Sunday, May 23, 2010

Why the Economic concept of Scarcity is a big fallacy

One of the things I was taught in Economics back in high school is the concept of scarcity. Where we are told that resources are scarce and simply put, there is not enough for us all. Well guess what, that concept is a fallacy. Plain and simple.

To explain my point, let us take a look at this example. In a country where the per capita income is less than $400, with basic amenities such as water and electricity available more as a luxury than a necessity, one would expect there to be prudent and sensible management of these scarce resources we are talking about right?

The teachers have always been agitating for higher wages and better conditions of service. The usual response they get is, there is no money. There is not enough government resources to cater to their needs. The football team of this country goes to play a tournament and did not even make it to the quarter finals, suddenly they are given a rousing welcome home. 

Each person is given $50000 as bonuses in addition to the latest BMW cars. What I want to ask is, if resources were scarce and limited as was being told to the teachers, where did those funds come from to waste on those players who brought nothing of benefit to the people?

There are thousands of such cases where resources have been spent on completely useless and irrelevant things at the expense of what really needs to be done. To those proponents of that fallacy called scarcity of resources, I say it is not the resource that is scarce but rather the moral turpitude of those that control those resources to put them to good use. Resources were not, are not and will not be limited or scarce. That concept of scarcity is a big fallacy.

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