Laws require everyone is exposed to some kind of economic study in high school. Between supply, demand, guns, and butter, you probably also heard your teacher repeat the word “scarcity” over and over again.
It’s pretty much the common denominator in everything economics – you only have this many resources, so how should they be best aligned for efficiency. Everything is defined by its scarcity, and everything is indeed scarce. That is, there is nothing that is unlimited.
One of my favorite economic topics is that of post-scarcity, or a reality in which most things previously limited in quantity as now unlimited. As we know, when a certain something is plentiful, it is very cheap. When something is in short supply, it is very expensive.
So post-scarcity discussions are a lot of fun, right? Like, what if we’re on the verge of becoming so efficient that we no longer have to work? Or what if we can cure hunger with a simple mega pill that replaces our daily food intake? We would have so much extra farmland that we could use for more productive uses. Food would no longer be scarce, and it would have almost zero real value.
Anyway, these are just examples. And as much as I enjoy the whole post-scarcity idea as much as I enjoy tacky, late night productions on the Syfy channel, it’s not all that realistic. At least, a post-scarcity reality in which EVERYTHING is plentiful is kind of ridiculous.
One thing that I have been thinking about a lot is what happens when labor is no longer a scarce commodity. Raw human work where people actually do something (manufacturing, for example) is becoming far less important, right?
Where one person could put in a few rivets per minute on an assembly line, one person operating a massive piece of machinery can put in thousands of rivets in the same amount of time. Both are relatively unskilled types labor, as the worker’s value comes mostly from his or her ability to flip a switch and watch for problems today, or fire a riveting gun decades earlier.
The current rate of technological development would suggest that we will need fewer and fewer workers to do more and more things in the future. Human work so far as physical labor has become so incredibly invaluable, mostly because it is not nearly as scarce today as it was years ago.
The Real Reason to Invest
I think scarcity better explains why you have to become a greedy capitalist to protect that which you own. Generations previous would do the same job their whole life, enjoying awesome job security because human hands were still more efficient than mechanical operation. Today, that is not the case at all.
And when you think about it, the proceeds of production are going to fewer people as fewer people are employed. The real benefactors are the owners of this capital, hence capitalism.
At any rate, I think the best reason to be any kind of investor is for the purposes of income protection. Your health and your capacity to do work are important, but perhaps problems more meaningful in 1900 than in 2011. That is to say that if you lose your job in the future, it won’t be because you could not work. It will likely be because a machine could do this work better. Years ago, you lost your job because your body just couldn’t handle it any more.
I’m curious as to what you think about a post-scarcity reality for labor. I’m of the view that labor will always (obviously) be finite, but its supply will grow far faster than most anything else.
What can you do to protect yourself from changes in your own industry?
Have you or someone you know lost their job to a machine that was more efficient?
Can humans learn faster than machines; is it possible to beat the curve?