Economics: Coping with Scarcity

Economics: Coping with Scarcity

The grass is always greener on the other side.

A bird in the hand is worth two in the bush.

The early bird catches the worm.

Sometimes it seems like half the quirky idiomatic expressions in the English language are just colorful ways of expressing the most basic concept of economics: scarcity.  You can't always get what you want, right when you want it.  So you have to make choices.

You have to decide whether the grass is greener over there or over here.

You have to decide whether to hold onto that one bird in your hand, or let him go to go after the two hiding over there in the bush.

You have to decide whether catching that worm is worth sacrificing sleep to wake up before all the other birds in the morning.

Those decisions are economics.  If there were no scarcity, you could have everything you want right now.  You wouldn't have to make hard decisions or trade-offs.  But in the real world, there is scarcity, and because there is scarcity, we have economics, the study of how individuals, firms, and entire nations deal with the limitations imposed by scarcity to prioritize and allocated limited income, time, and resources.

Why It Matters Today

Is LeBron James "worth" $20 million a year?  Many people's gut reaction will be to say no, that nobody who plays a game for a living should be worth that much money.  Why should a guy who plays a kids' game make as much as a hundred or more brilliant scientists working to cure cancer?

And if you define "worth" as a moral question, maybe that's a good point.

But if you define "worth" as an economic question, it becomes a simple question of scarcity.  How many people out there have LeBron James's talents?  By our count... exactly one.  If you're an upwardly mobile owner of an NBA team, with hundreds of millions of dollars in the bank and a burning desire to win a championship, LeBron James may well be worth $20 million. Truly unique talent is extremely scarce, and thus extremely valuable.

The moral of the story: cultivate a unique talent, kids.  (Of course, it also helps to be 6'8" tall, fast as a sprinter, strong as an ox, and incredibly coordinated.  But there are other kinds of talents, too, just in case you don't match that description.)

Sometimes, a Song Says it Better: Welcome to Paradise, by Green Day

Once you move out of your parent’s home, you may be “feelin' so alone” and find the creature comforts that Mom and Dad have are scarce.