Scarcity is one of these difficulties. It is one more obstacle to surmount.

Frédéric Bastiat
Economic Harmonies

Frédéric Bastiat does not spend a lot of time on the concept of scarcity that was recognised by Nassau William Senior as the source of value and he concludes that scarcity of the corresponding service indeed has a great influence on the value of things.

Today’s quote seems to be interesting to me because it reminds us that scarcity is one of these obstacles that give a price to things. It is often observed that, when some prices increase during a crisis, a good part of the non-economists complain about it, pointing at the greed of merchants who take advantage of a situation allowing them to generate undue profits. Yet during a crisis, what generally leads to price increases is scarcity – if there are 9000 litres of water available for 10000 inhabitants, it is highly probable that demand will be far above supply, which induces a price increase. Far from complaining about it, we should rejoice. Indeed, the water price increase will favour its economy (hence reduce demand) but also create an increase in the offer while some merchants will find a good enough motivation for this (one can imagine some cases where water would be transported by helicopter instead of trucks – this I costlier but if the price is high enough to generate a profit, somebody will be there to meet the need). 

Other quotes from On Value:
Introduction – Part 1 of 10 – Part 2 of 10 – Part 3 of 10 – Part 4 of 10 – Part 5 of 10 – Part 6 of 10 – Part 7 of 10 – Part 8 of 10 – Part 9 of 10 – Part 10 of 10 – Conclusion – Epilogue

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