One of my key areas of interest is how to deliver sustainable, stable and inclusive prosperity. This is why I dedicate so much time to economics.
However, the word “sustainable” may not convey the same thing to everyone: via Sustainability: An Assault on Economics – Tyler A. Watts – Mises Institute:
The sustainability movement is an assault on economics. It claims at its core that prices don’t operate through time to direct consumption and production decisions in a sustainable way. A lesson in basic economics should suffice to defend against the sustainists’ attack.
Prices arise in the market economy as a concomitant of mutually beneficial exchange. People want things that improve their lives — we call this value. Some valuable things are more scarce than others; take the classic case of water and diamonds. In absolute terms, water is more valuable than diamonds: you don’t need diamonds to live.
Yet water is, pound for pound, far cheaper. Why? Although it’s valuable, it is also relatively abundant; in many parts of the world, it literally does fall from the sky. The price of any good reflects this combination of value and scarcity. We’re willing to pay more for valuable things as they become relatively scarce (e.g., oil); and we needn’t pay as much for valuable things as they become more abundant (e.g., grain).
Likewise, as scarce things lose their value, people are no longer willing to pay for them (e.g., typewriters), and people must pay more for scarce things that suddenly become sought after (e.g., vintage Michael Jackson records). The awesome thing about prices is that they seamlessly convey this combination of facts about an item’s value (demand) and it’s scarcity (supply). Prices, of course, are subject to change — prices of certain goods fluctuate every day. But this is a good thing; discernable trends in prices over time indicate relative changes in the “market fundamentals” of supply and demand.
I am put in mind of this from philosopher Karl Popper:
Do not allow your dreams of a beautiful world to lure you away from the claims of men who suffer here and now. Our fellow men have a claim to our help; no generation must be sacrificed for the sake of future generations, for the sake of an ideal of happiness that may never be realised.
Tags: economics, Karl Popper, Liberty, Market Intervention, Prices, Quotations, Responsibility, Sustainability