Case Studies

Unspoiled Alaskan Wilderness or Oil?

Most all economic decisions involve tradeoffs. This segment explores Congress’s 1980 decision to designate more than 100 million acres of land in Alaska as Natural Parks and Wilderness areas, closing this land to mineral exploration.

From the perspective of Don Young, U.S. Congressman (R-Alaska), the cost of this decision, means loss of jobs for US workers and a continuing dependence on foreign oil and minerals.

However, environmentalists and Morris Udall, U.S. Congressman (D-Arizona), viewed this as short sighted. They argue that Alaska is the last wild home for many species of plants and animals. While there might be a short term economic gain, they believe the land should be preserved for future generations.

Congress with feedback from the American public weighs these matters of which is most important to them.

Comment & Analysis by Richard Gill The Alaskan Lands Issue is ultimately an issue of limits. What is the true value to society of preserving our natural wilderness. The first and most important lesson in all of economics is that we usually can’t have everything we want. Our desires for material goods may be virtually unlimited. Our resources for fulfilling those desires are not. They are limited and scarce. More wilderness, less oil and minerals. More oil and minerals, less wilderness. Economists call this the "production possibilities curve".

Guns or Butter?

In 1943, American servicemen were fighting a war on two fronts while American civilians were living better than they had in years. This segment explores how the United States increased its production of both guns and butter during World War II.

In the Great Depression, which began with the Great Stock Market Crash of 1929, the U.S. economy was in ruins. Industry was in collapse, banking was in panic and labor was in despair, unemployment high.

However, when German armies marched in Poland, igniting World War II, the U.S. began mobilizing resources to aid the Allies. To do this there was a total mobilization of the economy, where new steel mills were built, new factories opened, new jobs created to build tanks guns and planes.

With full employment came a demand for consumer goods which had been unaffordable during the lean years of the 1930s. The country was producing and consuming more of everything. For a while the United States kept increasing its production of both guns and butter…both military and consumer goods…but eventually choices had to be made.

After Pear Harbor, mobilization efforts were directed towards military efforts, with a reduction of civilian products. No new automobiles were produced by the late spring of 1942. Instead production was switched to producing tanks, airplane parts, and guns in the big auto factories.

Our ability to quickly and completely mobilize these resources brought final military victory and economic recovery.

Comment & Analysis by Richard Gill Economics is fundamentally concerned with scarcity and limits. But we do not always produce to our limits. And those limits can and do change over time.

Workers Health or Profitability?

This segment explores the tradeoffs made in deciding how much money should industry spend on a workers’ heath and safety and at what cost.

Workers in the textile industry, suffering from "brown lung" disease brought on by inhaling the particles of cotton dust and fiber, supported OSHA’s demand for tougher standards in the mills despite the costs.

However, in the 1970’s the American textile industry was locked in a fierce struggle against foreign competition. American textile industry was spending millions to protect worker health, but competing Asian textile industries spent almost nothing.

Industry claimed that the regulations would cost them billions and that they could achieve almost the same result with using inexpensive dust masks, which would significantly reduce the risk of the disease, but not eliminate it. Money spent on improving health would mean higher consumer costs and elimination of thousands of jobs for what industry experts believed would be a massive diversion of resources resulting in limited health and safety improvements.

Comment & Analysis by Richard Gill The first relatively small expenditures for worker protection were able to produce large improvements in worker health. To improve health still further required massive expenditures. The more of one economic good you produce, the more it usually costs in terms of some other economic good you have to give up.

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