Re: Economics

"Duncan Rose" <duncan.rose@xxxxxxxxxxxxxxxx> wrote on 28 Jul 2006 15:4:
government interference like this in free capitalist markets, whilst often
disguised as well-intentioned almost always results in high short-term
returns for companies associated with members of the government.

Yes, I agree with you. The majority of government subsidies to industries
are basically an indirect form of corruption.

I think perhaps many small producers is a better situation to be in than
few (or in the worst case, a single) large producers. It's not clear to me
whether if left alone the market would tend towards the latter or not.

Unfettered capitalist markets are neutral about this. The long-run stable form
of different industries can vary depending on the characteristics of that
particular industry. (Plus a bit of random chance, I suppose; there may be
multiple stable outcomes.)

Scarcity is a measure of (/ availability-of-thing size-of-population)

That's a bit too simple. Different people desire a thing at different rates,
even if the price is zero. And then there's the sliding demand curve, where
generally fewer people choose to buy a thing the more expensive it gets.
You've also left out how the size of the population could add to the supply,
for example of computer programmers.

But perhaps these are just nits.

I also think that many things that are scarce currently are things we
either think we need or want, such as diamonds (perhaps artifically scarce)
or gold (actually scarce))

You're right that diamonds have an artificially heightened scarcity, but you're
wrong to conclude that without the manipulation they wouldn't be scarce at all.
Diamonds have been items of value for millennia. Market manipulation is only
in modern times.

rather than things we actually need (food and shelter (I see no natural
reason for these to be scarce, except possibly due to overpopulation)).

There is no population at which food and shelter would become free. They cost
resources (material and human labor) to produce. There will always be people
who could dream of a bigger house than the one they happen to be in. Or steak
every night.

Oil might be an interesting resource to think about, but I'm pretty sure
there are very very few uses of oil that could not be served by synthetic
alternatives (preferably synthesised from renewables) equally well.

Not at all true. Oil probably has been the main driver of the industrial
revolution in the last century or so. It's basically free energy, originally
costing almost nothing to take out of the ground, but provide huge surpluses
in the work (electricity, transportation) that could be accomplished.

There's an argument to be made that the huge rise in world wealth (GDP) in
the last 200 years is basically a one-time bonus from the discovery of oil,
which unfortunately has now just about peaked. Without fusion (or possibly
fission), the next century may not show the same kind of long-term economic
growth as the previous one.

You're only thinking of oil as a material, like in the way petrochemicals are
used as a raw material to make plastic, or as a lubricant in motors. Yes,
most of those uses could be replaced by different raw materials. (And, at
enormous cost, transportation could probably switch from oil to a hydrogen
economy.)

But replacing the free energy that oil has provided is not really feasible.
There is no obvious replacement at similar levels of cost/energy.

The only resources I can think of that might be both necessary and scarce
are minerals and ores

You're leaving out everything that you can buy. Bananas, iPods, SUVs, PCs,
chairs, scissors, clocks, beer, etc. All of those things are scarce goods,
in that the demand (at a price of zero) vastly exceeds the supply at that
price. Some people who want the thing MUST do without. Note how this is
different from air or sunlight or seawater, where you can use as much as you
wish and it doesn't really impact whether anyone else could do the same
thing.

I wonder why it is we seem to be depleting our oil reserves as quickly
as possible? I'm pretty sure there is a conspiracy there somewhere ;-)

Well, an opposing question might be, what good does it do in the ground?
Either you'll use it for very low cost energy, or your children will. It's
only a one-time bonus either way. Is there really any benefit to saving it?

(You could make an argument about how there will need to be a transition to
some other energy supply, and perhaps conservation now is part of an overall
plan to ease the shock of Peak Oil. But that's a slippery argument, as many
of the changes required will probably be postponed by society until the price
of oil rises high enough to force them. Which means either demand continues
to rise, or supply finally falls, or perhaps huge taxes are applied to the
use of oil. But just "don't use so much oil" doesn't really solve anything.)

-- Don
_______________________________________________________________________________
Don Geddis http://don.geddis.org/ don@xxxxxxxxxx
If you ever get whipped by a bullwhip, try to breathe _in_ as the whip is going
back, and _out_ as it hits your back. Or is it the other way around? Anyway,
you'll figure it out. -- Deep Thoughts, by Jack Handey [1999]
.

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