I want to talk about 'Scarcity' and the .

While reading an article I came across someone describing Economics as, “The study of things that are scarce.”

I’m of two minds about this. First, like anything I find overly reductionist, this elevator pitch one-liner offends me. (I won’t explore that more here.)


But, secondly, it made me think a bit and I realized the statement wasn’t even correct in the first place, because it is based on assumptions about how economies work which are not supported by reality. However, it could be restated in an equally reductionist – but more correct – way: “Economics is the study of resource allocation.”

Notice ‘scarcity’ is gone?


Here's the thing: not all resources are scarce. And, by definition, there is no need to allocate abundant resources – everyone already has all they need.

However, the real world is neither homogeneous nor fair. Resources might be abundant in one place and not in others. Resources can be *made* scarce by various means: through laws or agreements or just one person hoarding all of it.


So, while the concept of scarcity might underlie economic practices, that scarcity is often *created* in order to enable arbitrage not *naturally* possible.

Maybe this is a 'Western World' problem, but most studies of Economics focus on the mechanics of that arbitrage and most schools of Economic thought assume our ground state of existing laws and agreements and hoarding driving those mechanics are the only way things can work. (See also, 'Austrian' & 'Chicago' schools of Economics.)


But when I say, "Economics is the study of resource allocation," I am not including those assumptions in the statement. I assume a more *fair* economy *is* possible. I don't know what this would look like and, almost certainly, it would be just as reliant as our current ground state economy on laws and agreements.

I do believe this 'real scarcity' economy would still be market-based, as I believe markets are the most efficient ways to allocate resources.


Only, instead of creating arbitrage opportunities by creating artificial scarcity it would rely on the true availability of resources in a region or between regions.

It would not be a 'Free Market' any more than what we have now is a 'Free Market'. Instead, it would be a 'Fair Market' that gave no one a leg up simply because they have more resources or the ear of politicians or any other unfair advantage.


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