basic problem:
1. Zero sum thinking causes bad economic policies.
2. Bad economic policies cause a poor economic outcome.
3. A poor economic outcome causes zero sum thinking.
Rinse and repeat.
I’ve always been aware of the first two points, but hadn’t given much thought to the third point. An excellent recent article in the Financial Times (by John Burn-Murdoch) has some data on this question:
If someone’s formative years were spent against a backdrop of abundance, growth and upward mobility, they tend to have a more positive-sum mindset, believing it is possible to grow the pie rather than just redistribute portions of it. People who grew up in tougher economic conditions tend to be more zero-sum and sceptical of the idea that hard work brings success. These attitudes are perfectly rational.
The pattern holds whether you look at people who grew up at the same time but in countries with varying economic fortunes, or different generations who grew up in the same places but against a shifting economic backdrop.
The article provides some interesting graphs that illustrate the relationship:
In recent years, economic growth has slowed in many countries, including the US. This has been associated with a rise in identity politics:
You wouldn’t typically think of affirmative action advocates and anti-immigration nativists as being bedfellows. The former group skews young and is composed overwhelmingly of progressives, and the latter skews old and conservative. But according to a fascinating new study out of Harvard University, they have one significant thing in common: a predilection for zero-sum thinking, or the belief that for one group to gain, another must lose.
The same way of thinking crops up on all manner of issues that cut across traditional political divides. Roughly equal numbers of US Democrats and Republicans agree that “in trade, if one country makes more money, then another country makes less money”. And while Democrats are more likely to say “if one income group becomes wealthier, this comes at the expense of other groups”, a third of Republicans agree.
Not surprisingly, Obama-Trump voters are especially likely to engage in zero sum thinking:
Populism, conspiracy theories and nativism are all rooted in the belief that one group gains at the expense of others, and all these have risen of late. Self-identified Democrats who voted for Donald Trump in 2016 scored very high on zero-sum beliefs.
Some people argue that economic growth makes us happier. I’m skeptical of that claim, at least beyond a certain income level. But if growth leads to less zero sum thinking, and that leads to more market-oriented polices, then growth may indirectly lead to greater happiness. Not because more money makes us happier, rather because economic freedom makes us happier.