Why Scarcity is a Good Thing

The sworn enemy of economists is not debt, as you may presume. It's scarcity.

The reason why is that if you eliminated "scarcity" you would have unlimited "wealth," solving all of the economic problems of the world.

However, terms like "scarcity" and "wealth" have very specific meanings to economists and when compared to the meanings associated with them by normal people, there is some miscommunication.

"Scarcity" means that there is only a limited amount of the stuff.  Technically, everything is scarce.  There is a limited amount of dirt.  There is a limited amount of rocks.  However, when it gets to things like oil, gold, iron ore, etc. things become a little more scarce.  Because of this people must be efficient, they must be "economic" in their decisions on how to use these scarce resources to get "the most" out of them.

Get the most what?

Get the most "wealth."

"Wealth" though commonly assumed to be money or income, is quite different in economic terms.  "Wealth" is simply "stuff."  Your cars, your food, your house, every item and asset you own. The reason why economists are so focused on "wealth" and not "money" is because it is not so much the MONEY that matters to people as much as it is the physical items and services.  In short you don't get a benefit from a $20 bill.  You can't eat the $20 bill.  That money is technically not wealth.  The $20 in groceries it can buy, however, is.  Because those groceries will help maintain and improve your life. 

Therefore, in an ideal world (say like Star Trek where they have a replicator), resources would not be scarce, but limitless.  If you had unlimited oil or unlimited diamonds or unlimited chocolate, everybody's "wealth" would increase to a maximum level at minimal cost.  Standards of living would be unlimited and the only thing that would limit your life would be your mortality.  Ironically, in such a world, economists would be unemployed because there would be no need for them.

Of course, a scarceless, unlimited wealthy world is not feasible.  There is a limit to everything, not only including physical resources, but human time as well.  But there ARE instances of unlimited wealth and while economists may think that is the ideal situation or "goal" of economics, they  may want to rethink such an infinitely wealthy world. 

Understand there are instances of unlimited wealth.  I've seen it first hand.  And it was when one of the Saudi princes came to the Mayo Clinic.

My buddy ran the security company that was hired to provide the prince protection.  He flew in with an entourage of about 120 people, 90 of which were support staff, servants, cooks and maids.  he flew in his own private airliner and was so wealthy he had rented EVERY 2010 Mercedes S Class in the UNITED STATES that was rentable (it was 2009 and he would ONLY settle for the newest cars) to transport him and his family (chauffeurs were driving from California and NYC).  There were also trucks lined up at the airport that would be used to transport all the items he and his entourage would purchase at the Mall of America and other places.  And he had rented out two entire floors of the Kahler Hotel in downtown Rochester.

He and his family had unlimited wealth.

But what transpired afterwards was something that I couldn't put my finger on, but after reflecting upon figured out what was going on.

He and his family would buy ANYTHING.

And by ANYTHING I meant ANYTHING.

One of his three wives bought a large commercial sized crate of hand lotion at Wal-Mart.  Another wife would buy clothes at Nordstroms.  One of his daughters left the convoy and her protection for a slice of pizza at Pizza Hut, only to take one bite and throw it away.  Top of the line German cars were purchased, as was jewelry.  Though one of the princesses insisted on having her hair cut at a cheap salon.

There was no rhyme or reason to their purchases.  They didn't buy "only the best" as evidenced by their trip to Wal-Mart.  They didn't buy stuff they needed as evidenced by the crate of hand sanitizer.  They didn't buy stuff they were going to use (one of the wives bought three truckloads of crap she could never ever wear/consume in her life time).  And they didn't buy stuff for a purpose (tools, medicine, entertainment).

They just bought stuff for the sake of buying.

And then I saw what was going on.

With literally unlimited wealth the Saudi prince and his family were unable to assess VALUE.  Their entire lives they could afford anything they wanted.  There is more than one story of a Saudi prince buying a brand new Mercedes, having NO CLUE it runs on this thing called "gas," runs out of gas in the middle of the desert, and abandons the car there.  He would simply get picked up, returned to the castle and buy another one.  The reason why is that with unlimited wealth that Mercedes might as well cost as much as a piece of chewing gum because to the Saudi prince, it does.  $100,000 vs. $1 is an inconsequential difference to a man with $10 billion.

But while you and many economists may wish to be so wealthy, think again, for there is a consequence.

What would your life be without the ability to judge VALUE?

You take this ability for granted.  You, me and most normal people have to assess, judge, discern and discriminate how we spend our resources.  We have to compare whether or not the outlay in terms of time, money or resources is worth the item or service we purchase.  And not only in our purchasing lives, but our social lives as well.

Do you spend time with that annoying friend or the couple who can't keep their loud obnoxious kids in line?

Do you spend the time getting that Masters in Quadrapalegic Turtle Art History Transgender Studies?

Do you go on a date with Tami the Suburbanite Bimbo Brat or have a scotch and cigar with your buddies?

But if we had unlimited funds and essentially our entire free time to ourselves, how would you be able to discern which is better?  You didn't have to part with a piece of your finite life to get the money or the day off to enjoy a purchase or social time with friends.  And since you didn't have to forfeit anything in exchange for money or free time, you don't value it.  Your time and life is essentially worthless and you will spend it accordingly so. 

This is why the Saudis not only piss away their money in the most random and chaotic fashion, but why they also were never smiling.  They were grumpy, I never saw one smile, they were miserable.  I would even consider them zombie-like when you'd see them going to and fro in the world's most expensive cars to go places their subjects could only DREAM of going and would be ecstatic in doing so.   And also imagine how impaired their ability is to judge human value.  Do you think any one of the score of princesses has a good friend to talk to?  Do you think the princess has ever endured hardship and strife or just a plain challenge that would have developed character and a personality?  Or do they just have legions of servants, maids and yes-men taking advantage of them for their wealth?  Heck, one could make a very good claim the Saudi royalty is inoculated against love because they aren't capable of it and nobody would love such boring, mindless, money-spending automatons. 

In short having unlimited wealth would be nothing less than sustaining an injury that would cause you to lose one of your senses.  You become blind, you become deaf, or you become paralyzed.  You can no longer "sense" value and therefore can no longer make wise decisions on how best to spend your life.  Worse still you lose your ability to determine what is important in life.

Fortunately, however, for you and me and most everybody else, we were brought up poor or certainly not "billionaires."  We've had to discern and judge value.  We've had to work for we got.  We've had to suffer and sacrifice, and thusly attach a value to our time.   Consequently we have richer lives than any Saudi king will ever have.

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