Allocating Scarce Resources

Income is finite. That’s a hard concept to get your mind around, because income, in aggregate, is so large, and hard to measure. Also, income, in aggregate, is constantly changing. But just as you or I have a limited income, when you add all those limited incomes together, you get a limited aggregate.

And even though income, in aggregate, is constantly changing, at any one moment, income is finite. Income is limited. Maybe tomorrow I’ll get another job, or a raise, or I’ll find a new advertiser, but, at any particular point in time, there’s a number, some big, hard-to-calculate, number, that represents our income.

Of course, there are a few people in El Paso who have more money than they can spend, but even they are not driving around throwing that money out their car windows. Their constraint might be time, or personal energy levels, or interest.

If you accept that undeniable truth, that income is finite, then you realize that we’re faced with hard decisions. Every dollar that is spent one place is a dollar that won’t be spent somewhere else. Every dollar that you spend at Food King is a dollar that you won’t spend at Sprouts. Every dollar that you spend at the movies is a dollar that you won’t spend at the bar. That part is easy to see.

But every dollar you spend on entertainment is also a dollar that you won’t spend on education.

Economics is defined as the study of the allocation of scarce resources. Income (money) is a scarce resource, especially in El Paso, one of the poorest cities in the country. Every dollar we spend on taxes is a dollar that we won’t spend on rent, or to buy a house, or to send our kids to school. Every dollar that we spend at a government subsidized entertainment facility is a dollar that we won’t spend at a local mom-and-pop, or at the farmer’s market, or supporting local artists.

Capitalists believe that the free market is the best way to allocate resources. That the demand for a limited amount of a good or service will drive the price of that good or service up, and the higher price will induce people to produce more of that good or service. Socialists believe that the government should intervene to control the allocation of resources. Mostly socialists think that this method of allocating resources should benefit the less fortunate in society. They believe that the government should step in to see that no one goes hungry, or lacks healthcare, or a place to sleep.

El Paso’s public policy is a perverse version of socialism, where the government chooses to intervene to make sure that the citizens have enough options for their leisure time and places to shop. These policies ignore the needs of the less fortunate, and penalize the local businesses competing for those dollars.

One comment

  1. You’re forgetting about the multiplier effect, synergy, transmutation and the Philosopher’s Stone. Fishes and loaves my friend. You gotta believe.

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