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Originally Posted by JakeMartinez
There is nothing as scarce as you think it is, GoldenBoy.
There is a finite limit to everything. Theoretically, the universe will come to an end when the total amount of helium is exhausted. Stars use helium, so we have about 50 billion years until there is nothing.
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Capitalism creates scarcity. If it didn't, capitalism wouldn't work. We always hear that
True capitalism is operated on the concept of opportunity cost. When competing against another firm, the essence of time itself is scarce. You have to utilize your strengths and weaknesses, so that you can effectively lower OTC, and in doing so will be able to realize real growth.
For example, if a firm spends 50 hours a week aquiring material A, 100 hours to produce product X(s), time is then represented as a scarce resource. Without a quantitative limitation (function of time), i can produce an infinite amount of goods in zero time. Hence time is a scarce resource. What the firm can do is attempt to lower the amount of hours spent producing at the most minimal cost.
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Abundance
and Sustainability
are created best under a free market system, but the opposite is true.
Open market operations outproduce central planned markets... End of story. If you do not believe me, than why does china produce 5 times its growth only 10 years from the previous? Answer: They opened up their markets. Now, they have a middle class that is greater than or equal to (in population) what we have in the US.
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Abundancy--If any resource that was once scarce became incredibly abundant, to the point that it could be offered at a miniscule cost to the consumer, all the businesses in that sector would fail. Why do you think we don't have cities fitting building after building with solar panels? Why aren't we peppering the Midwest with wind turbines? If we did, we could offer energy to our citizens for practically nothing.
Lets go back to my example with time. Time is a scarce resource. When computers, cell phones, and the internet were implemented into the business world, something truly remarkable happened. OTC were reduced in regards to time. Firms had an abundance of time relative to when technology did not allow it. Did they fail? Of course not, because it allowed for the possibility of growth. With higher growth potential, firms had an easier time attracting capital, hiring employees, and securing loans. This allows for real growth represented in profit, although it is not a guarantee. The firm has to actually make it happen.
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Sustainability--For a society to be sustainable, it has to monitor the use of the resources that it runs on, effectively manage those resources, and look for ways of making them sustainable long enough to find a better resource or find a better way of utilizing it. Thus, sustainability is the bane of a free market's existence. If ANYTHING becomes sustainable (renewable), and abundant, those two things alone kill any business' chance of making a profit from it. Thus, where's the incentive to CREATE a society where people DON'T go hungry? Or get their furnace shut off because they couldn't afford a gas or electric bill?
Again, this all goes back to opportunity costs. When energy source A becomes more expensive to produce than energy source B, which one will fetch both the smaller price, and hence the greatest potential sales? It would be source B, as long as the quality is similar.
If a firm decided not to produce source B, and instead stuck with source A, we then can observe the OTC of the situation. This firm is allocating more time and capital to produce an energy source that represents less potential profit. Therefore, this firm can be thought of as weak, and will not be able to compete with firms offering source B at a cheaper price. Rationality will call for the majority of firms to stop producing source A, lowering overall competition along with total production of source A. As more and more firms restructure to produce B, competition automatically pushes the price down as firms attempt to absorb market share by increasing their overall volume.
Is there an opportunity cost for over abundance? Absolutely! A firm that produces more than the market demands will have excess inventory. Inventory that faces potential risk of depreciation as well as cost of upkeep. Therefore it makes absolutely no sense, whether you are government or private business, to over shoot your demand capacity. You create waste, inefficiency, less potential profit.
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I understand that a free market is good for creature comforts, since it gives us such a variety of them, but the things we need to survive should NOT be for profit.
There is still only one slightly free market, it is known as the internet.
By eliminating profit incentive, you lower overall production and quality. During the Russian revolution, as the Red's took control, Vladimir Lenin enacted the NEP. Instead of complete state control of production which was the current, Lenin allowed peasant farmers to sell their surplus. In doing so Russia's agriculture segment began to eclipse the industrial production segment, as prices continued to decrease in food while the prices for manufactured goods (still controlled by the state) increased. Prices increased because of the limited production (supply side), while prices decreased in agriculture.
NEP
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The Government should handle electricity, food, water, and shelter. Enough for all of their citizens to at least have a chance at living a decent life.
As my previous example proves, centralization of these industries creates a higher OTC to consumers whether it is higher prices, limited availability, or lack of quality.
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If they want more than the standard food and housing, they can get a job and work for it. The private sector doesn't have to be completely phased out, which is honestly what I want. The two can meet in the middle to create a society that has competition and innovation to raise the standard of living, and yet something to offer even the lowest of the lower class.
European nations tend to have higher social safety nets (besides the UK), and with it higher unemployment. By providing such necessities, you crowd out employment, and thus you stagnate growth.
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And, under this way of thinking, we can work to make all of our resources abundant and sustainable. It's a start, at least.
I like government for certain things that cannot be efficiently provided by private industry. Such things include fire and police, military, roads (to a point), and periods of infrastructure renovation. As the evidence clearly shows, abundance and quality are a product of capitalism.