Reply #7: Inelastic Demand & Inelastic Supply

[dcfirefighter]

very few demands are inelastic in the long run. There are things that are absolutely inelastic (crude oil deposits, physical locations, fresh water, etc.) in supply. This is the real weakness of the capitalist system as we know it.

There is nothing at all wrong with free markets. The problem is when individual corporations can corrall the financial returns to these inelastically supplied natural values.

Free markets in, say, food or clothing, tend to reduce the price and increase the production of these things. This goes for everything that is manufactured by man. As prices rise, more items are produced.

Free markets in land, water, oil, etc. tend to increase the price and reduce the supply (b/c it becomes profitable to withold their use, or under-use them, and merely hold them for speculative gain). Furthermore, because these things are generally needed by everyone, paying to access them becomes a tax, a tax that currently dissappears into the dividends of their owners.

It's important to recognize that favoring capital is the problem - capitalism is unfair to labor and encourages unemployment; treating land like capital is the crux of the problem: it reduces wages, exacerbates wealth concentration, and inefficiently allocates natural resources. Highly recommended reading: http://www.henrygeorge.org/chp1.htm