Law of Scarcity

I had this idea for a blog post recently, but it seemed to disappear for awhile.  Now it's back.  Ok, what does it mean, this Law of Scarcity?  Let's use it in the economic sense.

I want to show why it isn't such a bad idea to produce a big surplus of say, platinum group metals from asteroids, if that is a likely result from mining the asteroids.  After all, if a big surplus occurs, prices will fall by the law of supply and demand.  Why should anyone want that?  Or to put it another way, why should someone want to mine platinum only to have to drop off the scale in price?  That would be counter productive, then.

But why would anyone want platinum in the first place?  It has its uses does it not?

The air we breathe has its uses too.  Yet, no one can market the air we breathe for profit.  That is because of its abundance.  What makes a substance marketable is its scarcity.  The market price of an item relates more to its availability than its value.  Sometimes the concepts get mixed up.  The confusion is what makes guys like Warren Buffet rich.  People may overvalue an item and pay too much.  On the other hand, they may undervalue a thing, and a bargain may be obtainable.  The price of an item and its value are not necessarily one and the same.  What value can you put on the air we breathe?  Without it, nothing else is possible.  With it, and all things possible to living beings are possible.  It's value is measureless, yet it can't be sold.  Fortunately, there's an abundance of it.

I would hold that platinum could be like the air we breathe.  It is very valuable.  Not in terms of life itself.  I suppose life may depend on some small part the contributions of platinum.  But on the whole, we could live without it.  But for a modern economy, platinum is very valuable and needful.  Yet, it doesn't exist in abundance.  At least not on Earth.  If lots of platinum could be found somehow, everyone would be better off.

Platinum can be used in hydrogen fuel cells as a catalyst, for example.   It can also be used with ruthenium (another platinum group metal) to hydrolyze electrolyze methanol.  In combination, these two processes can be used to support a completely new way of powering an automobile by use of a hydrogen fuel cell.  If these metals were as available as air, the products that could be made from them would be worth more than the metals themselves are now, even though the price is high.  Consider that it would no longer be any need to import oil into the USA, hundreds of billions of dollars could be saved each year.

From that, I would argue that it doesn't pay to keep things scarce.  At least that appears to be true with platinum.  Could it also be true in the general case?