Scarcity and Abundance

Scarcity blog

The annual release from copyright took place last week.  One of the songs that is now public domain is, somewhat ironically, “The best things in life are free.”  Don’t sing it to an economist, though.  Theirs is a world of scarcity, not abundance.

Right at the start of initiating students into the mysteries of economics, we introduce them to the central role of scarcity. (When we were developing materials for K-12 education incorporating economics, that concept was introduced to first graders.  One enterprising youngster believed that it was actually two words, Scar City. That precocious child undoubtedly grew up to be a philosophy major.).   

If wants are unlimited while resources are limited, society needs to direct those scarce resources to their highest and best use in order to get the most out of scarce resources of time, energy, materials, whatever.  Most is normally an adjective, so what’s the noun? Economists are rather vague what the noun is to be maximized.  Most happiness? Wealth? Well-being? Satisfaction?

Following 19th century utilitarianism (which is the foundation of economics), the most likely answer is welfare.  No, not as in aid to poor families.  Welfare is just a synonym for well-being.  Since economist like to be able to measure and compare, they generally use per capita Gross Domestic Product as a rather questionable measure of societal well-being. The Kingdom of Nepal measures Gross National Happiness as an alternative to Gross Domestic Product. I’M WITH Nepal.  The World Bank and other entities construct multiple measures of well-being, like life expectancy, access to health care, and education al attainment.  By those measures the United States does not do so well, because they measure outcomes or access to some of the good things of life—the ones that are not free.

But back to scarcity. More than one economist has observed that scarcity is a universal fact of life outside of paradise—which in their (warped?) view, makes paradise boring and reality more interesting. Scarcity forces us to make choices and tradeoffs, and stimulates competition, creativity, and innovation.  Scarcity forces us to conserve the scarcest resources and rely on the more abundant ones—substituting capital for labor when labor is scarce and vice versa, shifting to sun, wind and hydropower as fossil fuels become scarcer and more expensive.  The price signals emanating from the market let us know what shifts we need to make.

HOWEVER…a mentality of scarcity gives rise to greed, and greed gives rise to poverty and inequality, something economists don’t talk much about. Most of what they teach is efficiency, which is how to get the most out of your scarce resources. Most being, implicitly, material goods, services, and other good things that can be purchased with cash.Or credit. So perhaps it is time to switch our attention from scarcity to abundance and efficiency to equality.

Yesterday I tested positive for COVID after escaping it from three blessed years. It’s not severe or incapacitating but the best wishes and offers of help from friends and family were overwhelming.  They did more to raise my spirits than even the over the counter remedies money can buy.

When I was growing up, my mother used to by Reynold’s Doughnuts. On the side of the box was a picture of a tree and two men sitting with their back to the tree.  One was facing a doughnut with a small hole, the other on the doughnut with a big hole.  Accompanying the pictures was the little verse “As you wander on through life, brother, whatever be your goal, Keep your eye upon the doughnut, and not upon the hole.”

Good advice from a doughnut box.