"Growing the pie" is an expression used in
macroeconomics
Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole.
For example, using interest rates, taxes, and ...
to refer to the assertion that growing the
economy
An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...
of a nation as a whole creates more availability of wealth and work opportunities than does
redistribution of wealth
Redistribution of income and wealth is the transfer of income and wealth (including physical property) from some individuals to others through a social mechanism such as taxation, welfare, public services, land reform, monetary policies, confisc ...
.
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Summary
Growing the pie could be called "more for everyone." This is as opposed to centrally controlled economic theory, where some give up some of their slice of the pie, that others might have more. Growing the Pie refers to a theory that
free market
In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any o ...
economics grow the size of every slice, and thus raises the standard of living for all participants. This theory proposes that growing the pie is better than redistribution of pie through a centrally controlled economy.
Growing the pie is related to the concept of
economic liberalism
Economic liberalism is a political and economic ideology that supports a market economy based on individualism and private property in the means of production. Adam Smith is considered one of the primary initial writers on economic liberalism ...
. Economic Liberalism was first fully formulated by
Adam Smith
Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
, who advocated minimal interference of government in a market economy, as opposed to
Keynesian and
centrally planned economic views which support taxing and
deficit spending to control
consumption.
Meaning
The phrase itself refers to a
pie
A pie is a baked dish which is usually made of a pastry dough casing that contains a filling of various sweet or savoury ingredients. Sweet pies may be filled with fruit (as in an apple pie), nuts ( pecan pie), brown sugar ( sugar pie), swe ...
that is divided into various sizes. In a free economy, certain players have larger ‘slices’ of pie than others since there is a clear and concise inequality of wealth. To increase the share of the poor, those with smaller slices, the first instinct would be to redistribute the slices to be more evenly cut. However, the criticism of this is that the nation as a whole does not become wealthier and leaves some worse off than before. They explain, then, that the optimal solution is to expand the size of the pie so that the share proportions remain the same but result in larger overall wealth.
[
With this there is no redistribution of wealth, but all in the economy are left with larger ‘slices’ of wealth. Advocates of this phrase and theory criticize redistribution of wealth since there is no new wealth created. This phrase supports a more liberal economic view in which savings and investments are encouraged rather than consumption and government spending to increase long term growth.
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Criticism
This phrase receives criticism from like-minded classical liberal advocates who stress that it suggests there is an inherent level of wealth present in a society in which individuals are entitled. When in fact, these critics state, wealth in a modern society is created and owned by individuals, not societies, and therefore the imagery of the pie fails to capture this.
See also
* A rising tide lifts all boats
"A rising tide lifts all boats" is an aphorism associated with the idea that an improved economy will benefit all participants and that economic policy, particularly government economic policy, should therefore focus on broad economic efforts.
O ...
* trickle-down economics
Trickle-down economics is a term used in critical references to economic policies that favor the upper income brackets, corporations, and individuals with substantial wealth or capital. In recent history, the term has been used by critics of ...
References
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Classical liberalism
Economic ideologies
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Economics catchphrases
English phrases