Question on Quora: In other words, is wealth a fractional concept? I know there are discoveries of new resources (not only physical), but don’t these actually make the other resources value less (a game of winning and losing percentage), instead of adding value to the world?
Answer from Ryan Lackey: Absolutely not. This is probably the most fundamental misunderstanding of economics, technology, and reality, and is fairly widely held.
When a new technology is developed, everyone becomes richer. You can do more stuff with the same or less resources. It’s the “ability to do stuff” which is ultimately value. Capital equipment or other capital investment (in addition to technological development) also makes the world richer.
Supplemental Answer from Kerry Champion: Ryan is correct in that new wealth is created by technology improvement. However keep in mind that economists include in technology improvement a whole range of things that the average person does not see as “technology”. Basically any change that leads to more (or more valuable) output with the same (or less) inputs is included in the technology improvement bucket. For example improved management techniques count as technology improvement to an economist. If Southwest Airlines figures out a more efficient way to schedule their planes and crews (so more passengers are carried more places with the same number of planes and crews) then that is a technology improvement. Even though most people don’t think of a new “scheduling method” as a technology.