Forbes  Magazine – 6/14/2011

Metaphors, to use an overused metaphor, are a double-edged sword: sometimes they clarify, sometimes they confuse. One metaphor responsible for a great deal of confusion is that of wealth as a pie–a metaphor that shows up again and again in debates over income inequality.

“No matter how you slice it, when it comes to income and wealth in America the rich get most of the pie and the rest get the leftovers,”writes a critic of income inequality. “[T]he people who are in the top 1% today earn a larger share of the income pie than the people who were in the top 1% 25 years ago,” notes economist Russ Roberts, a non-critic.

One implication of the pie metaphor is that wealth is a zero-sum game: there is a fixed amount of houses, cars, medicines, etc. to go around, and the more Steve Jobs gets the less is left for the rest of us. That may have had some plausibility 250 years ago when most wealth was in the form of land. But today, when an iPhone 3G verges on outdated technology, it’s impossible to miss the fact that wealth grows. Roberts puts the point this way: “[T]he pie is not constant. So your well-being can grow even when your share of the pie falls if the pie is getting sufficiently larger.”

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