Economics of Scarcity

October 26, 1973

Report Outline
Increasing Shortage of Vital Goods
Lessons from Past Periods of Dearth
Options for Dealing with Scarcities
Special Focus

Increasing Shortage of Vital Goods

Diminishing Material Abundance for U.S. Public

The American Cornucopia, that overflowing horn of plenty, has an ominously hollow air about it these days. It still is undeniably bountiful, but lately this land of material abundance has come up short of some important items—including foods, fuels, lumber, chemicals and textiles, to name just a few. Though not crippling or universal, the shortages are widespread and irritating enough to wake up the American public to the harsh fact that many traditional resources can no longer be taken for granted. Many say the shortages are merely temporary, and that the cornucopia soon will replenish its depleted supplies. But others grimly forecast a future filled with insufficiency and want, and warn that the nation should learn to cope with the new economics of scarcity.

Theoretically, a constant condition of scarcity is a basic element of modern capitalism, as the individual drive to satisfy personal want keeps the economy functioning. In practice, however, genuine scarcities—as the concept is generally defined—have been rare in the United States for nearly a quarter-century. Poverty and hunger have by no means been eliminated, but the material standard of living for the bulk of the American people is among the highest in the world. To a great degree, the scarcity phenomenon is directly related to rising affluence. Americans, who have become accustomed to seemingly unlimited supplies of diverse goods, now are suddenly shocked that some items are no longer obtainable. In much of the developing world, on the other hand, shortages are a universal condition only beginning to be alleviated. Two-thirds of the world's inhabitants find scarcity a way of life. Inevitably, the efforts of less-developed countries to raise their living standards will exacerbate scarcities in the United States.

Scarcities that have developed in this country so far in 1973 cover an astonishingly wide range of items. Meat and gasoline probably have been the most widely felt and publicized everyday items, along with heating oil for the coming winter. But the list seems endless. It includes such basic materials as natural gas, paper, plastics, metals, fertilizers, cotton, wool, wood, ceramics, leather, cement and rubber. Those scarcities led to consumer product shortages for—among other things—blue jeans, rugs, diapers, wire, toilets, rags, cardboard, belts, stationery, furniture, burial caskets, automobile parts, electric motors, musical instruments, polyester fabrics, wooden poles, fuel tanks and starch. Basic industrial products in short supply have included chlorine, soda ash, phenol, toluene, hides, newsprint, insulating material, steel tanks, ethyl alcohol, ethylene oxide and tallow. Food shortages extended to such staples as potatoes and rice, as well as to raisins, salmon, sauerkraut, shrimp, corn syrup, grapes, apples, canned fruits and vegetables, honey, goat's milk and popcorn.

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