The term is well-defined in economics. It is incumbent on you to familiarize yourself with the jargon if you are going to debate within the subject’s sphere. BTW, we’re speaking about scarcity of resources (including time), not choices, so don’t try shifting the debate. I’m not sure how your response even came near to dealing with the argument put forth, i.e. that scarcity exists in the manner described.
The dictionary definition and the economist’s definition don’t always match. Here, we’re using the word in the economic usage, not the common usage.
The term is well-defined in economics.<
Yeah right. It is all nonsense and double talk. You guys present scenarios, and say, ‘see, that is what we mean’. Show me the dictionary that defines the word in the meaning that you want it to mean.
If you want to talk limited resources, then say limited resources. Using the word scarce has meaning that is far different than limited. But then you guys don’t want to be understood; because it is all incomprehensible nonsense.
Except that businesses founded between 1901 to 1928 were not designed to compete in the 1921-1900 tariff environment. Their output levels were designed to run in the 1920-1928 low-tariff environment. The citation you found in wikipedia is also very misleading: the period from 1821-1870 had high tariff rate, a very significant contributing factor to the Civil War. The 1871-1914 period had much much lower tariff rate. After the interruption of WWI, 1920-1928 saw another period of low tariff rate. Then tariff and out-right restrictions began to be introduced in 1929, with disasterous results for business that were founded to be profitable in the pre-1929 low-tariff environment.
The point that I find most interesting is “In addition, imports in 1929 were only 4.2% of America’s Gross National Product (GNP)”. I deem it impossible for the economy to be bettered or worsened by an excess of 10% by a complete and sudden evaporation of all external trade. The economy of a region is always rather isolated to that region, and external trade is always about froth… excess.
It’s not our fault that you never had Economics 101. The economics use of the word “scarcity” is a much better defined term than the word in the vernacular use. In the vernacular use, the term “scarce” is very subjective and not really defineable (is 100 in the world scarce? about 100,000 scarce? depending on context. 100,000 loaves of bread would be very scarce, whereas 100 Miss Universe or 100 retards wouldn’t be scarce resource). The econmics use of the world is actually logically very consistent: if something is not practically unlimited, it would be scarce indeed for the ones fighting over the last bits of left overs; that’s why there is a price for most items of resources: to decide who gets it before the count gets down to zero. If the last loaf of bread is scarce, the loaf before it being physically exactly the same should certainly be scarce too . . . hence all the loaves before too are scarce. Hence, Economics is about the study of allocating scarce resources. That’s what you will learn in the first chapter of Economics 101.
You have been brainwashed into believing a bastardized version of “demand-side economics.” In talking about “over-capacity” you ignored the crucial factor in deciding what is “over-capacity.” Over-capacity only shows up as a problem when the price point for the end product driven down by supply volume reaches such a low point that producer can no longer pay for the capital and labor factors that go into bringing the product to market. If there is no capital or labor cost associate with the product, there wouldn’t be over-capacity. For example, there is no over-capacity for a particular song for download even if 9 billion copies are available for download when there are only 6 billion people in the world. Over-capacity means the business has invested (i.e. consumed) so much capital in putting together the enterprise that it can not hope to maintain the price-point and volume combination to be profitable. What does that mean? The business has laid too much claim on the scarce resources that went into production; now the creditors are knocking on the door. Over-capacity is a misallocation of scarce resources, resources that could have and should have gone into producing something else.
Fixed wage levels as part of union contracts and minimum wage laws raise the cost of goods production, hence exacerbate the “over-capacity” problem. The businss become unprofitable and people lose their jobs even as less goods are brought to market. That’s why economies under-perform, real standards of living grow at slower rate when there’s wage control.
No, it’s been in use that way for a long time now (in the way defined by the definition Pairunoyd cited.) Had you any actual interest in educating yourself, you’d have made the effort to find out (economics dictionaries, incidentally, offer the definition, as does the Oxford dictionary, and the very dictionary you cited.) Of course, you have no argument. Other than dishonest nonsense and evasions, you have put forth little in the way of such. So stop accusing economists (who, like all scientists, use jargon specific to their subject-matter) of the very things you engage in.
Then you don’t understand economics. Profitability and business viability are always on the margins. What’s the most efficient way to utilize limited resources is highly dependent on the relative valuation of different kinds of resources. Long distance transportation being expensive, import and export items always have great effect on the relative valuation of different kinds of resources because what get transported are usually the items with the highest price differentials between the two locations. The total US oil import amounts to less than 3% of GDP today. Can you imagine what kind of economic calamity would result if not a drop of oil is available for import? The mere change from $50/bbl to $90/bbl already had a profound effect on the economy.
More importantly, total US import and export volume was growing at nearly 8% each year between 1922 and 1928. A lot of business were capitalized with that kind of import and export growth rate in mind. From 1929 to 1934, however, due to tariff restrictions around the world, the total trade volume dropped by nearly 2/3. Can you imagine what kind of dislocation a 2/3 cut in oil import would cause? When Middleast oil embargo took place in the 1970’s, the Middleast countries only accounted for 25% of total world oil production, and less than 15% of US oil import.
the economics use of the word “scarcity” is a much better defined term than the word in the vernacular use. In the vernacular use, the term “scarce” is very subjective and not really definable<
?? I show you a dictionary definition and challenge you to show me one with a meaning that you give it. You cannot. That is because if the clear meaning of the statement is shown to be absurd, then you just carve up the meaning of the words in the statement, and render the statement incomprehensible rather than just plain wrong. If you want to talk limited resources, then say limited resources. The word scarce has a definite meaning that is quite different from limited. The way you use it, it has no meaning whatsoever.
Over-capacity means the business has invested (i.e. consumed) so much capital in putting together the enterprise that it can not hope to maintain the price-point and volume combination to be profitable.<
Overcapacity is encountered when realization falls too far short of expectations. That has nothing to do with the limitedness of resources.
Fixed wage levels as part of union contracts and minimum wage laws raise the cost of goods production, hence exacerbate the “over-capacity” problem.<
Overcapacity is not a regular problem within the macro economy. When it is, the problem cannot be fixed by shrinking the capacity, but only by expanding the consumption. Under-consumption is a bit of the same thing as overcapacity, but it is much more repairable. Increased wages do increase some of the costs of production, but at the same time increase general demand in the macro economy. The micro is much more dependent on the wages of the macro than it is in realizing its own expectation.
No, it’s been in use that way for a long time now (in the way defined by the definition Pairunoyd cited.)<
You mean this one?? “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!"
You have no definition!! You use words and then decide what you want them to mean. Not acceptable. You are talking about limited resources. What is wrong with using words that have the clear meaning of what you are trying to convey?? Are you trying to be understood, or are you trying to obfuscate?
Then you don’t understand economics.<
When someone disagrees with you, it is not a symptom of them being more ignorant than you.
More importantly, total US import and export volume was growing at nearly 8% each year between 1922 and 1928.<
But still, the import was about 4%, and what was the export? 6% of GDP? How does that translate in the evaporation of 1/4 of the economy. You are insisting that the tail wagged the dog. International trade is about the froth. It is not that important.
Can you imagine what kind of economic calamity would result if not a drop of oil is available for import? The mere change from $50/bbl to $90/bbl already had a profound effect on the economy.<
If we didn’t have the oil then we would do something else. Economics is about finding profitable sale of excess. We do not need to rely on the largess of other nations.
See, the thing is, nothing is scarce. Everything is limited, but nothing is scarce. You pay lip service to changing the meaning of the word scarce, but deep down you know what it means, and it scares you. The economy of today has almost nothing to do with the economy of tomorrow. If one item becomes more limited, then another item will become less limited. Always there are abundant choices, and never is there any real scarcity.
Spare me the condescenscion. You haven’t the knowledge for it to be justified.
He offered another one from investopedia. It seems you don’t actually read posts though. The definition is clear and exists already. You are ignorant. Nothing is left to be said on this. The reason you think there is no scarcity is because you are oblivious of entrepreneurial activity, which is a reaction to disequilibria in the market.
“But still, the import was about 4%, and what was the export? 6% of GDP? How does that translate in the evaporation of 1/4 of the economy. You are insisting that the tail wagged the dog. International trade is about the froth. It is not that important.”
Actually, that is very well true. As Jim pointed out, oil imports account for very little of the GDP. But if oil imports were to suddenly stop, our economy right away would experience a major recession. Our processes of doing business would dramatically decrease. We couldn’t simply switch to another resource in an instant. That’s simply impossible.
You can not ignore international trade anymore. For example, Japan relies HEAVILY on international trade. They have very little resources to call their own. They have labor and knowledge. Raw materials is something they lack. To say to them…that international trade is not important…is saying japan can sustain itself like it is today if it cut itself from the outside world.
“If we didn’t have the oil then we would do something else. Economics is about finding profitable sale of excess. We do not need to rely on the largess of other nations.”
Really now, so if we cut off the supply of oil today…right now…there would not be any negative effects on the economy? If all of the imports of oil in the US suddenly stopped today, our economy would not change?
">Over-capacity means the business has invested (i.e. consumed) so much capital in putting together the enterprise that it can not hope to maintain the price-point and volume combination to be profitable.<
Overcapacity is encountered when realization falls too far short of expectations. That has nothing to do with the limitedness of resources."
Why are you disagreeing with this statement? He is pretty much saying the same thing you have. Yes, over-capacity does mean that the business spent more on the product than it has sold. But this is not normal business operations. You are suggesting that over-capacity always exist…since there is more supply than demand.
" Increased wages do increase some of the costs of production, but at the same time increase general demand in the macro economy"
I see here you have changed your position on wages. You first said wages do not increase the cost of production…now you say they do. But higher wages do not create increased demand. Just because you have more money, does not mean you are going to engage in more current consumption. You might save money. You might not engage in direct consumption. You can not expand consumption by simply giving people more money. That is what the government has been doing for YEARS! That is how they caused the business cycle…and why bubbles are created.
“You use words and then decide what you want them to mean. Not acceptable. You are talking about limited resources. What is wrong with using words that have the clear meaning of what you are trying to convey?? Are you trying to be understood, or are you trying to obfuscate?”
Assuming that he is human…and the writers of that dictionary reference are human…aren’t they both doing the same thing? I mean, this analysis here is getting ridiculous, but it seems you want to drag off to here…instead of looking at the real issue. As I said, using your definition…and since demands are unlimited, I must conclude that supply is unlimited. But supplies are limited. Using the word abundant has no exact definition.
Incidentally, one of the flaws of the old Keynesian system was that it limited its analysis of money holdings to a choice between cash and bonds. That was until Friedman brought them to the realization that asset portfolios tend to be far wider than that limited set of choices.
Regarding “overcapacity”, the notion becomes meaningless in the absence of scarcity (call it whatever you like.)
Okay, here it goes:
The Merriam-Webster definition of “scarce” in the vernacular context is: “deficient in quantity or number compared with the demand.” Notice, the word “demand” in the vernacular sense does not have the qualifier that the person is willing and able to pay the market-clearing price like the Economics term “demand” you have been substituting. A beggar who want a loaf of bread but not willing or able to pay for it is a demand for food too in the vernacular use of the word “demand.” Whereas in the Economics use of the word “demand” that you have been using, the beggar who can’t afford to pay for the bread does not constitute “demand.” So in the vernacular sense that you are so fond of, all items that have a price obviously has more vernacular “demand” than “supply” (otherwise, there wouldn’t need a price to stop the beggar from getting it). In other words, all items that have a price are scarce. You either stick with the vernacular meaning of both “demand” and “scarce” or grow up and use the Economics definition for both. Under both sets of context, any non-abstract item that normally has a price is scarce.
Since you are such a fan of wikipedia, here is what wikipedia has to say about Economics:
A definition that captures much of modern economics is that of Lionel Robbins in a 1932 essay: “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.”[2] Scarcity means that available resources are insufficient to satisfy all wants and needs. Absent scarcity and alternative uses of available resources, there is no economic problem.
Of course it does. Like I said before, overcapcity only arises as a problem when there is cost of production (which takes limited resources). If the cost of production and distribution of a good is zero, there is no over-capacity. Over-capacity just means inability to maintain a particular price point. Why is that particular price point important? That’s the price point at which the producer can still turn a profit. There is no overcapacity of voluntary generosity for example. Even as “overcapacity” proclaimed between 1929 to 1933, people were lining up in soup kitchens. Obviously, there was no shortage of “demand” for bread or milk in the vernacular sense of the word. Only shortage of “demand” in the economic sense: not enough people are willing to pay the price at which the producers can be profitable and sustain their production. Why is maintaining that price point important to the producers? Because they have to pay for the scarce resources that go into the production and distribution of goods.
That’s typical conclusion from people who can not handle details. Investors are people too, and they make mistakes; sometimes, technology advance and render old methods obsolete. For example, when cars became reliable by about 1910, makers of horse saddles and whips had an “overcapacity” problem: the pool of horse equipment buyers shrank, and therefore the price point had to go down, gradually the less efficient ones, one by one, found their own operation unprofitable, hence the “overcapacity,” and they had to go out of business. The same thing happened to hay farmers who produced horse feed. Now, would the FED stepping in and printing a ton of money, or government mandate to give people money for free so that some of them may spend on horses help keeping those businesses going? Sure, but it would only exacerbate the mis-allocation of capital.
Import oil only accounts for less than 3% of GDP today. Yet, a complete cut-off of that 3%, i.e. complete shut-down of all oil import (raising import oil price to infinity) would evaporate far more than 1/4 of the current economy.
Sure, agriculture output only accounts for 1% of US GDP today. I’m sure you will find plenty something else to eat if all agriculture disappears overnight (sacasm). Goes to show that you have no understanding of economics.
from your definition Jim, is it safe to say that you are explaining the difference between demand and quantity demand?