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Posts Tagged ‘scarcity’

Is the Future Really "Better Than You Think"? Ask the Authors of Abundance

On an early episode of Freakonomics Radio, we interviewed Peter Diamandis, founder and CEO of the X Prize Foundation. He was a great (and inspirational) guest. Now he has written a book with journalist Steven Kotler called Abundance: The Future Is Better Than You Think. From the flap copy:

Since the dawn of humanity, a privileged few have lived in stark contrast to the hardscrabble majority. Conventional wisdom says this gap cannot be closed. But it is closing — fast. The authors document how four forces — exponential technologies, the DIY innovator, the Technophilanthropist, and the Rising Billion — are conspiring to solve our biggest problems.

The Butter Chronicles: Norway Comes Up Short

Norway is in the midst of a butter shortage. Yes, butter.

There are a few explanations: low-carb diets have been popular, and the summer of 2011 wasn’t ideal for dairy. Olav Mellingsater for CNN writes:

A rainy summer reduced the quality of animal feed, decreasing milk production in Norway this year by 20 million liters (5.3 million gallons) compared with the same period last year, the cooperative said.

Stores are currently rationing butter sales, and some entrepreneurial spirits are selling butter online at 30 times the normal cost. There are also some gray market characters emerging from the crisis. CNN reports:

Authorities detained a Russian citizen Monday who they said was trying to smuggle 90 kilograms (200 pounds) of butter from Germany into Norway. Food safety authorities then warned people not to buy butter from strangers, Norway’s TV2 reported.

Beauty Pays is Out! Bring Your Questions for Dan Hamermesh

Beauty Pays is out!! (Princeton University Press, 2011, available from the Press, or either hardbound or Kindle version). Its central point is that beauty affects outcomes in markets because it is scarce. It details how these effects function, how large they are, and what they imply about a wide array of markets.
It includes relevant jokes, songs, etc., lots of pictures but no graphs. Despite a “chatty” tone the discussion of beauty illustrates ideas comprising almost half of an introductory micro course.
It raises a wide array of issues and questions. I’m happy to answer any questions that Freakonomics readers might have, so please ask away in the comments section below!
Here’s the table of contents:

Do Paid Chores Pay for Themselves?

My son now travels three days a week, and my daughter-in-law has knee problems. What to do about such tasks as gardening, lawn mowing, leaf raking, etc.? They could hire a gardener; but their kids, now teenagers, are confronting scarcity: Their allowances no longer cover the things they want to buy—they have become economic people.
To solve both parental and offspring problems, the kids have offered to engage in household production in return for extra pay. The garden now looks better, leaves are raked more quickly and the lawn is mowed on time—and the kids have more spending money. I have no doubt that paying the kids is cheaper than hiring a gardener—cheaper than the market solution. Of course, my son could order the kids to do the tasks, but paying them is a nice way to give them spending money. I wonder, though: Does their pay of, say $10, represent a $10 increase in income? Or does my son cut back on the things he used to pay for and now makes the kids pay for themselves? If so, do teenagers understand this kind of fiscal substitution?

The Rare Earth Conundrum

Electric cars are all the rage today, but some of the smartest people I know believe that moving towards electric vehicles is a terrible idea. Looking casually as an outsider at the unappealing economics of electric vehicles (the need for a new and immensely expensive infrastructure, cars that cost much more than either traditional gas engines or hybrids, limited ranges and long recharging times), I find it hard to understand why the Obama administration is pushing electric cars.
One argument I’ve heard is “national security,” the idea being that electric vehicles would make the United States less dependent on imported oil. Be careful what you wish for, however, because if electric cars become a mainstay, we may be trading one dependence for another that is even more troubling. Ninety-five percent of the world’s output of rare-earth metals today comes from one country: China. By some estimates, demand will outstrip supply within five years. At least with oil we know there are fifty years of oil reserves readily available. Moreover, oil is produced all over the world, limiting the monopoly power of any one country.