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Resources (an Economic Issue)


There are basically three types of resources needed to create wealth. These are raw materials, energy, and labor. Each of these resources is limited in some way. There are limited amounts of raw materials, but you can recycle many of them. We have both non-renewable and renewable sources of energy. Once a non-renewable energy source is used, it is gone, but renewable energy of one type or another should always be available. Labor is also always available, but individuals need the right training to effectively apply their labor.

In general, all economic wealth can be boiled down to the proper application of labor. That’s because the acquisition and use of raw materials and energy could simply be made dependent on the right application of labor. Of course, there is so much that goes into the topic of labor that we will need to deal with it separately. Here, we are going to talk mostly about our acquisition and use of raw materials and energy, which we can think of together as our natural resources.


When the United States of America was founded, we had an abundance of natural resources. In addition, the average individual only needed and used a small portion of these resources. There was so much land, water, minerals, trees and wildlife, that there must have been a feeling of unlimited bounty. If it were not for disease, natural disaster, and human greed, it could have been a true paradise for everyone.

As our nation grew, our abundant natural resources and ingenuity brought us great wealth and an affluent lifestyle. They helped to make us one of the greatest nations that has ever existed on the face of the Earth.

As time went by, our once abundant natural resources were being used up at an ever-increasing rate. Eventually, we needed to start importing ever-increasing amounts of oil, minerals and other non-renewal resources from other countries. Even some of our renewable resources started being stretched past their ability to be renewed. We even started to deplete more and more species of fish from our once abundant oceans. We are even nearing the point where we may need to import more food than we export.

Today, there is only one resource that we still have in abundance. That is our ingenuity. To survive, we must tap deeper into this resource every day. We can only hope that we do not deplete it before we can turn things around.

Supply and Demand

One of the basic and most important principles of economic theory is the law of supply and demand. When the supply of an item is high and the demand for it is low, everyone can get the item at a low price. When the supply of an item is low and the demand for it is high, some of us will need to pay a high price to get the item and others of us will have to do without.

Of course, supply and demand are also affected by price. At a lower price, fewer businesses are willing to supply the item and supply goes down, but the lower cost will mean more of us can afford the item and demand will go up. At a higher price, more businesses are willing to supply it and supply goes up, but the higher cost will mean fewer of us can afford it and demand will go down. Eventually, the price of an item will rise or fall to a point where supply and demand come into balance.

For instance, we can take the case where many of us would like to have some given luxury item. Some of us can afford it and are willing to buy it at a high price. Others of us will wait until the price comes down. At a high price, businesses can make a large profit making the item, which will encourage more businesses to make the item. As the supply rises, the price will come down and more of us will be able to afford it and be willing to buy the item, which will increase the demand. Eventually, a point will be reached where the price will be high enough for businesses to make a good profit making the item, but low enough so that a lot of us who want the item can afford to buy it.

When nearing a balance point in supply and demand, competition will be at its most intense. Businesses will try to lower their costs so that they can raise their profits. As profits increase, more businesses will start to make the item, which will further raise the supply and lower the price. At a lower price, more of us can afford the item and demand will rise. If costs can be reduced, then continued competition would continue to raise profits, and would lead to even more of us being able to afford the item and lead to even higher demand.

In the above case, where we simply want a luxury item and do not need it, the law of supply and demand can work out good for everyone. The makers of the item can earn a profit and a lot of us are able to get that item at a reasonable price. On the other hand, a problem arises when we talk about needs. In these cases, we may not be able to wait for prices to come down. When the supply of a needed item is low and the demand stays high, prices will remain high, and a lot of us will need to make sacrifices in other areas to buy the needed item.

For instance, let’s take food and water. We would not live long without these items, so there is no real option for us to do without or to wait for the price to come down. Therefore, even when a limited supply drives up the price, the demand will always remain high. Some of us might need to give up everything else to get the food and water we need. If that ends up still not being enough, then we might die. In fact, this is happening at an alarming rate today. Every day, in almost every country, there are poor individuals that starve to death because they cannot afford to buy food or water. In addition, some individuals are resorting to and are dying from drinking or eating spoiled, unclean or contaminated food and water.

Limited Supply

All resources have a limit as to their supply. For some resources, there is simply a fixed amount of them and no more. For instance, there is only so much land and we can only get just so much oil, gas, and minerals out of it. In addition, the deposits of resources that remain today will be more difficult and costly to extract than those extracted in the past, since all the easily extracted deposits have already been gotten.

Once we have extracted all the resources, then that is it. Some resources, like iron, copper and silver, can be recycled, but this may sometimes cost more than it did to extract them in the first place. Other resources, like oil and gas, will simply be gone. I will talk more about these nonrenewable sources of energy in the upcoming subsection on energy.

Some resources are renewable, but they can only be renewed at some maximum rate. There is only so much land, water and sunshine to grow food and trees. We are already pushing the limits on plant growth. We may be able to squeeze a few extra bushels out of a given field or plant more crops on marginal land, but to do so will take more effort and will cost more.

We are also already pumping more water from deep aquifers to irrigate our crops at a higher rate than they are being replenished, and we are depleting the nutrients from many of our crop lands. In addition, our dependence on getting greater yields per acre could simply lead to greater losses when there is a flood, fire, cold snap, or other disaster.

An Historical Example

Throughout history, even with our modern globalized economy, there have been many big and small communities and civilizations that have failed after using up one or more of their critical resources. A look through the historical and archeological record will show us many examples of this. One interesting example is what happened on Easter Island.

The archeological record shows that, at one time, the inhabitants of Easter Island had a flourishing culture. The island was covered in trees, which the islanders used for food, firewood, and building material for their homes and boats. With their boats, the islanders could fish and travel to nearby islands to get other necessities and luxury items.

Over the years, the population grew and so did the demand for wood, so more and more trees were cut down. Within each generation, the decrease in the number of trees was most likely too small to be readily noticeable, but over many generations, the number of trees dropped dramatically.

Eventually, the inhabitants of Easter Island cut down or lost the last tree. Without trees, they lost their source of nuts for food and wood for firewood. They also could not build any new boats, so they were soon unable to fish or to travel to the nearby islands. Without nuts and fish for food, many individuals starved, and the population plunged. By the time outsiders arrived on the island, the few remaining islanders were scraping out a meager existence.

However, other factors contributed to the fate suffered by the inhabitants of Easter Island, and it looks like they did try to prevent their fate.

On the one hand, it looks like those who settled on Easter Island brought along something that helped them in eliminating all the trees. It looks like they had brought along some rats on their journey. Without any natural predators on the island, the rat population grew rapidly on a diet of nuts and bird eggs. Without some predator limiting their population, they helped in the elimination of the trees and many of the bird species that lived on the Island.

On the other hand, it looks like the inhabitants of Easter Island did not go down without a fight. Archeologists have found evidence that they set aside areas where they tried to save some of their trees. However, it looks like their efforts came too late.

Even so, the fault still comes back to rest on those who introduced this nonnative species to the island, and who cut down so many of their trees.

Unlike the early inhabitants of Easter Island, we should be easily able to see the consequences of our increasing demand for resources. First, our resource usage is growing at an incredible rate, so we can see the changes within our own lifetimes. Second, we have written and photographic records of how things were in the past, so we can compare and analyze our usage. For the inhabitants of Easter Island, they were lucky that others could come to their rescue. With today’s globalization, if we use up our resources, we may not have anyone to come to our rescue.

Limit Demand

The answer is quite simple; we need to limit our demand for resources to those supplies that are renewable or recyclable, and that are available to us at an affordable cost. In addition, we must remember that many resources like land and water are also needed by the plants and animals with whom we share this planet. Therefore, we must be sure to account for their needs in any discussion about our planet’s resources.

Let’s look at life on our own small island out in the ocean where we assume that there will be no outside help. Here, it should be easier to comprehend the limits of our resources. First, we can determine how much of each resource is needed by an average person living a comfortable lifestyle. Then, we can take an inventory of all the resources on the island and determine its rate of renewal. With a small island, this should be easy for any group of reasonably intelligent individuals to do.

We would take the gross amount of each resource that is renewed over time, subtract what is needed by other living things over that same time, and then divide that resulting net amount by the amount needed by a individual over that same time. For each resource, this will tell us the maximum number of individuals who could live on the island and still have enough of the given resource to go around.

The smallest resulting maximum number of individuals obtained from each of these calculations would tell us how many individuals the island could comfortably support. If the population was allowed to grow bigger than this number, then some individuals would not be able to get enough of or would need to do without some of these resources or the things that would be produced from those resources.

Our planet is like an island. That is an island in space. It may be bigger than an island at sea, but its resources are limited just the same. Therefore, we can still inventory our resources and compute how many individuals they would support. If we keep our population below this number, then there will be plenty to go around without a lot of work, and we could spend more of our time enjoying life. If we let our population grow beyond this number, then we would need to work harder to supply our needs, we would have less time to enjoy life, and some of us would need to get by with less or even to do without.

Limit Waste

There could still be shortages, even if we are careful in calculating how much of each resource we can easily get, and we can limit the size of our population to where there should be enough for all of us. The biggest cause for shortages would most likely be natural disasters. However, barring natural disasters, the main reason for these shortages would most likely be waste. For instance, we have often wasted our precious limited resources through some combination of carelessness, greed and ignorance.

Whenever the use of some resource appears to have a low cost, we may not pay much attention to how much of it we waste. For instance, when we buy something, we are usually concerned with whether the item we are buying is worth the price or not and not with how much packaging it comes in. If the packaging made up only a small portion of the cost of the item, then the amount of packaging may not be much of a concern either to the buyer or to the manufacturer.

On the other hand, the amount of packaging used may make a big difference in how much it costs in terms of waste pickup and disposal. Usually, an entire community bears the cost of waste management and the cost to an individual citizen is usually not tied to the amount of waste coming from that individual. Therefore, the cost of taking care of the waste from packaging may not be much of a consideration to a consumer buying some given product.

Therefore, the best way to handle this packaging waste is to move that cost back to the product. For instance, a tax could be imposed on the amount and type of packaging used that will reflect what it will cost the community to recycle or to dispose of it. Since recycling something is better than throwing it in a landfill, the tax on recyclable packaging would be less than on non-recyclable packaging. With this tax included in the cost to buy a product, we would put pressure on manufacturers to reduce the higher price by reducing the amount of packaging they use and to use more recyclable packaging.

This packaging tax would be different than the deposit that many states require on soda bottles and cans. These deposits simply encourage us to recycle the bottles and cans so that they can get our deposits back. These deposits do nothing to encourage the manufacturers to reduce the amount of packaging they use.

When some products wear out or break, they themselves will end up needing to be recycled or disposed of. Although some products may be fully or partially recyclable, many of these products could still end up in landfills or even dumped in the woods. This is especially true when we are charged a disposal or recycling fee. Again, it would make sense to charge for the waste management costs when the products are produced, imported or sold by imposing some appropriate taxes.

If the waste management costs have been paid ahead of time, then there would no need to charge for the disposal or recycling of the item again. This would be very useful in the case of things like computers, televisions and refrigerators, which contain toxic metals and chemicals, and where some individuals are known to illegally dump these items to avoid paying a disposal or recycling fee. If the disposal or recycling is already paid for, then it would be far easier and cheaper for us to dispose or to recycle these items legally.

We also have cases where our resources are being wasted by individuals who are rich enough that being wasteful does not seem to hurt them, or individuals who are just plan wasteful. This waste may be difficult to do much about. For those who are very rich or very wasteful, cost may not be that much of a concern, so any waste management taxes may not be much of a disincentive against their wasteful ways.

Given the harm that this waste can impose on our society, it may be a good idea to pass laws against any excessive wasting of our resources. If we could face jail time, we might think twice about wasting our precious limited resources. Of course, it may be difficult to prosecute any but the most extreme cases where someone is clearly wasting far more than their fair share.

Reuse and Recycle

At our present rate of extracting various mineral resources, we could run out of some of them in the not-too-distant future. At that point, we will have to choose between giving up many of our technological innovations, digging up our landfills and greatly increasing our efforts at reusing and recycling our resources. Given these choices, it seems obvious that we must make it our goal to reuse and to recycle as much as possible.

For instance, in addition to the paper, plastic, glass, metal, etc. that we usually think of as recyclable, we also want to consider organic matter such as food scraps and yard waste that can be composted and used as fertilizer.

We currently have a few major problems with reusing and recycling. First, we produce a lot of things that we do not know how to reuse or to recycle. Second, most of us do not have a clear idea of what can and what cannot be reused or recycled. Third, it is often difficult or expensive for us to get things to a place where they can be reused or recycled.

The first problem will need a multipronged approach. We must look for ways to reuse and to recycle more of what we are currently throwing away. We must also work to stop making things that we cannot reuse or recycle and work to make more things that we can reuse and recycle. We must also work to reduce our waste so there would be less of it to deal with in general.

The other problems could be handled by a combination of things that would make waste management friendlier towards reusing and recycling everything. The goal would be to make it more convenient, easier and less expensive.

Each community needs to have a conveniently located place where anything can be dropped off. The personnel at this Reuse and Recycle Center would have the knowledge to determine what can be reused and what can be recycled and would handle things accordingly. If an item can be reused, it would be cleaned and fixed as needed, and then sent to where it can be resold. If an item can be recycled, it would be sorted and sent to the appropriate recycler. If an item cannot be reused or recycled, then it would be sent on to the appropriate dump site.

As part of this Reuse and Recycle Center, there should be a pickup service to handle the larger items that many of us are not able to transport to the center. There could be a cost associated with picking up the items that would be commensurate with what it would cost us to dispose of these items by other means. On the other hand, the appropriate taxes could be placed on these larger items so that no additional charge would be needed at the time of disposal.

We also want to consider processing all garbage to extract as much as possible for recycling. As resources become scarcer, this will become more economical to do. To help encourage reuse and recycling even more, we should consider higher taxes and fees on those resources that come from the ground as opposed to those that come from recycling. These taxes and fees could help to offset the environmental damage caused by methods such as mining, drilling and logging that are used to extract these resources.

Next Section

Energy - Moving towards being more Energy independent.

Last Updated:
Friday, December 29, 2023
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