People (we) have unlimited wants and needs but there are only so many scarce resources that are available to satisfy them.The lesson was important because it taught me about competition. Because people have a limited budget they will CHOOSE how to spend their money and you, as a business have to compete for their wallets.
But today I realised there was another lesson in that sentence which has taken 10 years to surface:
As long as people have unlimited wants and needs and resources remain scarce, inequality will persist. In fact, I am pretty certain that the more we are able to satisfy our desires, the more inequality we create by doing so.Let me explain why I think this is the case:
When you are poor you want and need only basic things. You may dream of being wealthy but your limited budget only permits you to have so much and this is usually limited to food, shelter and safety. As you earn more you begin to want more and this comes in the form of education, comfort and at some point even happiness becomes important. It is happiness that is the most expensive good of all because it evolves and grows into an all consuming resource monster by the time you are among the wealthy few (think of the cars, yachts and properties the top 1% own). Along the way, people have been known to steal, bribe, murder, deceive and manipulate their way to riches. This is true not only of individuals but also for countries and large organisations which fight wars or compete by playing dirty on a massive scale.
All this has happened because "happiness" goods which have now become so much more important (as our basic needs have been catered for), cost a lot of resources. There are now 7 billion people and while the number of those in poverty is very large, so too is the number of people looking for happiness.
For as long as happiness is primarily fulfilled through products and services that require physical resources to be made, inequality will increase.Now think of 10 products or services you really, REALLY want. Write them down. Put a price to them. Think about what was needed to make them. Can you image a world where everyone, all seven billion of us, had those 10 things too? Where would we find all the resources to make them all? Will we have enough resources left for our children? Now imagine if all the things you really wanted could be made out of thin air. They required no resources and everyone could have them. WOW! That would mean that happiness is within reach of anyone who wants it.
You may think this is an impossible dream. But I believe there is only one barrier to achieving this kind of world and that is the problem of imagination. People only want products they know about. How many people wanted an iPad or a car before it existed. None! The only people who can make this dream a reality are entrepreneurs, because WE CREATE PRODUCTS and SERVICES. We imagine them, we build them, we perfect them and we sell them.
Imagine a business that creates products or services that do not consume any resources but for the capital, time and people needed to create them (and even then very little). This business can sell happiness goods to those who have already escaped poverty and are now searching for happiness and self-realization. The money they make can then be spent on helping those who remain in poverty to escape it. Is this possible? I don't know, but through the internet I believe we finally have a medium where resource-less products are not only possible but also very scalable. E-commerce used to be about taking goods out of the store and putting them on to the internet. Can we now think about creating a new range of products, services or experiences that help people want less of what is physically made and more of what makes them truly happy?
As for an example, think of online dating sites - a good example of a resource-free happiness service. What's missing is for those profits to not help create one or two fat cats, but rather, to invest them into those countries that are poverty stricken. Perhaps it is when thinking about this last part where even a dreamer like me wonders if this truly is possible?!