system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: For me to make money does someone else in the world have to lose money

If for example i have $1000 more than last week does that mean that collectively everyone else is $1000 worse off?
gpt
The simplest way to understand this is through an economic concept called Pareto improvement.

Any trade is a Pareto improvement if both parties regard themselves as better off for having made the trade. Imagine buying a hamburger. You prefer having the hamburger to having the $2 that it costs (otherwise you wouldn't have bought it and would have kept the money) and the restaurant prefers selling you the hamburger than keeping it (because they make a profit).

By buying a hamburger, you have slightly increased the total value of the global economy, by improving the efficiency by which resources are allocated. The same principle applies to the vast majority of trades - if both parties didn't think that they would be made better off for making the trade, then they wouldn't do it.

The vast majority of trades in a functioning economy are Pareto improvements. Every time one of those trades takes place, the total wealth of the world improves slightly, because the underlying resources have been allocated in a way that provides a greater amount of utility. Not all of these transactions are ideal, but they're better than no transaction at all.

Situations in which trades are made with no Pareto improvement are sufficiently unusual that they have a specific name in economics, a "market failure". Examples of market failures include things like monopolies (where someone can control a market and coerce people into making unfavourable trades) and pollution (where a third party is made worse off by an economic activity).