Human desires are harder to satiate than I might think? Well...I think that human desire is insatiable. Let's juxtapose a couple wonderful passages...
We call contentment or satisfaction that state of a human being which does not and cannot result in any action. Acting man is eager to substitute a more satisfactory state of affairs for a less satisfactory. His mind imagines conditions which suit him better, and his action aims at bringing about this desired state. The incentive that impels a man to act is always some uneasiness. A man perfectly content with the state of his affairs would have no incentive to change things. He would have neither wishes nor desires; he would be perfectly happy. He would not act; he would simply live free from care. - Ludwig von Mises, Human Action
...and...
If we now turn to consider the immediate self-interest of the consumer, we shall find that it is in perfect harmony with the general interest, i.e., with what the well-being of mankind requires. When the buyer goes to the market, he wants to find it abundantly supplied. He wants the seasons to be propitious for all the crops; more and more wonderful inventions to bring a greater number of products and satisfactions within his reach; time and labor to be saved; distances to be wiped out; the spirit of peace and justice to permit lessening the burden of taxes; and tariff walls of every sort to fall. In all these respects, the immediate self-interest of the consumer follows a line parallel to that of the public interest. He may extend his secret wishes to fantastic or absurd lengths; yet they will not cease to be in conformity with the interests of his fellow man. He may wish that food and shelter, roof and hearth, education and morality, security and peace, strength and health, all be his without effort, without toil, and without limit, like the dust of the roads, the water of the stream, the air that surrounds us, and the sunlight that bathes us; and yet the realization of these wishes would in no way conflict with the good of society. - Frédéric Bastiat, Abundance and Scarcity
Human desire is limitless. The challenge is to figure out how to help people understand that we sabotage progress when we prevent each and every individual from having the freedom to prioritize their desires. And prioritizing desires doesn't mean making a list... it means sacrificing accordingly. This effectively communicates to others what's really important to us. Without this essential information... how can other people make informed decisions about how to put society's limited resources to more valuable uses?
Right now we can't choose where our taxes go. Instead, we elect a small group of people to represent humanity's powerful desires for a better world. The point of understanding concepts such as "scarcity" and "opportunity cost" is to effectively evaluate the efficacy of our current system. If it's beneficial to block your valuations from the public sector... then why isn't it beneficial to block your valuations from the private sector? Why do your unique private priorities matter but your unique public priorities do not? How can your freedom to sacrifice a fancy dinner for 10 books be more important than your freedom to sacrifice the drug war for cancer research?
I've given this article a thumbs up. Does this effectively communicate how much I value it? Does the number of thumbs up that this article has received effectively communicate how much we value it? Does it really matter how much everybody on this forum values this article? Does it really matter how much we'd be willing to sacrifice/forego/give-up for this article?
The point that I'm trying to make is that these economic tools aren't fancy paperweights. Whether our institutions are the forums that we participate in... or the governments that we pay taxes to... these economic tools serve a fundamentally important purpose of helping us to better understand our institutions. In the absence of this better understanding it's less likely that we'll greatly improve our institutions. No institution is perfect... and neither are the tools that we need to understand them.
Sequence summary: This is a series of 18 articles on the most fundamental concepts of economics: scarcity, opportunity cost, marginalism, and self-interest. These are the atoms, molecules, cells, the core things you need to have a grip on to move on with the science, and, if all goes well, we will move on, but first it is absolutely vital to get a strong grasp of the fundamentals. Though these are basic concepts, they are not easy to understand. If you want evidence of this, open a newspaper....
Previous: Imagining Scarcity
A familiar example of something scarce is ordering in a restaurant. There are so many enticing options, but you can only order one. You want more than what you can choose to have. Whatever option you choose, you could have chosen another one, and that which you did not choose is now beyond your reach. Even if you come back and order that other choice the next day, it's not the same day, you're not quite the same you. All this means that your options are scarce.
Or say you're packing to go hiking. You have only so much space in your pack. That means if you want to bring the flashlight, you won't have room for those extra snack bars, not if you also want to fit in the spare batteries for the camera. You have to pick one and make a tradeoff - that is, your space is scarce.
(Maybe you could bring a bigger pack. But that would be more unwieldy, and with all the stuff in it, it will be heavier. So there's your tradeoff - more stuff, or a more difficult hike?)
And don't forget, you need a tent. It rains pretty hard round these parts. Do you want to spend more money on the super high-tech tent with the poly-something supercalifragilistic anti-water technology? Or do you want the cheaper one, even though there's a chance you might get wet? Again, you have to make a choice, trading off one good for another because your money is scarce.
If only you had more money! If only you had more space! If only you could carry more weight! If only more restaurants would offer a tasting menu so you could sample everything and not torture you with the eternal mystery of what all these fascinating things actually are!
All these things are scarce.
Now that we have some examples, we can pin down a more precise definition of what makes something scarce. But first, I'm going to state very explicitly what does not make something scarce. Space is not scarce just because you don't have as much space in your pack as you want. Strength is not scarce just because you don't have as much strength as you would like. Money is not scarce just because you don't have as much money as you would like.
Your options are not scarce just because you cannot order from a tasting menu. In other words, what makes something scarce is not that there is less of it than you want.
Money, space, time, and energy are not scarce because you don't have as much of them as you want. That's part of what creates scarcity, but it is not scarcity in and of itself.
Think about trying to get that sand-sphere of your values to fit into the too-small hole. You have to remove some of the sand, and that sucks. But suppose that the sand is homogeneous, so removing one grain is the same as removing any other. So you remove the sand necessary for the rest of the sphere to fit into the hole, and....
Since the sphere is homogeneous, what's the difference between having to remove some sand yourself and just having a sphere that's small enough to fit into the hole?
Whether you think of it as a too-big sphere or a too-small hole, the problem's the same: you can only fit so much of the sphere into the hole, just like you could order only so many things in a restaurant or fit only so many things into your pack. You want more, but you can't have more, and that's not what makes it scarce.
Something is scarce not when there is less of it than you want but when it has alternative uses.
Your ordering choices in a restaurant are scarce not because you want to try everything and you can't, but because whatever you order, you could have chosen some other thing. What you do in that restaurant with your time, money, and the space in your stomach could have been some other thing. That means you have to think about which dishes you want to try the most and order those, forgoing the chance to try the other dishes.
The space in your pack is scarce not because more things won't fit, but because you have to choose which things you're going to pack. You have to think about what you want the most, knowing that any item you pack means you can't pack something else. Your strength is scarce not because you can't carry as heavy a pack as you would like but because you can choose to do alternative things with your strength, like having a faster or more pleasant hike. The money you could spend on a tent is scarce not because you want more of it, but because you can choose to spend it on alternative things.
It is the presence of alternatives that makes something scarce, and that's why the homogenous sphere of sand is not scarce. There are no choices to make, no alternative uses the sand can be put to; there's no difference between choosing to remove one grain versus another. There is no difference between having to make the choice to remove sand versus just having less sand to begin with (disregarding the brief time and effort of brushing the sand away).
You want more sand. Every grain is one of your values. But it is only because each grain of sand is different, it is only because there is a meaningful sense in which you can choose which values to retain and which to sacrifice that there is scarcity, choice, and foregone opportunities, - the core elements of economics. It all begins with a choice: this value, or that? This alternative, or that one? A mere lack of sand is insufficient....
This is why I don't take promises of a post-scarcity society very seriously. They seem to think in terms of leaps in production technology, as if the key to ending scarcity is producing lots and lots of stuff. But scarcity is the presence of alternative uses, not the presence of want, and making lots of stuff does nothing to address the former per se. Picard, who can make as much tea as he wants in his replicator, must still make choices.
Next: more on the relationship between cost and scarcity....