Question about Free Market Economic problem that I haven't been able to figure out

[TheOraclePaul]

Problem: High prices not diminishing demand - example: 'peak oil myth' - so oil prices are going up, which means people will use less, and alternative forms of energy will become viable. Ok I get that. But what if, despite the high prices, a select group of people is willing to pay until it's gone? A more applicable example of this happening might be a certain kind of animal meat - say some rare, exotic species. Super rich people might not care if it's going extinct and still want to buy it to the very end. How can this be reconciled without legislation prohibiting it - is there a free market alternative?

 

[The Gold Standard]

Why would it need to be reconciled? Prices would be high enough long enough for alternatives to be developed. It's not like overnight the price of oil would jump to $1,000,000 a barrel (unless there was hyperinflation, but that is not what you are asking). The price would rise to $150, then $200, then $250, and probably over several years would get high enough that only the richest would be able to afford it, but at that point why wouldn't the rich buy one of the alternatives? It isn't like oil has some magical properties that people would always want it. People want it to make energy. If they can get energy more efficiently for less money doing something else, they won't want oil anymore.

As far as the rare animal meat, the same principle applies. Eventually the item would be so scarce that the price would be too high to justify paying that much for it. If you are worried about the species going extinct, you could also raise money to buy the animals and not eat them. Make a zoo for them or something. We don't need a government solution for these issues.

 

[hazek]

Heh rare animals. I wonder if those so vehemently trying to prevent species from going extinct realize how many had to go extinct since the first life appeared until today, yes HAD to go extinct..

 

[TheOraclePaul]

that all makes sense - my concern though is of those ultrarich folks who don't care about the price mechanism. those that are willing to pay until the last drop. it isnt hard to imagine a lunatic with too much money to spend possibly doing it just for fun.

 

[fisharmor]

You can already see the economic reality behind rare animals.
In Botswana, where safaris are legal and westerners show up to pay big bucks to hunt elephants, elephants are common.
People manage their numbers for that reason.

In Kenya it's illegal to kill elephants.
Therefore it's impossible to assign economic value to them.
An elephant in Kenya is a crop-eating machine. What they don't eat, they trample.
So a farmer has two options: abide by the law and let the elephants live, and starve to death, or break the law, protect his farm, and about a literal ton of extra meat out of the equation.

And elephants are understandably not doing as well in Kenya.

 

[gerryb]

In the case of oil -- we will pump it till it's gone.

In the case of animals -- if people don't have ownership over them, thus stewardship -- they will be over-harvested and go extinct.

Look at Haiti vs. Dominican Republic -- No ownership vs. better land rights -- one has not a single tree -- the other has lush forests. Same island.

 

[Cabal]

If something like an animal becomes a rarity in demand, seems to me like it would be a good opportunity for someone to begin breeding said animal in order to satisfy that demand.

 

[Watch]

If you want to keep something abundant you must make it marketable.
The reason 8-tracks are so scarce and "extinct"(let us say, no new ones being produced) is because they are not marketable; though you'll find them in used goods outlets everywhere.

A free market problem, in principle, implies a problem with people(as we are markets); legislation doesn't "fix problems".
To elucidate the idea of things being marketable being abundant take trees for instance:
http://nafoalliance.org/forestry-journal/greenpeace-founder-wood-is-good/

 

[Steven Douglas]

Super rich people might not care if it's going extinct and still want to buy it to the very end. How can this be reconciled without legislation prohibiting it - is there a free market alternative?

Energy is going to be hoarded, there is no getting around that. Ultimately, however, it's about super-rich countries, not people, and whatever they can't reconcile with global legislation, they will more than make up for with war. You can have all the money in the world, but without the gears of war to back it up, you've ultimately got nothing. But that's the end game, which i have no doubt will a) get very ugly, and that b) we will get past it, with major changes to how the entire world conducts its affairs.

Oil is a finite commodity, and we are already at the point where major countries are aggressively vying for claims to existing reserves (think we're really worried about Iran getting a stupid nuke?). All major powers have their eye on the oil - who controls the spigots, and where they are aimed at all times.

Debt-driven global Ponzi monetary policies all have an exponential economy growth requirement/expectation factor which only serves to accelerate an end game that was already inevitable from the moment we found uses for oil and started extracting it from the ground. There's an ENORMOUS normalcy bias where oil is concerned, and a serious lapse of understanding just what "exponential" means, and how rapidly and destructively an end game collapse plays out once it reaches a kind of critical mass.

The "easy" oil has all been pretty much found. Even all the so-called major finds are a proverbial drop in the bucket in terms of what is known, pumped and already spoken for. We are after the harder and harder to get stuff now. This requires increasing amounts of energy (not money, energy) to get the same oil out of the earth, which can be expressed as a simple energy in/energy out ratio. When we reach the point (and we are fast approaching it, based on artificial exponential economic growth requirements) where the amount of energy required to extract equals the amount of energy we receive in return, money will become irrelevant.

The point is, you need energy to get energy, and that is the real "cost", which has nothing to do with currency exchange value, and which cannot be left out of the equation. But that gets ignored by most (especially economists, who only think in terms of monetary costs). A barrel of oil could cost $1 or $1,000, but if a barrel of oil in energy is required to get that same barrel out of the ground, what do you have? Nothing. Zero sum, and that has nothing to do with price in terms of money, but rather costs in terms of energy alone. That is the curve we were on from the beginning, with ratio that is getting exponentially closer to unity.

 

[PaulStandsTall]

I don't know about the rest of you but I'm crossing my fingers and knocking on wood for the E-Cat to actually work as described. Although I'm not too optimistic about it, life sure would be great if the price of energy were to nosedive over a new technology like this one.

What I can't understand is even though we are in this debt money fiat ponzi scheme, there are hardly any debt notes allocated to proven nuclear technologies. If we are going to create money out of thin air, let's at the very least put it to good use. China has 25 nuclear reactors in the making. USA has none. Nuclear power is 15% of electricity. It seems foolish to not be investing in this.

And don't say we can't do it because Chernobyl, or Fukushima happened. While those are sad, they are also learning opportunities. When planes were invented, they were terribly unreliable and today they are generally regarded as safe. If we improve the designs, we can make the nuclear disasters a thing of the past. This holds true for every technology.

 

[onlyrp]

Problem: High prices not diminishing demand - example: 'peak oil myth' - so oil prices are going up, which means people will use less, and alternative forms of energy will become viable. Ok I get that. But what if, despite the high prices, a select group of people is willing to pay until it's gone? A more applicable example of this happening might be a certain kind of animal meat - say some rare, exotic species. Super rich people might not care if it's going extinct and still want to buy it to the very end. How can this be reconciled without legislation prohibiting it - is there a free market alternative?

No, alternative energy doesn't become available just because there's incentive to. They may become cheaper or more expensive if they're already available, and trying to take advantage of a void. You don't suddenly use magic just because you're in trouble, nor does a miracle or prayer come to your rescue.

"a select group of people is willing to pay until it's gone" don't remind us, the NWO is already doing just that!! That's why they're scaring us with global warming.

"How can this be reconciled without legislation prohibiting it" Read your question again, the rich people who are willing to pay any price for exotic meat with no regard to extinction, DO NOT WANT ANY LEGISLATION. So no, there is no reconciliation. Even if there were regulations, they'd pay the regulators off, anybody has a price.

There is no human duty to preserve endangered species, we just choose to because we think it feels good. Or if it affects our food chain, eco system. The same is true with fuel, we don't conserve it unless we see a reason to, or if we're nice enough to think about the future generations.

 

[slamhead]

First you have to believe that oil is actually a finite product. There is some debate. I remember from Wired Magazine back in the 90's where they were able to find pockets of oil in solid granite. Whether you believe it or not.

http://www.rense.com/general58/biot.htm

 

[Steven Douglas]

First you have to believe that oil is actually a finite product. There is some debate. I remember from Wired Magazine back in the 90's where they were able to find pockets of oil in solid granite. Whether you believe it or not.

http://www.rense.com/general58/biot.htm

I have read that article before. I happen to be one of those who believes that only a fool concludes a negative proposition with any certainty, or even engages in argument by ridicule in support of a negative proposition. However, I do balance that as a proponent of healthy skepticism. From that article:

If there are in fact vast untapped deep pools of hydrocarbons refilling the reservoirs that oil producers drill into, it appears to make little difference to actual production, as tens of thousands of oil and gas fields around the world are observed to deplete, and refilling (which is indeed very rarely observed) is not occurring at a commercially significant scale or rate except in one minor and controversial instance discussed below.

Even the article you cited agrees that empirical support for abiotic theory is poor, or anecdotal at best. So while I would not rule it out, and I am glad there are exploration scientists who are actively engaged in seeing it through, I also wouldn't bet the farm on it.

Even so, let's say that there are vast, as-yet unexplored reservoirs that are within our physical grasp (i.e., in realistic drilling range), and for the sake of discussion, let's say that these sources are even a few orders of magnitude more than existing known resources. Those that are within our reach, able to be found and exploited using known existing energy sources, are still finite. We still have the exponential fundamentals to face (on several growth fronts, including whole populations, seeded by Ponzi economics). These are physical/mathematical realities that won't go away.

I'll go out on a prognosticating limb here.

One of the problems we are facing is that most of our transportation is based on hydrocarbons. We have plenty of electricity, and the ability to generate more of it in the future. But our transportation isn't built around that. The root question is how to get electricity moving us around the world the way oil once did. The obvious knee-jerk answer has been pretty much "batteries". And away everyone goes, trying to make a decent battery powered car, or at least a functional hybrid. Bulky heavy battery cars might make a great balm for liberals to feel good about their delicate, dainty carbon footprints, but we are NOT about to see massive trains, airliners and 18 wheeler versions of the Prius any time soon. In fact probably never, I would predict.

Does that rule out electricity? I don't think so. Flywheel technology is in its infancy, and it's not dependent on massive amounts or rare earths. If done right, it's a near perfect store of energy, and quite powerful. Not for planes, but quite possibly for ships, trains, trucks and autos. If I had to bet my life on it, I would say that we will see flywheel technology go through from infancy to exponential growth sometime within the twenty years.

Oh, and not massive flywheels, either. That's another mistake that's being made, I think. Billions of tiny ones, completely modular - able to spin thousands of times faster without flying apart.

 

[osan]

Problem: High prices not diminishing demand - example: 'peak oil myth' - so oil prices are going up, which means people will use less, and alternative forms of energy will become viable. Ok I get that. But what if, despite the high prices, a select group of people is willing to pay until it's gone?

What do you mean "what if"? The implication there is that there is something wrong with it. What you describe is the market operating as it should and not in some aberrant fashion as your words seem to imply.

The degree to which price effects demand is a basic economic concept called "elasticity". Look it up.

A more applicable example of this happening might be a certain kind of animal meat - say some rare, exotic species. Super rich people might not care if it's going extinct and still want to buy it to the very end. How can this be reconciled without legislation prohibiting it - is there a free market alternative?

I do not know whether you are being cute or if your ignorance is showing. Your mode of communication is rife with innuendo - generally not a good way to communicate, especially in such matters. In this particular case you imply that extinction of a species is some sort of bottomless tragedy from which neither humanity nor the planet will ever recover. From a personal standpoint I do not like the idea of such extinctions, but I recognize that this discomfort may well be a conditioned response. For decades we have been taught that such extinctions are without exception great tragedies from which great wailing and the gnashing of teeth are warranted. Personal feelings aside, I question this because the opinion is based on a set of profoundly broad reaching assumptions that have not to my knowledge been proven true.

Therefore you question, "is there a free market alternative?" presumes a need that may not hold any validity in fact, but only as an individual, emotionally-based opinion. One does not disparage the rights of others based on opinion underpinned by nothing better than mere emotionalism. That is the sort of behavior that gets people killing each other - sometimes on massive scales. This may not bother one if the people being killed are those with whom one holds disagreement. The sung song, however, usually changes when they find themselves on the wrong end of the gun.

I am not saying that extinction is never a bad thing. It may in fact never be a "good" thing, but thus far I cannot recall a single documented extinction as having been proven grave as is so casually claimed by the tree hugger contingent.

This may seem to have nothing to do with your query, but it does because the question itself is invalid if the underlying presumptions are meaningless.

 

[Acala]

that all makes sense - my concern though is of those ultrarich folks who don't care about the price mechanism. those that are willing to pay until the last drop. it isnt hard to imagine a lunatic with too much money to spend possibly doing it just for fun.

In a true free market, the rich get that way by serving the needs of consumers more effectively than others. The market rewards such people, who have proven their effectiveness at managing resources for the needs of the people, by giving them more power to demand more resources. It is SUPPOSED to work that way.

I suppose it is possible that someone could get rich and then just for a lark use their vast wealth to despoil some rare resource. Seems unlikley and really trivial, but so what if it happened?

 

[wannaberocker]

I was actually reading an old article by Thomas Sowell last night about natural Resources. Ill take the oil example he talked about.

1. High oil prices restrict demand. THat does not mean that the demand completely dies off, that just means that less people are able to pay the new higher prices. So they find alternatives in case of travel or heating their homes. That still means that there are people still willing to pay the higher prices because they can afford it.
2. Higher prices in oil does not mean that a cheaper alternative is currently available. For example if coal prices go sky high and electricity becomes very expensive. That does not automatically mean that solar power will become cheaper or that people will flock to solar. It might just be that even with high coal electric prices, its still cheaper than Solar. The bottom line being in order for people to move to an alternative form of energy, a "CHEAPER" alternative has to exist. If Oil prices go up and there is no other cheaper alternative available. People will still use oil.
3. Lastly, you have to remember that exploration for oil cost alot of money. Higher gas prices generally trigger more exploration because its financially viable to explore if the prices are high. If the prices are low, then its not financially viable to explore and spend so much money when there is no return. Bottom line if it cost me 1 billion to explore for oil, but 900 million to sell the oil i find. THen i will naturally decide against exploration in turn reducing the market supply of oil. On the other hand if it cost me 1 billion to explore for oil , but the sale of the new found oil brings me 2 billion. Ill be more inclined to explore for oil and risk the 1 billion.

Pricing in the free market takes care of the supply and demand issue. If it cost me $100 for a pound of chicken, then a very very large part of the population will stop eating chicken and start eating red meat or fish. However, if farmers see that 1 pound of chicken cost $100. They are likely to invest more money in chicken farms instead of dairy farms. That in turn will increase the supply of chicken and eventually the price of Chicken will come down from $100 to maybe $50. THe bottom line is that nothing in this world exist that will one day just disappear. Pricing in the free market gives the natural resource a chance to replenish themselves.

 

[Diurdi]

Problem: High prices not diminishing demand - example: 'peak oil myth' - so oil prices are going up, which means people will use less, and alternative forms of energy will become viable. Ok I get that. But what if, despite the high prices, a select group of people is willing to pay until it's gone? A more applicable example of this happening might be a certain kind of animal meat - say some rare, exotic species. Super rich people might not care if it's going extinct and still want to buy it to the very end. How can this be reconciled without legislation prohibiting it - is there a free market alternative?

For some industries using oil will always be necessary regardless of price. The increase in the price of oil will make the returns of investing in oil saving innovation much higher.

Furthermore, other entities that do not need this commodity will stop using it or use less of it. The rising prices also contribute to a increased incentive to produce more oil.


In the case of endangered species, privatization is a possible answer. As animals of the endangered species have legal owners', it is in the interest of the owners to keep them from going extinct so that they can continue selling meat/horns/pelts of said animals. That said, endangered species going extinct is not necessary a big issue from the perspective of the market anyway.

 

[sanssq]

I don't know about the rest of you but I'm crossing my fingers and knocking on wood for the E-Cat to actually work as described. Although I'm not too optimistic about it, life sure would be great if the price of energy were to nosedive over a new technology like this one.

What I can't understand is even though we are in this debt money fiat ponzi scheme, there are hardly any debt notes allocated to proven nuclear technologies. If we are going to create money out of thin air, let's at the very least put it to good use. China has 25 nuclear reactors in the making. USA has none. Nuclear power is 15% of electricity. It seems foolish to not be investing in this.

And don't say we can't do it because Chernobyl, or Fukushima happened. While those are sad, they are also learning opportunities. When planes were invented, they were terribly unreliable and today they are generally regarded as safe. If we improve the designs, we can make the nuclear disasters a thing of the past. This holds true for every technology.

The problem with nuclear power is twofold: It's centralized. It's not insurable. Both those lead to massive government involvement. Both lead to privatizing the profits and socialization of the risks. A better alternative is for decentralized and/or regional power production. The powerful hate this idea as the profits not as subject to political manipulation as with a centralized power generation. The answer is more likely more efficient solar, gravity/tide generation/ some wind and efficiency from geo thermal/heat exchange. A better utilization of the power. Things like LED lights instead of conventional lights. We would have been further down this road if it wasn't for the effective subsidizes of petroleum as an energy source. Storage is the problem here. Especially on a small scale like cars. Nano capacitors offer a chance for storage.

But think: a decentralized power production. especially on a owner scale, is a grave threat to the State and the powerful. If people didn't need to buy power, they would begin to think about what other things that they don't need for the system to provide. Home schooling is mostly more effective than public education for example. But the taxes we pay are massive.

 

[nayjevin]

In a free market, the extent to which a person uses his or her money in unpopular ways is the extent to which people do not continue making that person rich.

 

[PaulStandsTall]

The problem with nuclear power is twofold: It's centralized. It's not insurable. Both those lead to massive government involvement. Both lead to privatizing the profits and socialization of the risks. A better alternative is for decentralized and/or regional power production. The powerful hate this idea as the profits not as subject to political manipulation as with a centralized power generation. The answer is more likely more efficient solar, gravity/tide generation/ some wind and efficiency from geo thermal/heat exchange. A better utilization of the power. Things like LED lights instead of conventional lights. We would have been further down this road if it wasn't for the effective subsidizes of petroleum as an energy source. Storage is the problem here. Especially on a small scale like cars. Nano capacitors offer a chance for storage.

But think: a decentralized power production. especially on a owner scale, is a grave threat to the State and the powerful. If people didn't need to buy power, they would begin to think about what other things that they don't need for the system to provide. Home schooling is mostly more effective than public education for example. But the taxes we pay are massive.

Yes I agree that there are many problems with nuclear because of the costs etc, but my point was if the government is going to waste money, let's waste it on something we as a nation can use in the future. Of course this will not happen. Also, there is no megawealthy humanitarian that would build nuclear plants for the benefit of any country or continent. (Also a pie in the sky idea, let a rich man give it away for free!)
I still have my fingers crossed for the ecat. It is exactly what you describe, a decentralized power production capability down to the average joe! I'm not sure if you're familiar with the story, but it seems the inventor plans to sell them direct to consumers, which means of course an industrial revolution. That is, if it works though