This is something that has come up in quite a few of my debates recently, so I figure its worth posting about: The word scarcity is probably the most misunderstood economic term. In the economic world, to call something scarce is really to simply say that it is not completely infinite. This confuses those people who like to get into economic arguments but have not *formally* studied economics (Im not criticizing these people, but I am saying they should be aware of what they dont know from a technical perspective). Thus, when an economist calls something a scarce resource, they arent saying that there isnt a relative abundance of something. Theyre simply saying that by having less than infinity units, this resource has to be rationed by the market price mechanism. For example, eggs are incredibly abundant relative to other commodities, and as such, they are incredibly inexpensive. However, they are not free because they are still finite, and they still require the expenditure of labor and other resources to produce. Therefore, they are economically a scarce resource. Air, on the other hand, is not a scarce resource. It is infinitely abundant and requires no expenditure of labor or other resources to consume. As such, there would be no market for my bottling air and selling it at my local Wal-Mart (dont confuse what Im saying with the bottling of purer gases such as oxygen tanks and whatnot that obviously require more than just going outside with a jar and closing a lid on it). When we arent speaking in Economese, it would certainly be absurd to call many resources, such as eggs, scarce. For this reason, when arguing economics, somebody (myself, usually) may call something a scarce resource, and the immediate response will often be, that isnt scarce! There are tons of it! This response misses the economic implications of scarcity. Reproducible resources are also still not infinite because at any given time, there is not enough to satisfy all desire for the good without an offsetting cost (usually, but not necessarily, the money price). This also applies to resources that may require some kind of enhancement. If I live next to a lake, water may not be a scarce resource, but *filtered* water or water that is pumped to my house through a system of pipes may be a scarce resource. Under this understanding, it is not contradictory for something to be both scarce (economically speaking) and abundant (in the general sense) because of the strict economic definition of scarcity. So the economics word of the day is scarcity. This applies to any resource that is finite enough in its availability to require a rationing mechanism through the market price system, usually because it requires some amount of labor or other resources to produce. - Calton -
Posted on: Wed, 06 Aug 2014 19:50:01 +0000
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