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Thoughts to ponder
This book review has introduced me to a new enemy, the economist Tyler Cowen...
...“The critical economic problem is scarcity,” he says in his book. Like all other capitalist economist, Cowen is ideologically welded to this bad idea of lack and shortages as the key problem. However, scarcity is rarely real but manufactured. There is an abundance of energy in the world. The sun gives it to us daily for free. All this talk about there being not enough energy, food, fuel has been essentially false. And the wars that have been fought to protect the little there is for survival have been false wars—wars whose only truth is that they befitted those who in this or that period of history owned the means of production.
If scarcity was an authentic problem (rather than a fabricated one) then Africa would not be poor.
Here is the full review, which is titled "Bad Economics." The pointer is from a loyal MR reader.
Posted by Tyler Cowen on July 27, 2007 at 06:02 AM in Books | Permalink
Comments
Wow. That's it then, the game's up. We've all been wasting our time.
At least it's not scarce though.
Posted by: thom at Jul 27, 2007 7:47:51 AM
Looks like you're doing something right!
Posted by: Sameer Parekh at Jul 27, 2007 7:49:50 AM
He may be spot-on about Africa. My sense is that the scarcity there *is* contrived, by bad government and unproductive culture.
The part about abundant energy from the sun may be right some day, too. But your critic seems to be implying that I don't have a solar-powered car because of some evil conspiracy. Such a conspiracy theory would be loony.
But there is a kernel of truth in what he is saying. Lots of things that were scarce years ago are abundant today. And things that are scarce today may be abundant tomorrow. And when your problem is "so many movies, so little time," that *does* sound more like abundance than scarcity.
Posted by: Arnold Kling at Jul 27, 2007 8:08:29 AM
Oo, break out the popcorn! When sites get linked and then overrun by Instapundit readers, they call it an "Insta-lanche". If that happens because of this post, I demand a similarly catchy name for the phenomenon, and therefore propose "Marginal-ized".
Posted by: Dave at Jul 27, 2007 8:28:46 AM
Marxists have been quite right to ask the question, "who benefits from scarcity, and to what extent does this group overlap with those able to create or preserve scarcity?" Their answers may be incoherent at times (or indeed nearly always), but that does not make the question any less relevant. Scarcity creates market power outright, solves coordination problems for cartels, and favors certain sorts of cultural norms and their purveyors. Nobody corners the market for oxygen, or divides up the market for dirt, or denounces people from the pulpit for wasting sunlight on frivolous and decadent pursuits, nor do we see oxygen monopolists or dirt barons or sunlight-moralists lobbying in the halls of Congress.
Tradeable rights-of-scarcity, such as licenses to do business in certain goods in certain places, have been the building blocks of ruling classes since the Middle Ages. They remain politically popular today -- see, eg, taxi medallions, liquor licenses, professional licensing, intellectual property, cap-and-trade emissions-credits schemes, etc. It would be naive, under such circumstances, to look at scarcity as a purely natural phenomenon, or to look at efficient ways of managing externalities (as all the above are alleged to be) in purely economic rather than class terms. The Marxists have an important point, even if they run with it in a somewhat silly direction.
Posted by: Grant Gould at Jul 27, 2007 8:49:34 AM
No Arnold, it sounds like scarcity of time... and of reliable movie critics.
Posted by: michael vassar at Jul 27, 2007 8:50:19 AM
Arnold Kling - I don't think you understand why this guy is wrong.
Scarcity in the context Tyler used it is about infinite wants and needs and limited resources. Tyler *wants* to see all the movies but he has a limited amount of time and a whole abundance of other things to do with it. The opposite of scarce is not abundant but free, in the sense of having no opportunity cost.
Posted by: thom at Jul 27, 2007 8:53:08 AM
I now expect Charles from The Stranger to solve world hunger by lunchtime. After all, if the scarcity of food is manufactured by evil, selfish people, surely he can act nobly and use his endless talents and abilities to solve this quickly for us.
Posted by: Jim Outen at Jul 27, 2007 8:58:33 AM
Why do people have such strong oppingions about things they clearly don't understand. Why can't we just say, "I don't have the expertise to be completly sure, but this doesn't seem right to me." This guy reminds me of those people who go around saying "If man came from monkeys, why are there still monkeys around and why don't they give birth to any people!" I reasonable statement if you don't understand either the facts or the theory.
Posted by: josh at Jul 27, 2007 8:59:13 AM
There are an abundance of people in the world who think like Charles Mudede (the author of the "review" to which Prof. Cowen links). In the future, we will use them for food.
"Scarcity of food" problem solved.
Posted by: Garth Wood at Jul 27, 2007 9:19:23 AM
Is it any surprise that someone from Seattle has come up with another pipe dream? Honestly, when will reality finally break through that bleak climate. Such whiners!
Posted by: Chicagoan at Jul 27, 2007 9:31:39 AM
"Scarcity" when used as a term of art by economists is a self-evident concept. The only goods that are not scarce are goods that are free such as the air that we breath. When a price attaches to a good, that means the demand for the good exceeds its supply when a price is set at zero. And that to an economist means the good is scarce.
Posted by: Paul D at Jul 27, 2007 9:35:07 AM
I think Tyler's scarcity argument is along the lines of what Herbert Simon talked about -
"What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention, and a need to allocate that attention efficiently among the overabundance of information sources that might consume it."
I would say there is scarcity of attention because they is abundance of movies/books.
Posted by: Sharath at Jul 27, 2007 9:45:36 AM
thom:
"Scarcity in the context Tyler used it is about infinite wants and needs and limited resources."
You do realize the absurdity of this definition. First, infinite wants are cultivated, not natural. Second, and more importantly, the juxtaposition of infinite wants with limited resources implies one can never NOT have scarcity. What a useless concept, then, don't you think? What use is an all-inclusive concept?
Posted by: Samson at Jul 27, 2007 9:45:47 AM
Like many people, Mr. Mudede confuses just what a scarce resource is. It is not energy that is scarce. The universe is overflowing with energy. It is the silicon and the complex manufacturing processes required to convert one form of energy, sunlight, into useful electrical energy that is scarce. Similar arguments can be made about his other points on the scarcity of food and the poverty of Africa.
Posted by: Matt at Jul 27, 2007 9:46:32 AM
Samson,
Is there any empirical evidence you can point me to that supports your claim that infinite wants are cultivated and not natural? I would be interested to read things along this line. Having watched documentaries such as Planet Earth and studied biology as an undergrad I believe that wants are infinite or practically infinite for the individual, and certainly infinite for larger groups or ecosystems. Animals (and plants) always need more food, more territory, more mates, more water, more nutrients, more protection from predators etc... I think adding in the psychological conditions of humans in the modern age only strengthens the claim that wants are infinite.
Posted by: Jim Outen at Jul 27, 2007 9:58:44 AM
Paul D defines the concept best.
Posted by: Yancey Ward at Jul 27, 2007 10:15:51 AM
Jim:
Don't you think that animals and plants can have too much food, territory, mates, water, etc? (ok maybe not mates...)
Posted by: brian at Jul 27, 2007 10:21:44 AM
Maybe too much of any one of those, at a certain time, but never enough of all of them at all times.
Posted by: Jim Outen at Jul 27, 2007 10:28:05 AM
Wait, wait, a Marxist is a bit of a rube? I'd never have guessed that....
Posted by: Timothy at Jul 27, 2007 10:38:41 AM
You shall judge a man by his foes as well as by his friends.
Posted by: Shiraz Allidina at Jul 27, 2007 10:46:03 AM
I particularly like comment #14 on his post:
"The first law of economics is scarcity: there is never enough of anything to satisfy everyone who demands it.
The first law of goofy progressive blogging is to ignore the first law of economics."
Posted by mobile | July 27, 2007 7:14 AM
Posted by: Kristin Linder at Jul 27, 2007 10:47:37 AM
I was trying to figure out what Tyler would bother post such a trite and ridiculous review. What's his incentive? My theory is now that this is actually positive publicity for his book. The fact that such a silly critic dislikes the book so intensely is (defeasible) evidence that the book is good and worth reading.
Posted by: J. at Jul 27, 2007 11:16:36 AM
It always makes you sound smarter to hold up stupid arguments next to your own. But I hope your readers can see through it.
The amount of drivel on the internet vastly exceeds the amount of useful information. Your blog would be better used to point your readers to the gems rather than the gibberish.
Posted by: p at Jul 27, 2007 11:28:44 AM
p at Jul 27, 2007 11:28:44 AM:
Do you not see the incredible entertainment value in a guy suggesting that scarcity is not real?
Geez louise.
Posted by: almrr at Jul 27, 2007 12:00:06 PM
