Is scarcity a myth?
Let's take a look at the following quote:
"The definition of economics in terms of scarcity suggests that resources are in
finite supply while wants and needs are infinite. "
(http://en.wikipedia.org/wiki/Economics under "Criticisms of welfare and scarcity definitions of economics")
Are wants and needs infinite? Also, should wants be considered? Let's brake down some definitions:
- needs: resources required to our survival
- wants: resources not required to our survival, but preferred
When I look at the above, what comes to my mind is the relationship between scarcity and distribution. If we re-classify scarcity into two kinds of scarcity ("need scarcity" and "want scarcity"), then we can properly analize the relationship between scarcity and distribution in a social-economic context.
Now, let's analize the relationship between scarcity and distribution. Let's say there are $100,000 dollars worth of resources available to two people. Let's say that $30,000 is required to satisfy "need scarcity" for both.
Scenario 1: $50,000 for each
In this scenario, there is abundance. Both people have their needs satisfied and have an extra $20,000.
Scenario 2: One person has $80,000 and the other has $20,000
Now, the person with $80,000 has a lot of abundance and have their needs satisfied. However, the person with $20,000 does not have enough resources to satisfy their needs and, therefore, experience "need scarcity".
From this little experiment, I conclude that scarcity is relative to distribution.
If you factor in "want scarcity" at $50,000 each, then here's what you have:
Scenario 1: $50,000 for each
Nobody has enough. Scarcity for everyone!
Scenario 2: One person has $80,000 and the other has $20,000
One has just enough, but the other is in REALLY bad shape! Scarcity once again.
As you can see, if you consider both kinds of scarcity together, you will notice that scarcity is a lot more present when "wants" are considered. The importance of wants, therefore, must be taken into account and must be properly valued. What is our priority? Satisfying everyone's needs or satisfying some people's wants?
In conclusion, one must consider the distribution of resources before determining whether there is truly a scarcity of resources or not. While wants may be infinite, needs are not. This is one of the factors that must be considered when analizing economic problems. Also, while wants may be infinite, there's a limit to what people can actually use, so an excess of resources can result in stagnant resources that are not actually being used by those who own them. Given the fact that 3% of the world population owns over 80% of the world's resources, it turns out that the fundamental economic problem is not a problem of scarcity, but a problem of distribution. Even if you factor in "Want scarcity" you will notice that the richest have a whole lot more then they are actually ABLE to use and end up leaving large sums of resources stagnant in bank accounts while over 50% of the world population suffers. Is this what we call scarcity? Completely absurd.
