Economics Part 1: What, Why, and How

Economics is defined best as: The study of the allocation of scarce resources which have alternative uses.

Simply put, economics studies how we get what we need and want when we get it. During the times of the garden of Eden there was no need of economics. Resources were unlimited. God supplied Adam and Even with anything and everything they needed. There was no reason to economize because there were not costs due to resources being unlimited. There was not work to be done in order to produce their food, water, clothing, etc.. God provided unlimited resources for them.

Today and ever since that time period in history, all resources no matter what that resource is, are scarce. Meaning that the sum of everything we want in life is more than what is available in society. We have unlimited wants but not unlimited resources. This is the idea of scarcity: that resources are limited.

Simply put, economics attempts to teach us the best way or "most efficient" way to spread out or "allocate" limited resources or "scarce resources" to the many different ways those resources can be used or in other words to their "alternative uses".

So that is what and why we have to economize. Allow me to finish part 1 with how we economize.

Most countries throughout history have relied on kings and lords to make decisions of how much to produce of a good and where and when to send it. All matter of production and distribution of resources were left up to the leader of a nation or small state or community. The lord was the leader of the manor in a Feudalistic economy. The dictator and the czar were the decision makers in a Communist nations. During Biblical times, kings were the decision makers. For thousands of years leaders made economic decisions.

Beginning around 1776 the idea that a market or the "invisible hand", as Adam Smith(author of the Wealth of Nations 1776) called it, could guide resources quicker and more efficiently. Meaning, instead of one leader sitting somewhere whether that be in Moscow, Russia or in Washington D.C., a market of prices would be in charge of allocating resources which have alternative uses. A market is made up of consumers and producers who are willing to come into agreements about what they want and what they are willing to give up to get it. And if those choices are left up to those consumers and producers and decisions were based on the costs or prices of making those agreements, then these decisions could be far more efficient since those individuals know far more about their own needs in their own situations than some arbitrary leader in some far away city.

Part 2 coming soon