Economics 101: Lesson 3

Listen up class. A scarce resource is one for which there is more demand than there is supply. We commonly think of things like gold, diamonds, and works of art by Monet as scarce and that would be true; however, even things like gasoline, electricity, bread, and corn are also scarce. If they weren't you wouldn't have to pay for them. You want a cup of seawater? No problem, you won't need any cash. Just stroll down to the ocean and take your fill. You want a cup of corn? Now you need some cash. With an understanding of scarcity firmly established let's turn our attention to controlling demand. There are two effective ways to control the demand for a product. The first is price. Raise the price and you will reduce the demand for that product. We see this occurring around us everyday. The other way is to ration. When we ration, we don't really control the demand in the true sense of the word, rather we control the demand by enforcing an artificially low demand on those who are in need of the product.
That brings me to health care, another scarce resource. Health care in the U.S. is a scarce resource and as such we can only control demand one of two ways. Either raise the price to a point where supply equals demand or ration health care. Our president continues to say that under the public option there will be no rationing and that we must reduce the price of health care in this country. Folks, you can't have both. It either has to be expensive or you have to ration it. I think the whole administration needs a better understanding of economics.