Economics: Rationing | SterlingTerrell.net

Economics: Rationing

By: Sterling Terrell

I wrote a post sometime ago titled: 30 Basic Points on Economics.

Point #3 was:

      "An economic system is nothing more than a way of rationing economic goods."

As I have said before, the very essence of economics is the idea of an "economic good."

Economic goods are things that suffer from scarcity.

Non-economic goods are things that do not suffer from scarcity.

While economists do not worry about non-economic goods like love, patience, and this article - economic goods are of paramount importance.

See, economic systems are a way of distributing economic goods.

If there is not enough of something to satisfy the wants and needs of all those that desire it - it must be rationed in some way.

For example, there are not enough doctors, nurses, and hospitals for anyone that wishes to have 24/7 medical care.

We might start by saying: "I don't care what you want, if you are healthy, you are not entitled to constant medical care."

That would get rid of a bunch of people from needlessly using this economic good.

We might continue: "Minor injuries and illnesses are not entitled to 24/7 care either (sprained ankle, sore throat, etc.). You can see a doctor for 10 minutes and go home."

That would get rid of a lot more people.

This is rationing - deciding who is entitled, and who is not entitled, to consume a scarce resource.

Another way we could ration our healthcare, in this example, is through prices.

You can have all the healthcare you can pay for.

Here is the point.

Regardless of the rationing type you use, economic systems do not exist to provide you with goods and services. They exist to deny them.

Don't let your head explode.

It's true.

Economic systems exist to deny you economic goods.

For what would the world be like with anyone being able to have any amount of any economic good that they wish?

It is fundamentally an issue of scarcity.