The Time


The Time Essay, Research Paper



The Great Toy Shortage

Forget it, Virginia. Santa won’t be leaving a “Star

Wars” R2-D2 doll under the tree this year – just

an I.O.U. promising you one at some vague time

between February and June. Don’t count on a Mego

Micronaut kit for building your own robot either, or

a Milky the Marvelous Milking Cow, which drinks

water when its tail is pumped, moos plaintively and

squirts a tiny pailful of cloudy white “milk” from a

detachable pink udder….

Not since the Grinch stole Christmas has there been

such an unseasonable shortage.

Newsweek, December 19, 1977, p. 58


The Great Toy Shortage

Between Pig Copper and Dentistry

What Do We Mean by “Scarcity”?

What is the Best Way to Forecast Scarcity and Costs?

Will the Future Break With the Past?

A Challenge to the Doomsdayers to Put Their Money Where Their

Mouths Are


Afternote 1

The “True” Cost (Price) of Natural Resources

Afternote 2: The Ultimate Shortage

The “Great Toy Shortage” of 1977 clearly was a freak event. We don’t worry that a

scarcity of Hula-Hoops, pencils, dental care, radios, or new musical compositions will

last. And we don’t fear that a larger population will reduce the supply of these

goods; manufacturers will make more. Yet people do worry about an impending scarcity

of copper, iron, aluminum, oil, food, and other natural resources.

According to a typical pronouncement by Paul Ehrlich, the best-known contemporary

doomster, “In the early 1970s, the leading edge of the age of scarcity arrived. With

it came a clearer look at the future, revealing more of the nature of the dark age to

come”. That we are entering an age of scarcity in which our finite natural resources

are running out, that our environment is becoming more polluted, and that population

growth threatens our civilization and our very lives – such propositions are

continually repeated with no more evidence than that “everyone knows” they are true.

Is there a fundamental economic difference between extractive natural resources and

Hula-Hoops or dental care? Why do people expect that the supply of wheat will decline

but the supplies of toys and drugs will increase? These are the questions that this

chapter explores. The chapter draws examples from the metallic raw materials, which

are relatively unencumbered by government regulations or international cartels and

which are neither “burned up” like oil nor grown anew like agricultural products.

Energy, food, and land will be given special treatment in later chapters.


There is an intuitive difference between how we get Hula-Hoops and copper. Copper

comes from the earth, whereas a Hula-Hoop does not seem to be a “natural” resource.

Copper miners go after the richest, most accessible lodes first. Therefore, they dig

into lodes bearing successively lower grades of ore. If all else were equal, this

trend would imply that the cost of extracting copper from the ground must continually

rise as poorer and less accessible lodes are mined.

Hula-Hoops and dental care and radios seem different from copper because most of

the cost of a radio, a Hula-Hoop, or dental care arises from human labor and skill,

and only a small part arises from the raw material – the petroleum in the plastic hoop

or the silver in the tooth filling. For good reason we do not worry that human labor

and skill comes from progressively less accessible reservoirs.

But all this neat theorizing about the increasing scarcity of minerals contradicts

a most peculiar fact: Over the course of history, up to this very moment, copper and

other minerals have been getting less scarce, rather than more scarce as the depletion

theory implies they should. In this respect copper follows the same historical trend

as radios, undershirts, and other consumer goods (figures 1-1a and 1-1b). It is this

fact that forces us to go beyond the simple theory and to think more deeply about the


FIGURE 1-1a. The Scarcity of Copper as Measured by Its Price Relative to Wages

FIGURE 1-1b. The Scarcity of Copper as Measured by Its Price Relative to the

Consumer Price Index

At the end of this confrontation between theory and fact, we shall be compelled to

reject the simple Malthusian depletion theory, and to offer a new theory. The revised

theory will suggest that natural resources are not finite in any meaningful economic

sense, mind-boggling though this assertion may be. That is, there is no solid reason

to believe that there will ever be a greater scarcity of these extractive resources in

the long-run future than now. Rather, we can confidently expect copper and other

minerals to get progressively less scarce.


Here we must pause for an unexciting but crucial issue, the definition of

“scarcity.” Ask yourself: If copper – or oil or any other good – were much scarcer

today than it actually is, what would be the evidence of this scarcity? That is, what

are the signs – the criteria – of a raw material being in short supply?

Upon reflection perhaps you will not expect a complete absence of the material as a

sign of scarcity. We will not reach up to the shelf and suddenly find that it is

completely bare. The scarcity of any raw material would only gradually increase. Long

before the shelf would be bare, individuals and firms – the latter operating purely

out of the self-interested drive to make profits – would be stockpiling supplies for

future resale so that the shelf would never be completely bare. Of course the price of

the hoarded material would be high, but there still would be some quantities to be

found at some price, just as there always has been some small amount of food for sale

even in the midst of the very worst famines.

The preceding observation points to a key sign of what we generally mean by

increasing scarcity: a price that has persistently risen. More generally, cost and

price – whatever we mean by “price,” and shortly we shall see that that term is often

subject to question – will be our basic measures of scarcity.

In some situations, though, prices can mislead us. Governments may prevent the

price of a scarce material from rising high enough to “clear the market” – that is, to

discourage enough buyers so that supply and demand come to be equal, as they

ultimately will be in a free market. If so, there may be waiting lines or rationing,

and these may also be taken as signs of scarcity. But though lines and rationing may

Young and gifted , but not talented

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