A surprising number of people retain from childhood the idea that there is a fixed amount of wealth in the world. There is, in any normal family, a fixed amount of money at any moment. But that’s not the same thing. When wealth is talked about in this context, it is often described as a pie. “You can’t make the pie larger,” say politicians…
What leads people astray here is the abstraction of money. Money is not wealth. It’s just something we use to move wealth around. So although there may be, in certain specific moments (like your family, this month) a fixed amount of money available to trade with other people for things you want, there is not a fixed amount of wealth in the world. You can make more wealth. Wealth has been getting created and destroyed (but on balance, created) for all of human history.
Y-Combinator founder Paul Graham on money vs. wealth and how the pie fallacy limits our lives (via explore-blog)