Thursday, April 05, 2007

You can't always get what you want

Scarcity - Economics Basics

You can't understand economics without believing in scarcity. It is the starting point for the whole allocation of resources question that underlies the discipline. If there was no scarcity then why bother worrying about how things get allocated? Since the whole premise of the study of economics is this denial of satiation, it has been termed the dismal science (Even though the history of that phrase shows that it was introduced in a different context, people intuitively understand the implication.) Malthus thought that we were doomed since populations increase geometrically while resources only increase arithmetically. This view has actually proven to be incorrect in a whole host of industries. On the other hand, the idea that there is scarcity in the world is one to keep in mind whenever you hear people wanting to throw money at a problem whether it be global warming, space exploration, services for the mentally ill, or art musuems. There are tradeoffs.


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