Question about Free Market Economic problem that I haven't been able to figure out

[TheOraclePaul]

Problem: High prices not diminishing demand - example: 'peak oil myth' - so oil prices are going up, which means people will use less, and alternative forms of energy will become viable. Ok I get that. But what if, despite the high prices, a select group of people is willing to pay until it's gone? A more applicable example of this happening might be a certain kind of animal meat - say some rare, exotic species. Super rich people might not care if it's going extinct and still want to buy it to the very end. How can this be reconciled without legislation prohibiting it - is there a free market alternative?

[The Gold Standard]

Why would it need to be reconciled? Prices would be high enough long enough for alternatives to be developed. It's not like overnight the price of oil would jump to $1,000,000 a barrel (unless there was hyperinflation, but that is not what you are asking). The price would rise to $150, then $200, then $250, and probably over several years would get high enough that only the richest would be able to afford it, but at that point why wouldn't the rich buy one of the alternatives? It isn't like oil has some magical properties that people would always want it. People want it to make energy. If they can get energy more efficiently for less money doing something else, they won't want oil anymore.

As far as the rare animal meat, the same principle applies. Eventually the item would be so scarce that the price would be too high to justify paying that much for it. If you are worried about the species going extinct, you could also raise money to buy the animals and not eat them. Make a zoo for them or something. We don't need a government solution for these issues.

[GrahamUK]

but at that point why wouldn't the rich buy one of the alternatives? It isn't like oil has some magical properties that people would always want it. People want it to make energy. If they can get energy more efficiently for less money doing something else, they won't want oil anymore.

Thats not technically true..

A partial list of products made from Petroleum (144 of 6000 items)

One 42-gallon barrel of oil creates 19.4 gallons of gasoline. The rest (over half) is used to make things like:
Solvents
Diesel fuel
Motor Oil
Bearing Grease

Ink
Floor Wax
Ballpoint Pens
Football Cleats

Upholstery
Sweaters
Boats
Insecticides

Bicycle Tires
Sports Car Bodies
Nail Polish
Fishing lures

Dresses
Tires
Golf Bags
Perfumes

Cassettes
Dishwasher parts
Tool Boxes
Shoe Polish

Motorcycle Helmet
Caulking
Petroleum Jelly
Transparent Tape

CD Player
Faucet Washers
Antiseptics
Clothesline

Curtains
Food Preservatives
Basketballs
Soap

Vitamin Capsules
Antihistamines
Purses
Shoes

Dashboards
Cortisone
Deodorant
Footballs

Putty
Dyes
Panty Hose
Refrigerant

Percolators
Life Jackets
Rubbing Alcohol
Linings

Skis
TV Cabinets
Shag Rugs
Electrician's Tape

Tool Racks
Car Battery Cases
Epoxy
Paint

Mops
Slacks
Insect Repellent
Oil Filters

Umbrellas
Yarn
Fertilizers
Hair Coloring

Roofing
Toilet Seats
Fishing Rods
Lipstick

Denture Adhesive
Linoleum
Ice Cube Trays
Synthetic Rubber

Speakers
Plastic Wood
Electric Blankets
Glycerin

Tennis Rackets
Rubber Cement
Fishing Boots
Dice

Nylon Rope
Candles
Trash Bags
House Paint

Water Pipes
Hand Lotion
Roller Skates
Surf Boards

Shampoo
Wheels
Paint Rollers
Shower Curtains

Guitar Strings
Luggage
Aspirin
Safety Glasses

Antifreeze
Football Helmets
Awnings
Eyeglasses

Clothes
Toothbrushes
Ice Chests
Footballs

Combs
CD's & DVD's
Paint Brushes
Detergents

Vaporizers
Balloons
Sun Glasses
Tents

Heart Valves
Crayons
Parachutes
Telephones

Enamel
Pillows
Dishes
Cameras

Anesthetics
Artificial Turf
Artificial limbs
Bandages

Dentures
Model Cars
Folding Doors
Hair Curlers

Cold cream
Movie film
Soft Contact lenses
Drinking Cups

Fan Belts
Car Enamel
Shaving Cream
Ammonia

Refrigerators
Golf Balls
Toothpaste
Gasoline


Americans consume petroleum products at a rate of three-and-a-half gallons of oil and more than
250 cubic feet of natural gas per day each! But, as shown here petroleum is not just used for fuel.

[hazek]

Heh rare animals. I wonder if those so vehemently trying to prevent species from going extinct realize how many had to go extinct since the first life appeared until today, yes HAD to go extinct..

[TheOraclePaul]

that all makes sense - my concern though is of those ultrarich folks who don't care about the price mechanism. those that are willing to pay until the last drop. it isnt hard to imagine a lunatic with too much money to spend possibly doing it just for fun.

[Acala]

that all makes sense - my concern though is of those ultrarich folks who don't care about the price mechanism. those that are willing to pay until the last drop. it isnt hard to imagine a lunatic with too much money to spend possibly doing it just for fun.

In a true free market, the rich get that way by serving the needs of consumers more effectively than others. The market rewards such people, who have proven their effectiveness at managing resources for the needs of the people, by giving them more power to demand more resources. It is SUPPOSED to work that way.

I suppose it is possible that someone could get rich and then just for a lark use their vast wealth to despoil some rare resource. Seems unlikley and really trivial, but so what if it happened?

[fisharmor]

You can already see the economic reality behind rare animals.
In Botswana, where safaris are legal and westerners show up to pay big bucks to hunt elephants, elephants are common.
People manage their numbers for that reason.

In Kenya it's illegal to kill elephants.
Therefore it's impossible to assign economic value to them.
An elephant in Kenya is a crop-eating machine. What they don't eat, they trample.
So a farmer has two options: abide by the law and let the elephants live, and starve to death, or break the law, protect his farm, and about a literal ton of extra meat out of the equation.

And elephants are understandably not doing as well in Kenya.

[gerryb]

In the case of oil -- we will pump it till it's gone.

In the case of animals -- if people don't have ownership over them, thus stewardship -- they will be over-harvested and go extinct.

Look at Haiti vs. Dominican Republic -- No ownership vs. better land rights -- one has not a single tree -- the other has lush forests. Same island.

[Cabal]

If something like an animal becomes a rarity in demand, seems to me like it would be a good opportunity for someone to begin breeding said animal in order to satisfy that demand.

[Watch]

If you want to keep something abundant you must make it marketable.
The reason 8-tracks are so scarce and "extinct"(let us say, no new ones being produced) is because they are not marketable; though you'll find them in used goods outlets everywhere.

A free market problem, in principle, implies a problem with people(as we are markets); legislation doesn't "fix problems".
To elucidate the idea of things being marketable being abundant take trees for instance:
http://nafoalliance.org/forestry-jou...-wood-is-good/