Really? Somone eliminated scarcity and didn’t tell me?
What is this “yet” business? Two sentences ago you told me there wasn’t a finite amount of resources. Now you’re saying it’s possible to reach “zero-sum” (which you should probably define). Which is it? Is there a limited amount of resources, or are they infinite? It’s one or the other.
Your problem is you’re thinking about this in much the wrong way. Yes, there is a finite amount of matter on the Earth, but that’s not what makes resources scarce. And the fact that there’s still oil and minerals in the ground isn’t why we haven’t “run out” of resources. When I say there is a limited amount of resources what I am talking about is the existence of scarcity. There is only so much we can do at any given time. This doesn’t mean we have some stockpile that is being depleted and will eventually run out. This means we have an operating capacity. In microeconomics this is illustrated as the production–possibility frontier. Generally that graph is used to show the tradeoffs made between production rates of two commodities that use the same fixed total of the factors of production. It illustrates what I’m talking about (albeit on a micro level). When I say “resources are limited” I mean that if I cut down a tree to burn for firewood, you can’t use that same tree to build your house.
Yes, we can grow another tree…but this takes time. There is only so many trees available at any point in time. There is only so much that can be done at any point in time. Of course, these days, we can get a lot more done in a lot less time…with a lot less resources. (This is why we are wealthier than our ancestors). This is the result of economic growth through the division of labor and capital accumulation.
As mentioned here, we’ll probably never run out of oil. Largely because there’s still a lot available, and because we’ll transition to other sources of energy. But that doesn’t mean it’s unlimited. If that were the case we wouldn’t be looking at $100/barrel. We are limited in how much oil we can currently extract and refine. Our supply will last longer than a lot of people believe because (as the gentleman mentions) for one thing, our recovery rate is improving. And for another, prices function to ration resources and allocate them most efficiently. If oil is that important (i.e. there is a high demand), as it gets more and more scarce (i.e. a lessor supply) the price will go up…leading to less consumption of it.
Yes, we’ll constantly have resources (through lengthening the usage of current ones through free market rationing by the price system, as well as technologies that utilize the resources more efficiently, thus doing more with less — making the resources less scarce…and also through innovating new resources (or, innovating ways to make things that currently have no or little productive use into resources that can be used for something people desire). But just because we’ll have resources into the future it doesn’t mean we have access to an infinite abundance at any point in time.
There is always a limit. This is the entire basis of economics.
Where are these businesses going to get the resources needed to expand if said resources are all in the hands of the consumers? Again, there is a limited amount of resources, and they can’t be in two places at once. You’re falling into a Keynesian way of looking at things…assuming aggregate demand is what drives economic growth. What you’re saying is basically in line with the mainstream proposition that if you just give consumers more money, they’ll go shopping, which will create business for retailers, getting them to expand…creating more jobs, and thus more people who have money to spend, and therefore more shopping, and more retail expansion and more jobs and more spending…into a neverending upward sprial of increasing wealth. It would just be a constant climb upward with ever-growing prosperity for all. Everyone should get the mall!
However…the reality is businesses expand by drawing on reserves of capital and generating activity in the higher order stages of production. But where would those reserves come from if no one were postponing their consumption? Remember growth comes from savings…and savings is literally underconsumption. If you take money from people who would rather be saving, and then hand it to people who would spend it, all that does is remove opportunity for those businesses to expand. (And of course people wouldn’t be very happy about your stealing from them).
You’re basically recommending exactly what the government has done…incentivize spending to boost GDP. The only difference is there is only so much money the people will allow to be stolen from them. There is an upper limit to the amount that you can take from those who would postpone their consumption to hand over to people who would spend right now. And there are only so many people who are interested in spending now. So to make up for it the Fed just prints money and the government spends it for us. And what the government doesn’t spend is made available for those businesses we were just talking about to borrow…thus lowering interest rates artificially…thus leading to malinvestment…thus leading to a bubble…thus leading to a bust.
This of course is at the heart of Austrian Business Cycle Theory. (Of course, check the links there…especially the “full collection” one. For an intro, I’d go with this, and this.).
I’d tell you, but I’m not even exactly sure what you’re thinking. It sounds like you’re saying a boom can go on forever, so long as you tax and spend enough.
No the difference is in the fact that your central planning scheme wouldn’t work that way. You might go back to this thread and read through the broken window fallacy discussion with “Fool on the Hill” (which was recently resurrected, actually). Your argument sounds a lot like his.
Your first sentence claims you don’t think Rothbard is right…yet the rest of your paragraph goes on to agree with him… ?
My response: “And?”