This holiday season, it's worth considering economist Steve Landsburg's humorous, but also telling, defense of Scrooge:
Here's what I like about Ebenezer Scrooge: His meager lodgings were dark because darkness is cheap, and barely heated because coal is not free. His dinner was gruel, which he prepared himself. Scrooge paid no man to wait on him.
Scrooge has been called ungenerous. I say that's a bum rap. What could be more generous than keeping your lamps unlit and your plate unfilled, leaving more fuel for others to burn and more food for others to eat? Who is a more benevolent neighbor than the man who employs no servants, freeing them to wait on someone else?....
In this whole world, there is nobody more generous than the miser—the man who could deplete the world's resources but chooses not to. The only difference between miserliness and philanthropy is that the philanthropist serves a favored few while the miser spreads his largess far and wide....
Saving is philanthropy, and—because this is both the Christmas season and the season of tax reform—it's worth mentioning that the tax system should recognize as much. If there's a tax deduction for charitable giving, there should be a tax deduction for saving. What you earn and don't spend is your contribution to the world, and it's equally a contribution whether you give it away or squirrel it away....
Great artists are sometimes unaware of the deepest meanings in their own creations. Though Dickens might not have recognized it, the primary moral of A Christmas Carol is that there should be no limit on IRA contributions...
If Christmas is the season of selflessness, then surely one of the great symbols of Christmas should be Ebenezer Scrooge...
Of course, Scrooge is still vulnerable to ethical criticism, even if Landsburg's argument is correct. Ayn Randian "virtue of selfishness" libertarians (of whom, by the way, I am not one) could criticize him for neglecting his own self-interest by consuming so little. Utilitarians could argue that overall social utility might be increased if Scrooge consumed more. Communitarians could argue that Scrooge doesn't involve himself in the community enough (though his miserliness leaves more resources available for community involvement by others). However, Scrooge definitely has a strong case against the standard view that he harms others by being too miserly. Moreover, there is also a left-wing environmentalist case for Scrooge, in so far as he minimizes his use of nonrenewable resources and energy sources (e.g. - coal) that create pollution. Thanks to Scrooge, nineteenth century London had more resources and less air pollution!
I present to you: Ebenezer Scrooge - benefactor of the poor, conservationist, and environmentalist!
Maybe Scrooge was paying an efficiency wage!
Remember the Angel of the Future.
We reap what we sow...
In the long run we're all dead.
Second, although this is funny, I am just a tad troubled by the asumption by the author that environmentals want everyone to live like Scrooge, ie., that everyone should deny themselves basic elements such as food and heat in order to save the world. That isn't what true conservation says, of course. What it does say is that things such as food and energy should not be wasted, and that there are tremendous efficiencies that can and should be culled out of the economy for the benefit of everyone.
Throwing money around for popularity (as the UN does, as the left wants the US to do) is not putting it to best use and becomes a huge drag on the economy. Employing servants is fine, but if your money is in the bank instead it will be invested and put to good use.
Oh, and the radical environmentalists do want everyone to live in the cold and without electricity, etc. That is very easy to confirm, and those who live as they preach do move to rural communities, build hay shacks and live primitively. I have a lot of family and friends who have done this sort of thing (I was raised in a community like that partly).
Bingo!
Let loose Scrooge goose!
What you say would be perfectly true if he hid his money in a mattress rather than use it to hire employees. However, since he put it in the bank, the money lowered interest rates and was lent out to entrepreneurs who then hired those peeople that Scrooge did not hire directly. He did not cause unemployment, he simply passed on the chance to employ further workers, instead allowing others to do so. Its simply choice. In a free market some may choose to risk their wealth, others to save it and neither hurts the economy but rather creates opportunities for others to choose differently. Supply and demand encourages those on the margin to change their choice. Through lowering the interest rate, entrepreneurs are created to take advantage of these funds that exist at the bank.
Wow, that week I spent outlining for my Income Tax exam actually paid off.
First, he lives in a huge house. Dickens says his staircase was wide enough to drive a hearse up. Granted the house is poorly lit and practically unheated, Scrooge is still consuming those resources.
Also, who said he didn't have any servants? The fire didn't light itself, and little saucepan of gruel did not place itself on the hob; I don't see Scrooge as a crockpot kind of guy (and if he were: more excess consumption!). We know he hires a laundress and a charwoman, at least, because they steal his bed curtains etc and sell them to the rag dealer/pawnbroker in the Ghost of Christmas Future sequence.
But there's a more central objection to casting Scrooge as an environmentalist. Note this exchange between Scrooge and Marley's ghost:
Think of the iron ore, the coal, the pollution necessary to build 300 or more feet of iron cabling. Think of all the mining, and smelting, and casting. No one involved in such a task could possibly be considered an environmentalist!
You might argue that this is a virtual (or perhaps spiritual) chain, and that therefore the iron and coal and pollution are only virtual. But really, that only makes it worse! We all know that it's the essence of modern environmentalism is spiritual; that's why people who jet around the world to talk about what others should do about global warming are today's model environmentalists. A model that Scrooge falls very far short of!
Then the Ghost of Christmas visits him, and after chugging a bottle of Nurse McReary's Surgical Linament Lotion, reveals that if he goes bad his descendants will rule the universe....
Actually, we can roughly break the difference between spending and investing. Spending on servants only provides short-term benefit to the individual or family that hire them. In contrasts, saving money in a bank or other financial instruments leads to higher real investment (e.g., more factories, homes, public infrastructure) which has long term benefits to many people.
Second, the problem with the argument that Scrooge was an exemplar of environmentalism is that the environmentalists think we all should live like that and the State should force us to. #$&% them.
I just really liked when he threw open his shutters, tossed some coin to the kid in the street and had him buy the biggest goose in the market. Yeah baby... You got it? Let's EAT!
If Scrooge, like the McDuck, has a vault with _gold_ in it, then he's reduced the money supply, which screws the economy.
If there's Federal Reserve instead, the interest rates rise as a result, and exceed their monthly target, and so the Fed pumps out more money by buying back debt, and Scrooge's hoard of cash is simply replaced in other hands until such time as he spends it.
Scrooge himself, in that case, has no effect on the economy if he doesn't spend it, but is merely an example in it of the propensity to save or spend.
Scrooge's effect occurs when he dies, and the hoard falls into the hands of ne'er-do-well relatives or the government.
He has an effect on the economy if he puts his money in the bank or lends it out to others.
- Josh
While Scrooge does engage in little consumption, he is a work-a-holic that presumably engages in a great deal of production. I would posit the following: If everyone had his values, then we would have an economy with more than enough production to meet everyone's consumption desires. Such a world wouldn't undermine the validity of economics. Instead, it would change economics from the study of scarcity to the study of abundance.
(1) to make money;
(2) to win the approval of others;
(3) to obtain personal gratification.
These reasons are not mutually exclusive. Only reason (3) would provide people in this society of Scrooges with any motivation. (I don't suppose Scrooges would like the idea of producing a lot of goods and then burning them up in a display of egotism as I have heard some Amerindian tribes did). A society of Scrooges would be a society of obsessives.
At the very least we know that Scrooge McDuck had a giant vault with money that he swam around in. And that doesn't help anyone. And it's likely impossible. Doing impossible things is also unethical.
At the very least we know that Scrooge McDuck had a giant vault with money that he swam around in. And that doesn't help anyone. And it's likely impossible. Doing impossible things is also unethical.
Actually, Landsburg's essay covers both cases, and shows why both are socially beneficial. However, the original Scrooge is probably better than McDuck because he's not keeping valuable gold out of circulation!
True. I don't think that a society of Scrooges would be very desirable. However, I think that there is a role for Scrooges to play in society. For example, I suspect that many of the great entrepenuers and businessmen are in fact Scrooges. People like Warren Buffett, Sam Walton, Bill Gates, and Steve Jobs are "set for life" relatively early in their careers. However, instead of consuming their money and their time with non-productive activities, they choose to continue to work very hard.
Consider Steve Jobs. He was already a multi-millionaire in 1980. However, he went on to do the following:
- lead the introduction of the Mac,
- found NeXT,
- create Pixar after buying a division of Lucasfilm,
- return as the CEO of Apple (after Apple's merger with NeXT and while still the CEO of Pixar),
- oversee the development and introduction of many new products at Apple (OS X, iMac, iPod, iTunes), and
- become a member of the board at Disney (after he worked out a deal to sell Pixar to Disney that made him Disney's largest shareholder).
I bet Scrooge would be proud.
Also, one cannot say that any particular level of production is "enough to meet everyone's consumption desires" because "everyone's consumption desires" are not in fact a fixed number but are a theoretically infinite set of "if-then" propositions, which we model on our basic demand curve. Perhaps we could posit that "everyone's consumption desires" culminate at the point where the demand curve reaches P = 0, e.g., how much everyone would consume if everything in the world were free. However, even in your hypothetical Scroogeverse, we would not have reached such a level. We would, have reached a level where production is high and consumption is low, but not one where production is infinite and not one where consumption is costless. As such, it would be inaccurate to say that "everyone's consumption desires" would be met in such a world, any more than they are in our own. There would still be nonzero costs for goods and services in such a world, and the general assumption that if prices fell further, consumption would increase would still be valid (unless you assume total inelasticity of demand, a near impossibility in a single-commodity market and a true impossibility across an entire economy).
Of course, his lack of charity was not his only failing. Scrooge had rejected genuine relationships, and had rejected Christmas to the point that even wandering carolers who cost him not a shilling tick him off. There's a balance between productivity and charity, and between work and fellowship.
As a single unit, we probably could say Scrooge balances another single who is rich, but with profligate habits. They both just net out to two moderates.
Economists assume that people consume more when their income increases (i.e., the income elacticity of demand is greater than zero). Economists also assume that people value leisure (i.e., people might work less to consume more leisure). Scrooge violated both of these assumptions.
Scrooge apparently did not consume more as he made more money. Instead, he simply saved the additional money. In addition, Scrooge continued to work manically even though he had more than enough money to meet his consumption needs.
Based on these, I don't immediately see why Scroogeverse could not have P=0 for consumption goods. (Of course, I could be wrong.)
There is, I suspect, a reason why economists have so little impact on society... :)
I am also always impressed by Scrooge's enlightened view of his clerk's request that he be allowed to have Christmas Day off -- with pay, no less: