*Scarcity*
By: CJ
21 January 2008

No man is an island. One person alone can't make everything needed to survive very far above above a subsistence level (ie maintaining technology, herds, advanced crafts such as metalworking). Prospering rather than merely surviving has historically always required specializing. It's one of the big reasons that towns and cities developed. If the group is stationary, some people can specialize in making tools, houses, bricks, tiles, and other material things. Others specialize in services, such as medicine, tool-repair, entertainment, education, etc. The specialization allows those people to spend much more time on whatever they are specialized in, so that they become experts who "produce" a lot of whatever they do. In return, others must specialize in producing food to feed those who are not working in hunting/agriculture; in return they get tools, medical care, etc.

Such specialization requires acquiring goods & services from other people--either by purchase or by trade. That is how civilization works. Economics is the study of how buying, selling, and trading work. Given the importance of trading in all societies, economics is a field of study that is relevant to survivalism in all long-term scenarios.

Scarcity is the key concept of economics. Scarcity means that something exists only in a limited, finite supply. If a particular item (or service) does not exist in sufficient quantites for everyone to have as much as they need without having to do any work, then that that item has trade value. Anyone who needs it will either be producing it (and selling any surplus) or will be buying it (trading money or other goods and services for it). From the poorest household on up to Bill Gates, scarcity is what drives production, purchasing, and selling.

Scarcity drives price. In China, labor has until recently been something that was not particularly scarce. There were jobs to be filled, but there were also many people to fill them. As a result, wages in China--the COST of labor--were low. The demand for educated labor that stays at a particular company more than a couple of years is growing in China now. This type of labor is significantly more scarce than generic unskilled assembly-line labor. As a result of its relative scarcity, it is more expensive--wages go up. Diamonds are expensive because they are scarce--they are rare and difficult to obtain. If someone invented a process to create gem-quality diamonds cheaply and en masse, diamonds would no longer be scarce. Their price would thus drop. Oil was not scarce ten years ago. There was more oil being produced than there was demand, so the price of oil was low. Nowdays, there is much more demand for oil thanks to the continued growth of developed and emerging economies, and the level of production worldwide has not grown at a similar rate. Oil is now significantly more scarce, and there are prospects of it being even more scarce in the future. This drives prices up, as there is more competition to buy what oil there is.

In a long-term scenario, where our modern economy has broken down for whatever reason, scarcity can still be a tool for economic analysis. You look at the situation, the area you are in, and who is doing what. If 20% of the population has guns and can work as security guards, but does not have any skill in any other useful field, security guards are non-scarce. As a result, they are not going to be very highly paid (barring extortion of course) and this would not be a good post-fan "career." If, on the other hand, you are the only dentist in the area, you have a scarce good that people will gladly purchase in whatever fashion they may. This can also be applied to the commodity market. Ammunition, spices, perfumes, springs, gasoline, etc. are not likely to be replicated locally and thus not likely to be locally available after existing stocks run out. Anything that is sufficiently useful and that is likely to become scarce can be stockpiled as a trade good as appropriate for your situation.

In sum, the more scarce the useful goods and services that you produce and own after any disaster are, the more valuable they will be. Understanding this and factoring it into your decision-making can help you be more prosperous and successful.


CJ



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