In today’s article, we’re gonna discuss the difference between scarcity and poverty because scarcity and poverty are not the same things these two concepts are not equivalent. So if you remember the fundamental economic problem is that people have unlimited wants and desires but unfortunately in the world that we live in there are limited resources available to fulfill those ones.
There are limited natural resources, there’s limited land and so forth there’s only so much there are finite resources that are available to satisfy all of the people’s wants. We say that we have a scarcity issue. We have a scarcity problem and that refers to this inability to fulfill all these wants and desires that people have resources such as land are scarce.
Now taking the issue of energy for example, if we think about electricity, air conditioning things like that and let’s say that you wanted everybody in the world even in the most rural remote regions to be able to have access to air conditioning to cheap energy for electricity and we’re striving toward that but the bottom line is, there are limited resources available to meet all those wants. Even if you think to use solar power that “We’ll use solar power and then we’ve just got an unlimited supply of energy from the Sun” but then there’s the question of solar panels, how are we going to provide solar panels to everyone in the world?
Hopefully one day we might be able to do that but right now with the resources we have they’re limited and the more resources we use to make solar panels the fewer resources available to make other things. So we’ve got this world with limited resources, there are only so many resources to go around, it’s scarce of resources. Now as for the example I just mentioned you might be thinking well this has to do poverty because it’s really a question of these people in these rural remote regions, they don’t have the money to acquire to pay for electricity for energy or to pay for air conditioning and a lot of cases those people may be living in extreme poverty. So really you might be thinking this is really just a question of that we’re talking about poverty, that scarcity and poverty are the same things?
Because you may think that, people in wealthy nations maybe you think they don’t face scarcity there are really people who are poor below a certain income threshold that they are the ones facing scarcity and I want to kind of dispel that notion and show you that even wealthy people or just people, in general, can face scarcity.
So let’s say let’s just say that you’re really really wealthy, you are just you have billions and billions of dollars, and you want to become the world’s greatest guitar player but you also want to be the world’s greatest tennis player and the world’s greatest chess player. You’re very very ambitious and you also in your spare time you happen to manage a daycare center. so you’re running around all these that you’re managing in the daycare center meanwhile you’re trying to learn how to play guitar and play chess and stuff on a computer or something so you’re doing all these different things.
No matter how wealthy you are, no matter how much money even if you could hire a private tutor to help you learn how to play chess and your famous guitar player to help you learn to play guitar and so forth the bottom line is there are only 24 hours in a day. You only have so much time available so we could say that you face a scarcity of time. So even though you might be wealthy and have billions and billions of dollars, you only have a limited amount of time. So you have a scarce amount of time there’s just so much you do and you’re not gonna live forever. If you’re gonna live forever maybe you could go and do all of these things but because you face a scarcity of time you have to make trade-offs. You have to decide okay if I’m gonna spend an hour practicing guitar that’s an hour that I cannot spend practicing tennis or chess or maybe managing the daycare center. We’re going to talk about trade-offs and economics in the articles to come.