[deadmansshoes]

Am I missing something with this "pie fallacy"?

If you restore a car and then sell it to someone that needs a car then surely there is someone else who has sold one less car. The same principle applies to crop prices when all the farmers have a bountiful year.

Surely the reason that wealth has grown, is that the human population has grown - creating more needs and desires, and more workers to meet them.

[jjmaxwell4]

By taking a beat up car worth $200, and buying some parts for $400, and fixing it up and selling it for $1500, you just created $900 for yourself. This is growing the pie. The is not a set amount of wealth in the world.

Think about the creation of entirely new industries. Think of how much would be spent on cell phones today were it not for the innovation caused by RIM, Motorola and then Apple. Or cloud computing were it not for Amazon, Dropbox ect. These companies create wealth, by creating value for consumers. Banking is a little more complicated, but they provide capital to allow the aforementioned companies to grow and innovate.

[deadmansshoes]

Sure, but the $900 dollars would otherwise have gone to buy a car from someone else who fixed up a car or made cars.

I can see how reducing the cost of items or services can make more people "wealthy" - such as being able to buy a second car. But reducing costs normally means reducing wages meaning the owners get richer, and the manual jobs disappear.

[jjmaxwell4]

Reducing costs can often be accomplished through scale, efficiency, improved logistical delivery. Its not always about reducing wages.