The Fallacy of The Zero Sum Game

The Zero-Sum Fallacy is the idea that when one person wins, another person must lose. It's based on the belief that wealth is fixed and that there is no way for both parties to benefit. In such a worldview, there are never any win-win outcomes, but rather, only winners and losers.

This fallacy is often referred to as the “pizza pie fallacy” because it's similar to the idea that if one person takes a larger slice of a fixed-size pie, there's less pie left for everyone else, when in reality, multiple people can have larger slice sizes, dependent upon their tenacity, intelligence, and industriousness towards that end.

The Zero-Sum Fallacy is a pessimistic view of human beings as consumers. It's often used to describe the free market economy, but this is an error because it doesn't take into account the principles of wealth creation and voluntary exchange. In reality, the economy grows through innovation and the exchange of goods and services, where win-win outcomes are so abundant as to inspire millions of people to continue creating, selling, exchanging, and bartering under a banner of mutually beneficial outcomes. If mutually beneficial outcomes were not a hard measurable realty, all trade and commerce would have come to screeching halt thousands of years ago.

For example, entrepreneurs can create new products and services, or implement more efficient production methods, which can benefit society and create wealth. A product is created. A consumer pays for it. And,  both parties benefit from the exchange. Sure, there will always be selfish interests that come into play, greedy tycoons who seek to exploit economic exchanges, and ruthless corporate monopolies who seek to extract more wealth than they deserve, but ultimately, unless a consumer perceives “winning,” even the most ruthless cooperations tend to crumble and fail, logarithmically over time.

The Zero-Sum Fallacy can also be seen in competitive sports, where one person's gain is seen as another person's loss. However, competitions are not closed systems, and the benefits of participating go far beyond the win-loss record and number of gold medals attained.