Is there an economics of demand-side scarcity?

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Spending money to make money

People do become wealthy by managing intangibles. But the agreements and information on which they work all have to do with the production and sale of real goods and services.

People make money on the transfer of ownership from one multiplicity of persons and organizations to another. The reason for doing so is the value of the property.

Patented ideas have value because eventually something is made which can be sold.

You mention two more examples.

First, there's information about potential customers:

"The thing is, the holder wants to know an awful lot about you so that they can suggest other things you might not yet know you want. Someone gets rich on that access to information, which is now the mining of preference instead of scarce materials."

That information is useful because potential buyers can be identified with unusual effectiveness. What's bought? Goods and services.

The "scarce materials" still provide the wealth.


Second, there's the customer list:

"The fact every social networking site attempts to keep its doors closed to competitors so they can monopolize to the greatest degree possible the personal information they collect demonstrates that is is scarcity of demand rather than supply that has become the source of wealth."

What makes the customer list valuable?
To a competitor, the value is the likelihood that someone is buying a given service.

The "source of wealth" is not the customer list itself, but the sales that can be attempted with a better chance of success.


People who make money as facilitators (including middle-men) might be considered parasites on the creators of goods and services. But because they increase overall demand and do spend their loot, let's generously call it symbiosis.

Posted by: Anton Philidor   Posted on: 10/27/06 You are currently: a Guest | Members login | Terms of Use

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