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What is Economics?

Updated on August 7, 2009

Economics Defined

Economics is the proper allocation and efficient use of available resources for the maximum satisfaction of human wants. Since resources are generally scarce while human wants tend to be unlimited, economics encounters not a few problems. However, the biggest problem is not limited resources like land, money, machines, raw materials, technology, skilled workers, or competent managers. The root problem, which is the real problem, is the unjust distribution of productive resources among the members of the society. Such maldistribution of wealth and income is the root cause of poverty. Our available resources are in the hands of very few families. So, most of the people are mere tenants, clerks, factory workers and servants.

The fundamental problem of unfair allocation of resources has been a global problem. Most of the countries of the world experience such problem. There are extremely very few rich while there are very many poor. These countries are located in Africa, Asia and Latin America (South America and Central America). These regions are the poorest in the world. Everyday, some 40,000 children die of malnutrition. On the other hand, the few rich countries spend billions and billions of dollars for the foods of their favorite dogs and for arms race. Indeed, it is a very sad comparative note in illustrating the unjust distribution of resources. But this is what really happens in our own world.

Can we not correct the wrong distribution of wealth and income of our society? It is noted that there are very few rich and very few poor in rich countries like the United States, Japan, Germany, France, Canada, and Great Britain. Their lands have been fairly allocated. There are no squatters in their own countries. The poor in these countries can easily acquire their own decent houses through the liberal financial assistance of their own government. Workers have good incomes with profit sharing benefits. In the case of the poor countries (Third World), the maldistribution of productive resources can be corrected by proper economic, social, political and educational reforms. One good example is land reform. The tenants become small landowners. Unfortunately, land reform program in most less developed countries has not been successful. The ruling class (together with their rich relatives and friends) does not like to give up its political and economic powers and privileges.


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