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Is it possible for liberals to solve the scarcity problem on one hand and be true liberals on the other hand? Does money play a role in solving some scarcity problems?

Economics Dec 09, 2020

Is it possible for liberals to solve the scarcity problem on one hand and be true liberals on the other hand? Does money play a role in solving some scarcity problems?

Expert Solution

Money has a part in solving many scarcity problems, as it provides a measuring unit for supply and demand. This enables people to make efficient (appropriate) decisions about which resources to use, thus minimizing the problems of scarcity. This fits with the classical liberal notions of Europe, which defined and promulgated many capitalistic notions. However, it is at odds with the left-wing liberalism of the United States of America. The latter have often supported extensive government spending, which reduces economic efficiency and thus increases scarcity.

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