If the recent Daily Journal guest column on baking larger economic pies made you hungry, prepare to hear your stomach growl again. Max Borders‘ latest Ideas Matter update includes an item highlighting a similar theme:
Pies can grow. As long as the whole pie grows at the same time any given part of the pie will be bigger (read: better off). The pie may grow at different rates. But the whole pie gets bigger. So it is for economies.
Of course, we’re living in an unprecedented age of rent-seeking — which is to say transfers that don’t grow the pie. And yet the latest available data show that — despite all these transfers — the economy still grew for everyone. It grew for some segments MORE than others. But the pie still grew.
Also keep in mind that transfers are zero sum (don’t grow the economy) while free exchanges are positive sum (that do grow the economy). Any time the government does something it means shrinking the economy. Government transfers rearrange the pie (and often shrink it). Private exchanges grow the pie. So, while you may not like the distribution of freedom’s pie baking, you have to accept the premise that if you want growth at all, you have to allow for free exchange.
