Former Secretary of Labor Robert Reich believes the only thing the “zero-sum” sector produces are many of the nation’s ultra-wealthy and nothing of value.
Referring to industries including derivatives, private equity, and hedge funds among others, Reich argues that they are creating a few fabulously wealthy people who could vanish tomorrow and be barely missed for all the net value they produce.
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“Nada. Zilch. Every winner comes at the expense of a current or future loser. The only things this “zero-sum” sector produces are many of the nation’s ultra-wealthy. Money moves from one set of pockets into another — mostly upward, into the pockets of the ultra-wealthy,” Reich said in his article titled ‘America's growing zero-sum economy’ on Substack.
Reich also cited the recent implosion of Samuel Bankman-Fried’s FTX saga. “Months ago, FTX was huge. Now it’s a hole in the pockets of countless people who had put their money into it,” he said.
No Societal Gains: He also cites sectors like corporate law, management consulting, public relations and wealth management industry to make his point.
“Corporate law is another part. High-paid lawyers representing one corporation battle high-paid lawyers representing another. Huge sums of money are spent on these escapades. But there are no societal gains unless you equate one corporation’s victory over another with justice,” he argued.
Speaking on management consulting, Reich said that advising corporations how to make more money by cutting payrolls, abandoning communities, busting unions, outsourcing abroad, and pushing more jobs into contract work doesn’t add value.
"Some economists dub these 'efficiencies' but if the social costs inflicted on everyone else are included, it’s zero-sum," he said.
Reich believes that in reality, the vast and growing zero-sum economy is going to have a cost. It uses the time and energies of some of the nation’s best-educated people, he said. “They do it because zero-sum work pays so much compared to, say, teaching or social work or healthcare or journalism or art or science or many other things that improve peoples’ lives,” he argued.