Essential Economic Problems that Societies Must Solve

The economics of a society are related to production, distribution, and consumption. These three things have to do with the availability of resources. Resources like land, labor, and natural resources. The unlimited wants and needs of individuals and society lead to scarcity. Scarcity is a threat to every economy in this world. It means a lack of resources to fulfill the people’s desires in a society. Scarcity may weaken the economy and lead to a collapse. It affects the distribution of wealth, price mechanisms, and environmental impacts. So, every society should be able to address the problems that scarcity can bring and take measures to avoid them.

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1. Scarcity

Scarcity is a fundamental concept in economics. It arises from people’s endless requirements and desires. Scarcity causes an imbalance in society and the economic structure. When a society chooses to go beyond necessity, it causes an imbalance in the distribution of limited resources. In a society, needs and wants are the root of scarcity. In day-to-day life, we regularly interact with needs and wants.

Needs related to the survival of human beings, like food, clothing, water, and shelter. Wants are different. For example, imagine getting trapped in a situation where we have no food to eat. The first thing we want is food that can sustain our lives. When the situation improves, you will have a sufficient supply of food. Things are about to change. That is where the wants will arise. You start to think about adding different flavors to your food. In other words, scarcity forces us to give importance to our needs.

When the availability of resources increases, it influences our decisions. Here are some examples of scarcity

1.1. Natural Resource Scarcity

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On Earth, natural resources are finite. Minerals, metals, water, and fossil fuels—everything is limited. Overusing natural resources will cause them to become scarce. For this reason, government agencies oversee the management of natural resources in most nations.

1.2. Supply Scarcity

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Supply scarcity happens when the demand for a product or service exceeds the supply, making it scarce. For example, a new gadget with a limited edition of a famous brand creates scarcity because it is limited and hard to get. In economic scarcity, the value and obtainability of something makes it scarcer.

2. Scarcity in Different Economic Systems

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Countries use different economic systems, like market economies, command economies, and mixed economies, to attain economic stability. Each of them has its unique features and disadvantages. We are going to discuss how different economic structures deal with scarcity

2.1. Command Economy

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Predefined needs govern production and distribution under command economics. It is more like a socialist system. They promote the use of renewable energy. For example, the government provides subsidies for EV vehicles and loans for solar panels. And investing in research to find alternative energy sources.

In this way, they can prevent the threat of scarcity, and this approach helps meet everyone’s basic needs. North Korea and Cuba are real-world examples of command economies. In these countries, the government controls most of the business

2.2. Market Economy

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Individuals or business firms in the market economy determine product and service production, pricing, and distribution. This economic structure is based on capitalism. The market economy system addresses scarcity through the supply, demand, and price relationship.

To prevent scarcity, when a good or service becomes scarce, its price will increase. This demotivates excessive use and encourages producers to enter the market. High-priced forces adapt effective production methods and make careful use of resources. Switzerland, Singapore, and the United States are real-world examples of a market economy. However, experts point out that a market economy can bring inequity to society.

2.3. Mixed Economy

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A mixed economy is a fusion of command and market economies. In a mixed economy, production, distribution, and pricing are determined by the market and government; it is a balancing act.

In a mixed economy, product prices will go up to prevent scarcity. The government provides subsidies to encourage production. India, Germany, and Sweden are real-world examples of mixed economies. Like the other two economies, the mixed economy also has some weaknesses. Finding the correct balance between the market and government is difficult.

3. Addressing Scarcity: Effective Solutions

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Scarcity exists in society in various forms, like resource scarcity, infrastructure scarcity, and economic scarcity. Each of them demands a specific solution and different treatments. So, how do we tackle this ever-present problem? Here’s a glimpse into some potential solutions:

3.1. Individual Responsibilities

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A society is a collective of individuals. So everything starts with individuals. Let’s see what individuals can do.

  • Be aware of the impact that your buying decisions have on society.
  • Reduce waste by reusing, repairing, purchasing secondhand, and recycling things.
  • Use renewable energy sources. Encourage sustainable businesses.
  • Educate yourself and others.
  • Contribute to the community that works on solutions for scarcity.

3.2. Increase Resources

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We can increase the resources through Technological advancement, Infrastructure development, and sustainable practices.

  • Technological Advancement: The advancement of technology can help resist threats from scarcity. Technological progress helps renewable energy sources like solar. The use and production of fossil fuels pollute the environment. We can avoid this by replacing them with other renewable resources. Technology increases the availability of resources. For example, technology like desalination can improve water management in agriculture by purifying seawater and using it for industrial purposes. Through technology, we can increase resources.
  • Infrastructure Development: Investment in efficient resource management systems, such as water management systems, renewable energy grids, and sustainable transportation infrastructure, is crucial for long-term resource security. Infrastructure development helps sustain resources through efficient management.
  • Sustainable Practices: Encourage the sustainable use of resources. In agriculture, we can use drip irrigation for effective water management. Promoting reuse and recycling reduces waste and extends the life cycle of resources.

We interviewed Mike Breslin, CEO of ProMed DME on this. Here is what he had to say:

Mike Breslin - Featured
Mike Breslin

“In my experiences, particularly in the healthcare logistics and technology sectors, I’ve seen how advancements in science and technology can dramatically transform our daily lives and society as a whole.

For instance, the development and broadening access to Continuous Glucose Monitors (CGMs) have revolutionized the management of diabetes, turning what was once a constant struggle into a manageable aspect of many individuals’ lives.

This is a vivid example of how discoveries can directly impact patient care and well-being.

Interdisciplinary collaboration and open scientific communication are crucial in addressing complex global challenges.

In my work with medical courier services, I’ve observed how the integration of healthcare logistics with cutting-edge technology ensures that crucial medical supplies and specimens are transported efficiently, reducing the risk of delays and improving patient outcomes.

This synergy between logistics, healthcare professionals, and technology developers underscores the power of interdisciplinary collaboration in creating innovative solutions that can tackle multifaceted issues.

Moreover, the embrace of technology, as seen in the medical courier sector with the utilization of route optimization and digital tracking systems, showcases how open communication of scientific advancements and technological innovations can optimize operations, enhance efficiency, and most importantly, save lives.

These examples from my career highlight the transformative potential of embracing new knowledge and underscore the importance of interdisciplinary collaboration and open communication in pushing forward meaningful change to overcome global challenges.”

3.3. Promote Efficiency in Resources Utilization

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Increasing resources will not help if we do not practice responsible consumption and resource management. Here are some strategies:

  • Educate Consumers: Educate the customer about the environmental impact of their choice. This can promote a responsible purchase decision.
  • Sharing Economy: Rent instead of owning. Efficient utilization of resources decreases resource usage.

3.4. Shifting Priorities

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Shifting our priorities can help us overcome scarcity. Sustainable consumption requires mindful purchasing and responsible disposal. Our choices have the potential to change the world.

If you purchase electronic appliances, choose one that is more efficient in energy consumption. By purchasing them, you can support recycled goods. By changing priorities, we can preserve resources and eliminate waste.

3.5. Collaboration for a Bright Future

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We need to collaborate with various sectors and governments to prevent societal scarcity. Here are some options for collaboration:

  • Community Engagement in Local Resources: Local communities should be able to address the problem and find a solution. By using participatory methods, communities are given the power to take an active role in managing their resources. They design solutions that best meet their requirements.
  • International Cooperation: Cooperation between different countries can significantly impact the prevention of scarcity. Sharing resources, technology, and joint investment in research can bring considerable changes to society. The Paris Agreement on climate change is a prime example of international cooperation addressing a resource scarcity challenge.
  • Collaboration Between Academic Institutions and Industry: To measure scarcity, we can collaborate between academic institutions and industries. This collaboration can bring advancements in desalination technology, renewable energy, and sustainable agriculture. This can promote healthy growth for both parties and the development of a sustainable society.

The Icy Canada team talked to David Pumphrey, CEO of Riveraxe LLC, about using cutting-edge technologies to reshape society. Here is what he said:

David Pumphrey - Featured
David Pumphrey

“In my journey through the health IT and bioinformatics sectors, I’ve seen how scientific knowledge and cutting-edge technology, such as cloud computing, machine learning, and bioinformatics, are reshaping not just healthcare, but society at large.

For example, at Riveraxe LLC, we leveraged these technologies to make precision medicine more accessible. Our approach to integrating AI and machine learning with bioinformatics has led to more targeted treatment plans for cancer patients, based on the genetic makeup of their tumors.

This practical application of scientific advancements directly translates to improved patient outcomes and exemplifies the tangible impact of these innovations on daily life.

The role of interdisciplinary collaboration and open scientific communication in this process cannot be overstated. In developing bioinformatics solutions, we relied heavily on inputs from diverse fields including biology, computer science, and healthcare.

This collaboration ensures that the solutions we develop are not only technologically advanced but also clinically relevant and ethically sound.

Open scientific communication further amplifies the benefit of our work, by allowing for the validation and replication of our findings, promoting trust, and accelerating the adoption of new technologies in clinical settings.

Addressing complex global challenges, such as personalized medicine and the efficient use of big data in healthcare, requires the bridging of various disciplines and the breakdown of silos between scientific research and practical application.

By encouraging a culture of sharing knowledge and fostering collaborative environments, we can drive meaningful change.

The combination of interdisciplinary collaboration and the democratization of scientific knowledge is key to unlocking innovative solutions that can tackle not only current but also future societal challenges.”

3.6. Regulation and Policy

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The government should create regulations and policies to protect resources, such as allowing subsidies to encourage the purchase of renewable energy sources or providing loans to purchase electric vehicles. The government is responsible for implementing regulations and policies that protect resources.

4. Beyond Scarcity: Reimagining Our Future

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Every economy faces a threat of scarcity, and different economic structures have specific ways to deal with it. This article explores other possibilities and solutions to face scarcity and empower our resources.

Dealing with scarcity begins with addressing it, seeking possible solutions, using renewable energy sources, and reducing consumption by encouraging recycling. These are the first steps to preventing scarcity.

The government can develop regulations to support sustainable resources. At this point, we should realize that scarcity is not only an economic threat. It influences every aspect of our lives, and the consequences may be more significant than our expectations.

Every human has a responsibility to natural resources and their living environment. We must consider the next generation and its potential effects when using resources. Creating communities and possible collaboration among countries and organizations may enable us to fight against the crisis.

Using finite resources, like fossil fuels, hurts the environment. Recently, the World Meteorological Organization reported a red alert on climate change. This is all the effect of irresponsible resource handling. So, we need to act now for a better future, a sustainable environment, and a stable economy.

Guest Author: Saket Kumar

Last Updated on by Saket Kumar


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    Ajmal is a fresh content writer with a Bachelor of Commerce degree. Their passion for research and attention to detail shine through in every piece they create. When not writing, Aj enjoys reading books and watching movies, which infuse their work with creativity and relatability.

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