Zero-Sum Folly, From Kyoto to Kosovo

Originally published at The Wall Street Journal

What do the ethnic cleansing in Kosovo, the global warming treaty in Kyoto, and the Social Security “crisis” of demand-side Keynesian economics have in common, apart from a convergence of K’s? You can even add Theodore Kaczynski, the Unabomber. Answer: They all reflect a belief in a zero-sum world.

The concept of a zero-sum system originated in a branch of economics called game theory. In a zero-sum game, a gain by one party necessitates a loss for another party. It is the economics of a fixed pie that can be redistributed but cannot be enlarged. The gains and losses always add up to zero.

For most of history, most people have believed that economics is ultimately a zero-sum game. Predicting a zero- or even negative-sum struggle for food, Thomas Malthus was the most famous exponent of the view that population increases geometrically while agricultural output rises arithmetically. Karl Marx saw all economics ultimately reducing to a class struggle, with zero-sum assumptions and results. Throughout much of this century, dictators and warlords from Hitler to Stalin sought power and prosperity through the capture of neighboring territories.

The Kosovo “cleansing” is an obvious continuation of this zero-sum mentality. The Serbs and Albanians have endured 50 years of marination in Marxist doctrine and kleptocracy. These people cannot even imagine a capitalist world, where people prosper by serving their neighbors rather than killing or evicting them.

Zero-sum assumptions have led inevitably to conflict. If wealth cannot expand, the nation must. Countries must choose between famine and decline, or aggression and war. It was only capitalism that overcame this immemorial predicament. As Walter Lippmann put it, capitalism “for the first time in human history,” gave men “a way of producing wealth in which the good fortune of others multiplied their own.” At long last “the golden rule was economically sound. . . . Until the division of labor had begun to make men dependent on the free collaboration of other men, the worldly policy was to be predatory. . . . [But now] the ancient schism between the world and the spirit, between self interest and disinterestedness, was potentially closed.”

Sophisticated thinkers in the U.S. imagine that they have transcended the mode of thought that underlies Marxism, Malthusianism and ethnic cleansing. Many grasp the zero-sum futility of trade protectionism. But the U.S. intelligentsia is now adopting a posture even more dismal. The Kyoto treaty embodies a new zero-sum theory of ecology as stifling and sterile as the worst excesses of Marx and Malthus. Kyoto’s planned cutbacks in energy use would inflict zero-sum triage on the lives and opportunities of billions of poor people clinging to the bottom rungs of the economic ladder.

The irrationality of the global-warming theory is now entirely evident. A 3,000-year record of thermally dependent isotope patterns in fossil sediments demonstrates that current temperatures are about average, or possibly cooler than average, a conclusion confirmed by the known historical record. During previous centuries, temperatures were as much as four degrees Fahrenheit higher than today. A thousand years ago temperatures were two degrees warmer than today. Far from the disasters now predicted to result from far smaller temperature increases, these clement conditions allowed the colonization of Greenland and the expansion of European populations. A further series of measurements shows that global temperature changes are almost entirely attributable to changes in solar activity. A 0.036% rise in solar intensity over the last decade unleashed an energy impact on the earth 70 times larger than that of all human activity put together.

Far from science, global warming is a recrudescence of the zero-sum Zeitgeist, in which gains for comfort and wealth of some are assumed to cause losses for other people, other species or the environment. This perverse impulse has also aroused chimerical scares about DDT, nuclear power, acid rain, radon, chlorofluorocarbons, PCBs, Alar, power lines, cellular phones, personal computers and other crucial effects and artifacts of modern capitalism. All these scares later proved to lack any empirical foundation. DDT, for example, saved some 500 million lives from malaria without probably killing a single bird. Indeed, San Jose State ornithologist J. Gordon Edwards has marshaled impressive evidence that DDT increased bird life (infectious mosquitos happen to be bad for eagles too). With cutbacks in DDT use, malaria is now coming back.

Utterly unsupported by serious science, the claims of zero-sum ecology can lead to only one result: war. China and India currently use about one-tenth as much energy per capita as the U.S. To tell these Asian nations that their billions of citizens cannot even match current Western use of fuels, fertilizers, pesticides and other chemicals is to tell them they cannot feed their people, let alone get rich, without war. The initial Chinese response to their alleged zero-sum predicament — draconian policies of population restriction, abortion and infanticide — is only a foretaste of possible horrors to come. If the Chinese are willing to deplete generations of their own children, they will not balk at attacking the populations of the West as the implications of the “closing circle” of ecology become clearer.

Similarly, infatuated by Keynesian concepts of demand and debt, former Commerce Secretary Pete Peterson would compound the evils of Kyoto with a tightening noose of fiscal austerity. In his influential book “Gray Dawn,” he foresees draconian tax hikes, forced governmental savings, and redistributive measures that would bring growth to a screeching halt even in the U.S. All to resolve a predicted $4.3 trillion shortfall in funds for Social Security and an $8.9 trillion shortfall in funds for Medicare — 75 years from now.

This total of $13 trillion is about the amount of net new wealth created by U.S. households in the past five years. In the past year alone, enough new wealth was generated in the stock market to dispose of the entire 75-year Social Security shortfall. The Internet economy at least doubles in value every year, while Internet traffic doubles every 100 days or so. Within 75 years, the emerging technologies of the information age, together with improvements in the necessarily energy-intensive technologies of transport and food production, will make possible wealth beyond today’s imagination.

The only real threat to this process of capitalist enrichment is the same zero-sum economic theory that made the 20th century an era of total wars. Focusing on accounting liabilities but ignoring the trillions of dollars worth of new assets, Mr. Peterson pursues a zero-sum economics that will produce the very war between the generations that he fears. Projected onto the international stage, zero-sum theory is even more pernicious, because it brings not merely the sterility of redistribution and economic stasis but the horrors of militarism and holocaust.

We are getting a taste of it in Kosovo today. If we want more, we should follow the Luddite inspiration of Kyoto. Just as Marxists and Nazis were willing to sacrifice millions of lives to their zero-sum “science” of class and ethnic conflict, so the new prophets of a “delicate balance of nature” are willing to sacrifice millions of lives and trillions of dollars to an equally spurious pseudoscience of ecology. Arising at the very moment that technology promises new horizons of unparalleled wealth and opportunity world-wide, this amazing movement would halt the very economic progress that historically has made the redress of environmental problems relatively simple and cheap. And nothing so pollutes the world as war.

Mr. Gilder is editor of the Gilder Technology Report and a fellow at Seattle’s Discovery Institute.

(See related letter: “Letters to the Editor: With the Right System, Prosperity for Us All” — WSJ May 18, 1999)

(See related letter: “Letters to the Editor: Watch Who You Call a Keynesian” — WSJ June 3, 1999)

George Gilder

Senior Fellow and Co-Founder of Discovery Institute
George Gilder is Chairman of Gilder Publishing LLC, located in Great Barrington, Massachusetts. A co-founder of Discovery Institute, Mr. Gilder is a Senior Fellow of the Center on Wealth & Poverty, and also directs Discovery's Technology and Democracy Project. His latest book, Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy (2018), Gilder waves goodbye to today's Internet.  In a rocketing journey into the very near-future, he argues that Silicon Valley, long dominated by a few giants, faces a “great unbundling,” which will disperse computer power and commerce and transform the economy and the Internet.