A distinguished British economist named Lionel Robbins gave the classic definition of economics:
Economics is the study of the use of scarce resources which have alternative uses.
Some optimists have said that we now live in "an era of abundance" and some pessimists have said that we are entering "an era of scarcity." Both are wrong. The wide range of goods and services available to us vastly exceeds what past generations and past centuries had to offer. But every era has always been an era of scarcity.
What does "scarce" mean? It means that what everybody wants adds up to more than there is. This may seem like a simple thing, but its implications are often grossly misunderstood, even by highly educated people. For example, a feature article in the New York Times laid out the economic woes and worries of middle-class Americans-one of the most affluent groups of human beings ever to inhabit this planet. Although the story included a picture' of a middle-class American family in their own swimming pool, the main headline read: "The American Middle, Just Getting By." Other headings in the article included: Wishes Deferred and Plans Unmet Goals That Remain Just Out of Sight Dogged Saving and Some Luxuries In short, middle-class Americans' desires exceed what they can comfortably afford, even though what they already have would be considered unbelievable prosperity by people in many other countries around the world-or even by earlier generations of Americans.
Yet both they and the reporter regard them as "just getting by" and a Harvard sociologist spoke of "how budget constrained these people really are." However, it is not something as man-made as a budget that constrains them: Reality constrains them. There has never been enough to satisfy everyone completely. That is the real constraint.
