We always hear people saying that economy is growing or declining. Surely people are everyday inventing new things, expanding businesses. But how’s my gain is not someone else loss.
I am aware of Adam Smith free trade theory. But I am not fully convence.
In: Economics
It is not wrong to say that your gain is someone else loss. However sometimes that loss is in the form of time or natural resources which is something we have plenty of.
> But how’s my gain is not someone else loss.
Suppose you are a farmer. You take a field of dirt and with the application of a few seeds, water, sunlight, and time you end up with a field full of food worth far more. Now who loses in that gain of value?
Or imagine you are working in a factory that builds some machine. How does someone lose wealth just because you put together a new machine? You aren’t taking value away from someone else by making something new of value.
A big part of economic growth is velocity of money, which is now quickly it trades hands.
Imagine you get paid $100 and just stick it in your wallet for a year.
Now imagine you use it fo a new pair of shoes. And the shoe store owner takes his wife out for a nice dinner. And the waiter pays his rent, And the landlord makes his car payment. And the car salesman has a plumber fix his sink. And the plumber buys his kids new school clothes…. and so on $100 keeps passing
hands, generating more economic activity and growing the economy.
when we say the economy is growing we’re trying to quantify production. since more hours every day are put into production, the economy grows. we quantify this by a bunch of metrics, like number of new houses built.
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