When I was growing up, we had a colloquial phrase we used to express something that was really difficult to find. We would say that is scarcer than hen’s teeth. Wow! Everybody knew how scarce hen’s teeth were to find.
When I started studying the subject of economics, I learned a little different meaning of the word scarcity. It wasn’t that things were hard to find, it was that anything capable of having at least two alternative uses is considered scarce. It is scarce because we can figure out more uses for each commodity than there are commodities. Our wants and desires for the things that we can produce from those commodities are limitless. Our resources are limited and our desires and demands are unlimited. Therefore, we live in a world of scarcity. There is just so much of anything and no more.
Now, the questions arise in the end, how will that commodity be used? Who will get to produce something from the commodity? What product will be realized out of the commodity? For whom should the goods or services be made from the commodity? When the commodity is used to produce something, can the commodity be replaced or duplicated? Can it be recycled for another go around?
The question of scarcity is a question of cultural economics because it involves people and their behavior. It is a great study just to observe how people decide to answer the above questions. Everybody would like to have more and better everything, so our unlimited wants are forever smashing into the limits of our resources, forcing us to pick some alternatives and reject others.
When Jackson Brothers Investments was involved in real estate development in the ski areas of Colorado in the late 1960s and 1970s, we owned a motel right in the middle of the Winter Park Village on Highway 40. We wanted to build the local post office there, thinking that if we owned the post office building on our ten acres we would always have a say in where the center of the village would remain. If we could get the contract for the post office, it would also make the remainder of the property surrounding the post office more valuable forever. But we couldn’t use the ground for a post office and more development sites if the motel continued to fill the space.
At that point, the highway property on ten acres in the middle of the village became a scarce commodity. It had at least two viable alternatives for use. Additionally, other people were knocking at our door wanting to buy the property for projects of their own. But, we thought to ourselves, the motel is presently giving us cash flow, and if we tear it down the income will stop. So what should we do? You are right! We scraped it, hauled off the debris, built the post office, and lived happily ever after.
We have to face this economic principle of scarcity every day of our lives. Do we go to the gym and work out next Tuesday after work, or do we use the time to get the oil changed in our car? Time becomes a scarce commodity, and we have unlimited demands on that piece of time. It seems that virtually everything is scarce. We used to think that the air we breathe was a free commodity. But then we realized we had to either keep it clean and breathable, or we could dump garbage into it.
We used to consider the space above the earth as a free good: it just goes on forever. But now we discover that conflicts are even arising over the allocation of orbital slots. They, too, are becoming scarce commodities for our telecommunication satellites. Commercial airlines end up squabbling over new and improved “highways in the skies.” Maybe, the power of gravity that keeps us tethered to this old earth can be used as an example of a remaining free good. But almost everything you can think of is a scarce commodity simply because it has limited uses and we have unlimited desires and demands. So, what does all that have to do with cultural economics?
Next Week: The matter of choice.
(Research ideas from Dr. Jackson's new writing project on Cultural Economics)
© Dr. James W. Jackson
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