“A horse! A horse! My kingdom for a horse,” cried King Richard in Shakespeare’s masterpiece. Because he didn’t have a horse, the king would do anything to get one. In economics it is the principle of scarcity, the idea that the rarer something is, the more value it contains.
Yet as in so many things in life, scarcity is all the eye of the beholder. Consider one of the most bizarre movements in all of human history, the tulip panic of the 1600’s. In Holland a botanist by the name of Carolus Clusius introduced the flower to the wealthy. Soon tulips became a symbol of wealth, so much so that people were ready to trade anything to get one.
At the height of the mania people paid the price of a house to buy a single tulip bulb, giving up their entire life savings for one flower. The government stepped in to put an end to the trading before things got any further out of hand, but for many it was too late as they had already lost everything in the pursuit of a flower they believed to be priceless because they bought into the lie that it was scarce.
As odd as this period of history is, we see many similar things in modern day culture. It has only been a few years since Beanie Babies were all the rage, with people paying hundreds and even thousands of dollars for a small stuffed animal.
In South Africa De Beers restricts the supply of diamonds the world sees. Though diamonds are anything but rare, De Beers produces a false sense of scarcity by limiting how many diamonds reach the market. With so many cultures believing diamonds are necessary for an engagement, and almost 95% of people getting married at some point, they will never run out of customers willing to pay exorbitant prices for the “perfect” diamond.
Michael Gordon shares in his excellent book Economix, available at Cleveland's Loganberry Books, that in the 1970s the average CEO made 40 times the salary of a typical worker. In the year 2000 CEOs made 500 times as much. For example, Disney CEO Michael Eisner made $40 million in 1988; his salary ten years later was $575 million.
Adam Smith wrote, “All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.”
More and more it seems that what is really scarce is selflessness and integrity, a sense of purpose and a responsibility to our fellow man. There is nothing wrong with the pursuit of wealth, but if we lose our collective minds in the process and compromise what matters most, if things like character and morality become the rarest things on earth, then we are all in the end truly poor.
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