It’s a truism that the basic economic problem is how to deal with scarcity. Our means are limited and our wants exceed our limited means to satisfy those wants. But will there ever be time when we are free of scarcity? If we have everything we need, will the economic problem disappear?
The fact is that we will never have everything, even if we have all the material things we want. Even if there were no material scarcity, there still would be an economic problem. Scarcity exists because time exists and only a finite amount of time is available to finite creatures (which includes us humans.)
Time is scarce. So we have to choose among alternatives on what we spend our limited time on. If time were not limited, the economic problem would disappear.
Imagine that someone were so wealthy that he or she could enjoy whatever he or she wanted — food, clothing, activities, companions, whatever. He or she would be able to afford them all but will be forced to choose, and by that choice incur an opportunity cost in terms of the things that he or she will have to give up from choosing — those things one has to forego to be able to do the thing one does. There will be trade-offs.
These days information is not as scarce as it used to be. A few decades ago, you could only watch those movies that were playing in your neighborhood. Now you have on demand access to thousands of movies in the comfort of your living room. It is not meaningful to say that movies are a scarce good any more. But you can’t watch them all. You have a limited amount of time and therefore have to choose. It’s the tyranny of time.
Herbert Simon (1971) pointed out that in an information-rich economy, what is scarce is attention. “A wealth of information creates a poverty of attention.”{1} This is so because time is scarce and attention consumes time.
Back to the question. If scarcity didn’t exist, there would be no economic problem. But scarcity will always exist because time is limited. Therefore there will always be the economic problem.{2}
NOTES:
[1] Simon, Herbert A. [1971], “Designing Organizations for an Information-rich World”.
[2] What is “the economic problem”? It’s assumed that the economic problem is one of resource allocation. In the context of an individual, the ultimate resource is time. To an individual with unlimited time, nothing is impossible. Consider the question, “How far is that place?” and the answer, “Oh within walking distance.” Well, if you have the time, even a place 500 miles away is within walking distance.
Life is a Random Draw 