Challenge.... scarcity = not enough stuff to go around. How do we ration goods and resources?
Types of Rationing Mechanisms:
- Need - Equal Shares
- Queues (waiting in line) - Kicking ass
- Lottery - Merit (beauty? smarts?)
All of the above methods prove to be flawed and they don't allocate resources based on where they should be. Examples:
Queues = length of line is price
Lottery = people who value the good more don't necessarily get it
Kickin ass = impossible to predict/plan for anything
Merit = how do you measure merit?
Further Evaluation of Rationing Mechanisms: Where does competition come from? --> Scarcity
(1) Is the competition between individuals constructive or destructive?
- all of the above examples prove to be destructive. What can we use that yields constructive competition?...
(2) How does the mechanism impact supply?.... must be able to produce in future
(3) Other considerations
What is the solution.....
PRICE SYSTEM
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