The genius of economics is that it’s filled with win-win situations. Every time a buyer and seller agree to a transaction, they should both be made better off.
For most of our history, this is also how Americans got rich. But now, rather than making the pie bigger, Americans are more focused on taking someone else’s slice.
We can see it in how young people are using their money.
Gen Z, millennials keep their money in prediction markets. That's a problem
More than a quarter of Gen Z and millennials surveyed together by Global Strategy Group said they participated in prediction markets, versus 10% of Gen X and just 2% of baby boomers.
About 40% of Americans ages 18-49 told the Siena Research Institute that they had a sports betting account, compared with 16% of those 50 to 64 and 4% of those 65 and older.
And cryptocurrency
holdings among the younger generations are more than twice as prevalent as among the older, according to JPMorganChase.
Unlike stocks and bonds, all of these so-called investments are zero-sum.
For someone to win in a prediction market or sports bet, someone else has to lose. There’s no increase in the economy’s productive capacity. The same goes for cryptocurrencies, most of which have value based solely on supply and demand rather than any intrinsic usefulness. People who hold cryptocurrency only see their wealth increase when more people want to hold it. And this is where the younger generations are keeping their money.
If all of this money went into the capital markets instead, it would finance the growth of companies and spending by governments. Some of it might be wasted on perks and pointless programs, but most of it would fund innovation and entrepreneurship, as well as the infrastructure that girds the economy.
These are the true engines of higher living standards, yet money is being sucked away from them by zero-sum gambles.
Zero-sum game is a drag on US economic growth
These trends among individuals parallel recent moves in government and the corporate sector.
Washington has been trying to limit trade with tariffs, destroying more win-win possibilities for American companies and consumers. The Trump administration has also threatened other countries to take control of their resources: oil in Venezuela, critical minerals in Greenland and whatever the endgame might be in Iran.
Meanwhile, the families of the people in power have enriched themselves through connections and privilege rather than economic ingenuity.
In the corporate sector, businesses ranging from big-box stores to coffee shops have delved deeper into the world of personalized pricing, using data on consumers to set prices as close as possible to the most they would pay.
When consumers can only buy goods and services at their maximum price, then each transaction is no longer a win-win. Only the seller gains any extra benefit beyond their costs; consumers never feel like they got a bargain.
Investing corporate resources in this zero-sum money grab rather than new or better products creates a drag on economic growth, too. Growth is where the rubber meets the road in our economy, and not just for living standards.
Without strong growth in the nation’s incomes – and the resulting tax revenue – our enormous national debt will become even more difficult to sustain. We run the risk of a collapse in our currency, our wealth and our way of life if we continue to engage in zero-sum thinking.
It’s time to return to the more productive forms of capitalism that built our prosperity in the first place.
Daniel Altman is the author of “The Best Decisions You’ll Ever Make: An Economist’s Guide to Saving Time, Making Money, and Living Well” and the "High Yield Economics" newsletter.
This article originally appeared on USA TODAY: American capitalism was a win-win. We've abandoned it to bet | Opinion
