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Scarcity Isn’t Abundance

Posted By Don Boudreaux On September 24, 2011 @ 9:28 am In Myths and Fallacies,Seen and Unseen,Trade | Comments Disabled

Mr./Ms. “AmericanProudly”

Dear Mr./Ms. “Proudly”:

Thanks for your e-mail response to my post [1] explaining why Pat Buchanan is mistaken when he insists that “You cannot have a rising standard of living when your highest-paid production jobs are being exported overseas.”

You write that, unlike me, “Pat lives in the real world.”  You imply that economics is sophistry used to conceal truths that to persons such as Mr. Buchanan and yourself are plain enough in the absence of any serious pondering.

So let me make my point from a direction opposite the one I took in my post.  That point, you’ll recall, is that scarcity isn’t wealth, and (hence) government efforts to prevent goods and services from becoming less scarce retard, rather than promote, economic growth.

Suppose Dr. Evil Genius engineers, and unleashes on America, swarms of insects that extract oxygen from the air.  These insects attack randomly, killing a hundred or so Americans every hour.

The horror of these suffocations prompts American scientists and entrepreneurs to develop a device that, worn around the neck, protects each of its wearers from the insects.  This device, alas, is costly.  Yet to avoid suffocation Americans willingly buy these pricey devices.  And many Americans find high-wage jobs in factories producing these devices.

Evil Dr. Genius made breathable air scarce.  Producers responded to this situation by making it less scarce.  And they’re paid handsomely for their successful efforts.

Should we therefore conclude that Dr. Evil Genius has bestowed on Americans a benefit?  After all, he caused the creation of plenty of high-paid production jobs.  And should we lament it if foreigners eventually find ways to produce and sell this life-saving device to Americans at a fraction of the cost at which this device can be produced in the U.S.?

If you agree with Pat Buchanan, you must also agree that Dr. Evil Genius would be a genuine boon to America’s economy – and that anyone who devises a low-cost means of eradicating once and for all Dr. Genius’s swarming insects would be an economic curse that Congress should well and truly tax into inactivity before he or she succeeds in killing off the suffocating, but economically blessed, bugs.

Sincerely,
Donald J. Boudreaux

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