Joe:
Thanks for the response. I have no dispute with what you say. I have no
doubt that people are irked by the fact that scarcity does impact
prices. WHY they are irked is what puzzles me. Should we be irked by the
fact that the sun rises in the east instead of the west? Should we be
unhappy about the fact that  water boils (at sea level) at 100 degrees
C?  Physics and chemistry are sciences that observe the physical world -
it is no less the case with economics.  As the British economist Lionel
Robbins says "economics is the study of the use of scarce resources
which have alternative uses."  "Scarce" merely means that people want
more than there is.  There never has been and can never be enough of
anything to satisfy everyone completely.    That people want more of
something than exists is as much an immutable fact of nature as is the
law of gravity.  Prices mnerely reflect that fact

Why is it so strange and bothersome to people and why is it a source of
so much emotion that there should be such a thing as scarcity and that
this should imply a need for both productive efforts on their part and
personal responsibility in spending?

You posit that "If gasoline were rationed we might see fewer big SUV
..." The reality is that gasoline is rationed - by market forces and
prices.  But since some people are irked by that fact let's change it.
Let's say the government decides that every person of driving age is
allowed only 10 gallons per week.  OK but what price is to be charged?
Are the producers and distributers allowed to make a profit? How much is
that profit? Currently the free market oil companies, and these are
extremely good times, are making about $.08 to $.09 profit out of every
dollar from gasoline sales. In the past several years they were getting
about $.05 per dollar. Is that too much profit? If you force them to
make less profit then how many will stay in business?  How many will go
into the up scale coffee business and make more money - then how do you
guarantee that every person of driving age will get their 10 gallons per
week?  Will they take risky ventures such as drilling in high risk and
high cost fields?  (As an aside. I am curious - how many companies with
members on this forum have after-tax profits of more than 8% of
revenues? Should we be mad at them?)

Also, what if someone does less driving than his or her neighbor? Can he
or she sell the unused gas to that neighbor. Can it only be sold at the
price at which it was originally purchased?  If  a person can not sell
the unneeded gas at a profit to someone who needs it more than he or she
what is the motive to conserve and sell?  Wouldn't the normal reaction
be to just use up completely your ration? Is that desirable?

What really irks people is that those who are better off are, well ...
better off.  But is that such a problem?  Why does it bother someone if
I decide to work harder than my neighbor and then want to enjoy the
rewards of that effort? Why does it bother people if I postpone instant
gratification and make sacrificies in order to invest in the future and
ultimately benefit from that?
Neil Boortz once replied to the observation that the rich are getting
richer and the poor getting poorer. He replied by saying "the rich are
getting richer because they keep doing the things that made them rich.
Ditto the poor."

George Orwell had it fundamentally wrong. All animals are not equal,
they never have been equal. Do you really WANT to be the equal of your
neighbor - that lazy, slovenly, ill mannered boor who lives down the
road;  the guy that refuses to keep his yard clean and never does any
maintenance on his home. When it comes time to sell your home should you
not be entitled to receive a higher price than him because you worked
hard to maintain and keep a beautiful home?  Shouldn't you have the
right to make the most out of your life as you possibly can?  If you
want to be the equal of the lowest common denominator you really don't
have to work hard at it.  So go for it.

The golden rule applies, but what just how long are you going to observe
the rule when the other guy doesn't?

Just some thoughts.

Chuck D.

Joe Fjelstad wrote:

>Thanks Chuck.
>
>Summarizing the obvious as noted by the  authors, scarcity does impact
>prices. Always has, always will. I  think that is the inequity that raises the ire
>of folks.
>
>Those of lesser means are the ones most injured by price hikes,  especially
>when it impacts any portion of the middle class. Those with  greater means
>don't care what the price is until it impacts them in a  fundamental way, such as
>it would if rationing were invoked.
>
>If gasoline was rationed, we might see fewer big SUVs and more  car pools and
>bicycles on the road but then rationing commonly results in  gray and black
>markets where those with greater means and  desire will find a way to support
>their accustomed level  of comfort.
>
>"All animals are equal, but some animals are more equal than others."  Orwell
>noted.
>
>The "golden rule" still applies... ;-)
>
>Best,
>Joe
>
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