Underdog was great escapism for me as a young boy. So, I took the opportunity recently to get out of the heat and watch the new movie. In the movie, the dog’s boy says that the dog has a responsibility to others to use his powers for good. If you have a talent or an ability, it is your social responsibility to help others. There is no higher goal than such selfless acts. These selfless acts make the world a better place.

And the world is a better place. I recently listened to a couple of economists on a podcast. One economists said he does a regular poll of audiences when he speaks and finds that the median answer to whether and how much we have improved the human experience over the last 1000 years is about 50%. Most people feel that we are about 50% better off today than we were 100 years ago. Very few people believe that quality of life is more than double what it was 100 years ago.

That’s just a guess by audiences who are not economists. Many economists have actually put numbers to the available data and argue over the results. Their argument? Whether the data shows a 2,000% or a 5,000% gain in quality of life over the past 100 years. No. That’s not a typo. 100 years ago life really sucked compared to today.

But the world doesn’t run on selfless heroic acts. It runs on selfish people doing what is in their own self interest. And now economists tell us they are unsure whether we are 20 or 50 times better off. Holy cow!

Something is wrong here. Some basic understanding of the way the world works is missing. How can so many selfish people make the world so much better off?

Zero Sum Games

There is a branch of Mathematics known as Game Theory and a particular group of games known as zero sum games. Games which fall into this category feature one characteristic. At any time in the game, if you add up all the gains to players and all their losses, the sum is zero.

Poker can work like this. The total amount of winnings and the total amount of losses will always be equal. If we add those totals we always get zero. One person loses $50 (-50) and five others gain $10 (+50) each. Adding the losses to the gains (-50 + 50 = 0) we get zero. Always. Economists consider commodities trading as a zero sum game. At the end of the day, no new wealth is created by trading commodity futures.

At the risk of revealing my age, I recall another movie called Wargames in which a computer named Joshua figures out that a game called Thermo Nuclear War is a non-zero sum game. Basically, everyone loses. If we add the benefits and the losses in the game we always come up with a value less than zero. Murder, robbery, and war are almost always non-zero sum games where the world is almost always worse off than before.

So how does the world keep getting better? It turns out that most transactions we make are non-zero sum games. On average everyone is better off after these transactions. If we add the benefits to the losses in most transactions, we end up with a value greater than zero.

This positive sum nature of most transactions is a given to most economists. There is very little argument over the truth of it. Some argue that morality is slipping, but that is a much more subjective term. Each person or organization has a different definition of morality. That is a subject for philosophers.

I wake up and trudge my forty foot commute several times a day, not because I want to benefit my fellow man and not because I take way too many naps. It is because it is in my own self-interest to get up and make money.

I offer my clients something which I value less than I value the price I charge and my clients offer me money which they value less than the something I offer them. For example, I wrote an article a few years ago for a magazine. The publisher paid $350 for it. I valued the $350 more than the resources I used to create the article. The publisher valued the article more than the $350 he paid me. We both had a gain. We created wealth.

The publisher was able to spend more time selling advertising than writing articles. He made more than $350 by not writing the article. We were both better off after the transaction. We created wealth by trading with each other. We will continue to do such trades for as long as it is in our own best interest.

Neither one of us fell on a grenade or rescued a child from a burning building. Yet we created wealth. We made our own contribution to making the world wealthier. And we will keep on making the world a better place by taking care of our own self interested desires.

If you are feeling guilty about making money from distressed sellers, you are doing yourself and the entire world a disservice. You are hurting all of us because you are not getting out there to create wealth. Shame on you. Go create some wealth. Now.