Reading further, someone brought up a great point. If business is about finding profit from excess resources…then production cost for all businesses would be zero. So are you willing to say that as a farmer..who grows corn by himself…and then sells this corn on the market for $1 per corn…that my total net profit is $1?
How do you define scarce? I’m in country A and there is no product B. In country B theres lots of product B. I want product B. Would you say product B is currently scarce for me? Do you consider the difficulties in acquiring products or so-called resources as being indicative of their level of scarcity? If so, how difficult does the acquisition have to be before you’d define the product or resource as being scarce?
What if the friend beside me doesn’t want product B? Does this relate to your definition of scarcity?
Please, Arman, answer the question rather than evading by quibbling on the finer points of spelling.
What propaganda? You need to take economics 101. If resources were limitless, there wouldn’t be price, nor would there be profit motive . . . there goes the motivation to have business.
Resources is not just supply. Resources are input factors in production, such as labor, capital, natural resources, etc.. “Over capacity” is one way to desribe the market phenomenom where the supply-demand curves intersect at such a price point that the producer can not pay for the cost of resources that it takes to bring the product/service to market. If resources were unlimited (i.e. not scarce), there wouldn’t be “over capacity” because the cost of production and distribution would be zero; any sale at all would be 100% profit. There is no over-capacity of air, for example. Nor is there over-capacity on the number of copies of a particular song for download. There may be an overcapacity on the download server if the producer paid too much for a high capacity server that would never be utilized. That’s because server capacity is not free; i.e. it’s limited and scarce: unable to cover the production and distribution cost is the key.
If economy were limted by demand, a nation of extravagant beggars would be the richest in the world. That’s obviously not the case.
That’s not correct at all. Marketing is part of the price discovery process. What’s next? You are going to say free market trading is a waste of resources? and that government bureacrats allocating resources for production would be the most efficient? Here’s a hint from reality: private automobiles design and engineering have gone through numerous generations of improvement after WWII in the west. The result is better and better cars, and the car industry was one of the top advertisers for all those decades. In contrast, the Soviets more or less made the same Lada and Volga models since the end of WWII until the collapse of Soviet union. When it all ended in 1989. the soviet car factories were found to be making cars that literally worth less than the natural resources that went into making them. Which economic model is better? Marketting is simply part and parcel of the price discovery pricess. When you invent something new that make better use of natural resources, you need to let people know about it.
Business, to the extent that it is successful, is about making better use of limited resources. If resources were truly unlimited, there wouldn’t be any need to make better use of them. There wouldn’t be bankruptcy of business (if cost of production and distribution is zero, the business wouldn’t owe anyone anything); nor would there be any need to run any successful business at all (no bankruptcy risk, and no incentives such as being able to lay claim on limited resources either). For example, no company has gone out of business for not paying air (general air, not specialized industrial or chemical gas); nor is there any business selling free air (not industrial or chemical gas), precisely because it is not limited or scarce in our present environment. If all resources were like air, free for the taking (and the cost of taking is also zero), there wouldn’t be any business or any work at all. The fact that work and business exist is because almost everyone else demand something to be paid back in something when you want the fruit of their labor; that means, the fruit of their labor is limited and scarce . . . and you’d better figure out a ways to make efficient use of them.
Economic trend and economic trend lines have specific meanings in economics and finance. They are the macro lines drawn over decades of economic statistics. These lines do indeed filter out short-term fluctuations due to bad or good economic policies beccause policies get reversed frequently on that time scale. These are the only “economic trend” that are not affected by short term bad economic policies, because that particular econometric is precisely designed to filter out the short-term effect by looking at the very long term.
If you want to talk about short term economic indicators, then your earlier statement was false. Short term economic indicators are certainly adversely affected by bad economic policies such as raising tariffs.
Seems obvious to me that Arman is unfamiliar with the economic meaning of the term “scarcity”, and thus is using the ordinary definition of the term.
And the nitpicking is just ridiculous, especially about “treand”. Either clarify the terms being used, or give up on meaningful discussion.
Yea. Scarcity, in economic terms, basically means, “We ain’t gods.” We gotta make choices and we gotta toil to effect those choices." There exists relative/comparative scarcity. So if you ain’t no god and you’re sub-omnipotent - you gots to wrestle for it. Yee haw!
Or to clarify for Arman’s benefit: any commodity that does not have an infinite supply is economically scarce, even if the supply is ‘abundant’ and is greater than the current demand for it.
How do you define scarce?<
Try a dictionary.
In the three sources that dictionary.com uses, there seems to be only one definition that seems to alude to the definition that you seem to adhere to. “1.insufficient to satisfy the need or demand; not abundant:” This definition is in itself confused, because the first part is more restrictive than the second part, and so the second part almost negates the first part. If the word is used in different ways, then the two definitions should be on separate lines.
“Insufficient to meet a demand or requirement; short in supply:” http://dictionary.reference.com/browse/scarce
Lack of scarcity does not mean a limitless supply, but an adequate supply to fill demand.
I’m in country A and there is no product B. In country B theres lots of product B. I want product B.<
Scarcity is not about filling wants. Lack of scarcity means that demands and needs are met by supply. If you want it bad enough, and you have the resources than you can mailorder your demands and get your supply.
Do you consider the difficulties in acquiring products or so-called resources as being indicative of their level of scarcity?<
Scarcity means that supply cannot meet demand. It does not say that supply is easy or hard. There is no scarcity, so how can there be levels of scarcity. Either demand is met or it is not. Either it is scarce or it is not. There are levels of being pregnant. There are levels of being alive. There are no levels of being scarce.
“Scarcity is not about filling wants. Lack of scarcity means that demands and needs are met by supply. If you want it bad enough, and you have the resources than you can mailorder your demands and get your supply.”
I don’t believe you understood his point. In country A…product B is lacking. Meaning..there is less supply than demand. In country B…there is plenty of product B. So is Product B scarce in the economy..considering country A and B are the only two countries that demand product B?
Even using the dictionary definition of scarcity even applies to the economy today..and proves scarcity exists. Scarcity still exists even though demand meets supply. Scarcity simply means a limit. I doubt you would even say that we have unlimited land in the world. Or hell, that we have an infinite supply of Oil. Oil has a limit on this world. If it didn’t, then prices would not exist…since there would be no point. If it was infinite, people could just easily obtain it. If it is true about everything, then we live in a world similar to the garden of eden, where scarcity does not exist.
There are levels of “scarcity.” Prices say a lot about it…even though the way I am saying it, you must account for C.P. An item of higher price usually means higher scarcity…while lower prices mean less scarcity. But just because supply is meeting or exceeding demand, does not mean scarcity is no longer a factor. Think of it in the macro, not the micro. Resources are limited. It is just we have a large amount available.
"any commodity that does not have an infinite supply is economically scarce, even if the supply is ‘abundant’ and is greater than the current demand for it. "
This statement right here Arman, is what we mean by “scarcity.”
Short term economic indicators are certainly adversely affected by bad economic policies such as raising tariffs.<
Yeah right. What indicators are you thinking of? http://en.wikipedia.org/wiki/Image:Gdp20-40.jpg
“There is not universal agreement as to the impact of the tariff. According to the U.S. Statistical Abstract, the effective tariff rate was 13.5% in 1929 and 19.8% in 1933. From 1821 through 1900 the United States averaged 29.7% effective tariff rates and peaked in 1830 at 57.3%, dwarfing the Smoot-Hawley rate. In addition, imports in 1929 were only 4.2% of America’s Gross National Product (GNP) (although this does not include the effect of other countries’ retaliatory tariffs on US exports).” http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act
Sorry for all of the posts, but thoughts come to me right after I submit the post. Looking through the dictionary definition from the website you provided, I can apply it and prove that things are scarce.
Thinking through a long period of time…say, 1000 years, there is a shortage of everything. If it does not have an infinite supply, then it is a shortage. Simply because demands are infinite. Food is in a shortage…because we as a human race, must constantly eat food infinitely to survive. So is water. I believe only 3% of the world’s water supply is fresh water. To some areas of the world, water is not available. To other parts, it is abundant. But as a whole, water is actually scarce, because we as a human race, but constantly consume water infinitely to survive.
The way I see Arman is describing scarcity, is that simply, if there is a lack of supply, then there is scarcity. But how can you say that there is no such thing as a lack of supply in the world? Even in America, you can’t argue that certain people do go hungry. And certainly, they do demand food. So supply of food is actually lower than demand. Therefore, scarcity exists. Simply because, not everyone is being satisfied in the world. Everyone does not get what they desire. Therefore, scarcity exists, and is a factor.
“There are levels of being alive”
I want to say that this is false. You are either living, or you are not. There are no “levels.” Same goes with pregnancy. Either you have been knocked up, or you haven’t. There is no in-between. That is like saying there are levels of virginity. You are either a virgin, or you are not.
Scarcity (http://www.investopedia.com/terms/s/scarcity.asp) The basic economic problem which arises from people having unlimited wants while there are and always will be limited resources. Because of scarcity, various economic decisions must be made to allocate resources efficiently.
When we talk of scarcity within an economic context, it refers to limited resources, not a lack of riches. These resources are the inputs of production: land, labor and capital.
People must make choices between different items because the resources necessary to fulfill their wants are limited. These decisions are made by giving up (trading off) one want to satisfy another.
If scarcity and this definition do not match, what term can we apply to that definition?
This statement right here Arman, is what we mean by “scarcity.”<
And that is not the meaning according to the dictionary. If you are going to say anything of meaning, you must be careful to adhere to the meaning of your words, and it is not at all acceptable that you start to change the meaning of your words when it is shown to you that the clear meaning of your sentence is absurd.
Read what is written here:
“The basic economic problem which arises from people having unlimited wants while there are and always will be limited resources. Because of scarcity, various economic decisions must be made to allocate resources efficiently.”
According to the definition from the dictionary you used, scarcity exists when there is a shortage. Or in your words, when supply is lower than demand. If scarcity does not exist, and we also know that demands are unlimited…that we as humans always want more things to survive, then supply must be infinite, since demand is infinite.
People must make choices between different items because the resources necessary to fulfill their wants are limited. These decisions are made by giving up (trading off) one want to satisfy another.<
But you see, it is not at all important that people have their wants met. It is important that they have choice. It is important that they can create demand based on their wants. It is important that they have disposable income to create demand for labor service. Their choices, when they can make them, are always abundant. Giving them ever more choice is a symptom of a growing economy, not a basis. The choices are always limited, but they are never scarce.
Raising tarrifs? What indicators? Read when the smoot-hawley act was passed. It did raise tarrifs. It was passed in 1930. For the next 3 years, the GDP decreased. According to you, since economic regulations have zero impact on the economy, the GDP should have stayed constant. And if you read on from the wikipedia article you provided:
“Using panel data estimates of export and import equations for 17 countries, Jakob B. Madsen (2002) estimated the effects of increasing tariff and nontariff trade barriers on worldwide trade over the period 1929 to 1932. He included not just Hawley-Smoot but the tariff increases in other countries as well. He concluded that real international trade contracted by around 14% because of declining GNP in each country; 8% from increases in tariff rates; 5% because of deflation-induced tariff increases; and an extra 6% because of the imposition of nontariff barriers.”
Also, it is false that the peak was in 1830. FTA: “Smoot-Hawley Tariff Act “imposed an effective tax rate of 60% on more than 3,200 products and materials imported into the U.S.,” quadrupling previous tariff rates.”
Also FTA: “Although the tariff act was passed after the stock-market Crash of 1929, many economic historians consider the political discussion leading up to the passing of the act as a factor in causing the crash and/or the recession that began in late 1929, and its eventual passage as a factor in deepening the Great Depression.”
“But you see, it is not at all important that people have their wants met. It is important that they have choice. It is important that they can create demand based on their wants. It is important that they have disposable income to create demand for labor service. Their choices, when they can make them, are always abundant. Giving them ever more choice is a symptom of a growing economy, not a basis.”
You don’t understand the point. This is correct even if we do have “disposable income,” our wants are limited. For example, if I go to class at 6pm till 9pm, that means I lose 3 hours of doing something else I desire doing. I don’t get those hours back. I could be playing a video game from 6pm-9pm, but I am in class. I do have a choice, but I can’t certainly do both effectively. Choices are abundant, yes, but fulfilling the choices is limited. Choices are actually unlimited. They are infinite. But what about the poor? I mean, they certainly have choice. But I guess to you, it doesn’t matter that their choices are fulfilled.
“It is important that they can create demand based on their wants”
If this statement is true, then people having theri wants met is important as well. It is like me demanding a Rolls-royce, but not having the money to pay for it. The producer creating that car simply created it for nothing. I can demand anything I want. But if it isn’t being sold…then the want isn’t being fulfilled. Producers don’t produce things thinking that people may buy it. Producers produce because they believe people WILL buy it. If they produce 10 cars, and only 2 were sold, producers will not continue to produce 10 cars. That is inefficient. That is a waste of resources.