Monday, September 2, 2013

Prices Rise When We Make Things Artificially Scarce...

Do you think?? Yes, I know this should seem quite obvious. If only it were so! When we speak of scarcities in economics, often the first thing that comes to mind is physical resources and commodities. Oddly enough they hardly seemed scarce in the 20th century, given the ways in which product of every kind spread far and wide. Just the same, the notion of scarcity - as in actual finite quantities - was too readily applied to conceptual definitions where it never really belonged.

One of the more blatant examples were extreme constraints on building and construction definitions, before innovations in building and construction even had a chance to gain public consideration in the 20th century. To this day, far more inputs and materials go into construction than are actually needed or necessary, which does create the scarcity of the original definition.

Artificial constraints on knowledge use played a major role in the growing government redistribution which began in the 20th century. Governments scrambled to take on social contracts with their older citizens, in the attempt to make amends for increasing costs and complexities in healthcare. When those social contracts were taken on, perhaps it was understandable to assume that knowledge use potential might not ever see the widespread capacities it has actually acquired in the present.

But there is no denying now, that the potential for knowledge use application has become more prolific than the world has ever seen. Just the same, we still live in a era which dictates that knowledge must remain scarce on prior institutional terms: an unsettling proposition that is not playing well with the younger generations of our time.

We keep hearing about the fallout of the middle class for instance. But realistically, there never should have been a "failing" middle class at all.  Even so, there is a lack of consensus re the stupidity of making some very important aspects of life artificially scarce when they don't have to be. In the meantime, next time someone calls the phenomenon of artificial (politically powered) scarcity "inflation" , perhaps they deserve a pie...

This problem only magnifies when we allow the most basic aspects of life to become paramount, because they are defined by artificial scarcity terms. For example someone supposedly has to live in so many square feet of housing if they are going to "rise and shine" in the morning. Or, someone has to see an individual who just mortgaged the next thirty years of his life to his education, so that the person in question could take care of a nagging cough.

When the monetary elements of life lose out to the most common denominators as caught by special interests, there is precious little left over, for the elements that might actually add to what we thought could be our life experiences. And in monetary terms, too few among the public really "get" how much money still needs to circulate just to tend to the "leftovers" of our lives after the basics have been taken care of.

If these aspects of life remain the same because they appear as though intractable, that is one thing. But the problem is that the basic issue of artificial scarcity gets completely forgotten as it feeds into a political context. Consequently, political distortions result in people blaming the system and one another for the inadequacies of compensation (for artificial scarcity) through redistribution. For instance, lack of progress in the creation of innovative and dynamic building components, means that people continue to rely on a banking system of loans and mortgages which has long since outlived its usefulness for at least half the population in much of the developed world.

How do we really know which scarcities can be helped, and which ones cannot? First, it helps to ask - what is the political consensus which lies behind the induced scarcity, and to what degree is the public actually aware that this is in fact the problem? For instance, physicians are now facing societal pressure, but one of the real healthcare problems today is the extreme limitations of hospital settings. Part of the problem lies in the fact that patients cannot always gain access to the hospital which even utilizes the knowledge they need. What's more, how aware is the public that attempted redistribution to cover for artificial scarcities ends up as holes which can never be filled? Over time, the attempts to fill those holes just eats away at the larger goals and aspirations of both individuals and nations.

What's more, no one can expect for politicians, bankers and others who benefit from artificial scarcities to set knowledge use or innovation reforms into motion. Unfortunately, they would rather we blame one another so as to keep our eyes off the actual problem. The task for the public is to refuse to allow their politicians to divide them from one another. For as long as such divisions exist, there can be no coming together on the part of citizens to convince those in power that they only guarantee eventual decline by allowing artificial scarcities to continue to exist. All of us need to know which scarcities can or cannot be helped or amended in any realistic sense. By engaging in the dialogue which helps us to understand the difference, we have a place to begin.

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