Merry Christmas

I think I’ll make the reposting of this an annual tradition:

What I Like About Scrooge

scroogeHere’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?

Oh, it might be slightly more complicated than that. Maybe when Scrooge demands less coal for his fire, less coal ends up being mined. But that’s fine, too. Instead of digging coal for Scrooge, some would-be miner is now free to perform some other service for himself or someone else.

Dickens tells us that the Lord Mayor, in the stronghold of the mighty Mansion House, gave orders to his 50 cooks and butlers to keep Christmas as a Lord Mayor’s household should—presumably for a houseful of guests who lavishly praised his generosity. The bricks, mortar, and labor that built the Mansion House might otherwise have built housing for hundreds; Scrooge, by living in three sparse rooms, deprived no man of a home. By employing no cooks or butlers, he ensured that cooks and butlers were available to some other household where guests reveled in ignorance of their debt to Ebenezer Scrooge.

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.

If you build a house and refuse to buy a house, the rest of the world is one house richer. If you earn a dollar and refuse to spend a dollar, the rest of the world is one dollar richer—because you produced a dollar’s worth of goods and didn’t consume them.

Who exactly gets those goods? That depends on how you save. Put a dollar in the bank and you’ll bid down the interest rate by just enough so someone somewhere can afford an extra dollar’s worth of vacation or home improvement. Put a dollar in your mattress and (by effectively reducing the money supply) you’ll drive down prices by just enough so someone somewhere can have an extra dollar’s worth of coffee with his dinner. Scrooge, no doubt a canny investor, lent his money at interest. His less conventional namesake Scrooge McDuck filled a vault with dollar bills to roll around in. No matter. Ebenezer Scrooge lowered interest rates. Scrooge McDuck lowered prices. Each Scrooge enriched his neighbors as much as any Lord Mayor who invited the town in for a Christmas meal.

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.

Of course, there’s always the threat that some meddling ghosts will come along and convince you to deplete your savings, at which point it makes sense (insofar as the taxation of income ever makes sense) to start taxing you. Which is exactly what individual retirement accounts are all about: They shield your earnings from taxation for as long as you save (that is, for as long as you let others enjoy the fruits of your labor), but no longer.

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. This is quite independent of all the other reasons why the tax system should encourage saving (e.g., the salutary effects on economic growth).

If Christmas is the season of selflessness, then surely one of the great symbols of Christmas should be Ebenezer Scrooge—the old Scrooge, not the reformed one. It’s taxes, not misers, that need reforming.

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54 Responses to “Merry Christmas”


  1. 1 1 Kirk

    Consume! Must Consume! Consume More!

  2. 2 2 Will A

    The ghost of Christmas Present mocks Ebenezer Scrooge, “Are there no prisons, are there no workhouses?”

    And yet, the “redeemed” Scrooge does not reach out to those in prison or in workhouses, he shares his wealth with Bob Cratchit, a Victorian Gentleman who can read, write and do arithmetic.

    To me, the true meaning of “A Christmas Story” has always been that we should talk about helping the very poor, but we should actually help out those who are relatively well off.

    99% of the world makes less than $ 48,000 so half of Americans are in the top 1% of the world. Therefore, middle class Americans should lock down there borders in an effort to protect their wealth, complain about how hard life is for them and expect relief from the Scrooges.

    Dickens would be proud of our Christen Nation for keeping Christmas as it should.

    Merry Christmas Prof. Landsburg and all the commenters (including Ken B :-) ). Thank you all for helping me question my own deeply held beliefs, hopefully making me wiser and for sure giving helping me to become a little bit more at peace with myself.

  3. 3 3 Robert

    Dickens must have been writing in a liquidity trap

  4. 4 4 Robert

    Ha! I see that in 1842, Dickens was in a depressed US; A Christmas Carol was published in 1843.

  5. 5 5 Henry

    Ebenezer Scrooge lowered interest rates. Scrooge McDuck lowered prices. Each Scrooge enriched his neighbors as much as any Lord Mayor who invited the town in for a Christmas meal.

    This seems inconsistent with your view in The Armchair Economist (at least the original) that lower interest rates are not a social good, rather that they hurt savers just as much as they benefit borrowers and so are a wash.

  6. 6 6 Cos

    “If you earn a dollar and refuse to spend a dollar, the rest of the world is one dollar richer—because you produced a dollar’s worth of goods and didn’t consume them.”

    However, don’t voluntary exchanges (consumption) work out to everyone’s benefit, typically, and lead to more value being created?

    If you spent that dollar, you’d spend it on something that you value more than a dollar, sure, but whatever it is you’d be getting would probably be worth less than a dollar to whoever provides it to you.

    If the economy is hot, then sure, that person would likely find a different buyer; as long as they’re providing as many goods or services as they have the capacity to, your not spending of that dollar enables some other exchange, where someone else gets the value you’re forgoing.

    But you’re posting this at a time of a weak, under-capacity economy. In an economy like this one, not spending a dollar probably means reducing the total value of goods/services produced, because there are plenty of people and companies out there with plenty of capacity to do more, but not enough people interested in consuming it. So they’re sitting at home wishing for a job, or hoarding their cash and not hiring workers, waiting for a better time when people will actually want to pay for what they could produce with those workers – who are sitting at home wishing that time would hurry up and come already.

    Whatever your arguments about miserliness in a good economy, isn’t it damaging in a weak one like we have now?

  7. 7 7 Tristan

    Nothing to comment, just chiming in here that this piece had a strong influence on me when I read it years ago, and I would say put me on the path to the Economics major I have now. So thanks Steve, and M.C.

  8. 8 8 Steve Landsburg

    Cos:

    However, don’t voluntary exchanges (consumption) work out to everyone’s benefit, typically, and lead to more value being created?

    Yes in total; no at the margin. So the impact of a single miser’s decision to earn but not spend a dollar is essentially equal to a full extra dollar’s worth of consumption for the rest of the world.

  9. 9 9 Jeffrey

    The moral is:

    Don’t be a Scrooge, because the Scrooge was a quitter. (So was the Grinch, but there’s nothing economically interesting about that.)

  10. 10 10 Ken B

    Marc-Antoine Charpentier has consumed little in centuries, but with a little help from his friends, can still contribute. From a nativity setting http://m.youtube.com/?reload=9&rdm=mfca6b3ah#/watch?v=dX88p4IrPM8&feature=related

  11. 11 11 Tristan

    @Landsburg

    You typed: “Yes in total; no at the margin.”

    Did you mean it the other way around? It seems like on the margin we can see that a voluntary trade means a net gain, but when we broaden our scope to a closed economy we can visualize the loss that additional consumption entails?

  12. 12 12 Steve Landsburg

    Tristan: I meant what I typed. If you sell pies at $3 each, they will be bought by people who value them at $3, $4, $5, $6, $7 and $8. There’s a lot of net gain there. But if I induce you to sell one less pie (say by taxing you, so the price rises to $3.10), it’s the guy who values them at $3 who gets shut out of the market — and he wasn’t gaining anything anyway. (Of course real world taxes generally discourage more than just one sale, so they do create social losses.)

    Voluntary exchange creates enormous gains, but the *marginal* voluntary exchange creates no gains at all; if it created gains, it wouldn’t be marginal.

    Likewise, if many consumers pay $10 each for pies that are produced at costs of $1, $2, $3, $,4, $7, $9 and $10, there are great gains to the prouducers. But if one of those customers (e.g. Scrooge) decides to become a miser and forgo his pie, it’s the costliest pie that goes unproduced — and there was no gain on that one anyway.

  13. 13 13 Yancey Ward

    Ah, Robert, you beat me to it!

  14. 14 14 Robert

    Merry Christmas, Yancey. I expect my family will do their bit when the stores re-open. I’m still a Scrooge at heart!

  15. 15 15 Ken B

    @Will A: Thanks, merry Xmas to you too.

  16. 16 16 Henry

    Who exactly gets those goods? That depends on how you save. Put a dollar in the bank and you’ll bid down the interest rate by just enough so someone somewhere can afford an extra dollar’s worth of vacation or home improvement.

    Isn’t this inconsistent with your view in TAE (at least the old version) that interest rates are a price and thus any changes are a wash, benefiting borrowers exactly as much as they hurt savers?

  17. 17 17 Ken B

    Greater love hath no man than this, that he shall lay down his consumption for his friends. Or strangers.

  18. 18 18 John

    So Steve if I understand your explanation in post 11, it was no big deal (to Scrooge) to give up his goods because he was indifferent between purchasing them and forgoing them anwyay? In other words, this was not painful for him?

  19. 19 19 Ken B

    @John: the last one he bought was in theory just about at his indifference point. I eat chocolates as long as the marginal gain is positive, the last one is one i am almost indifferent to.

  20. 20 20 Paul T

    Ken B: “Greater love hath no man than this, that he shall lay down his consumption for his friends. Or strangers.”

    According to Hollywood rumor, in the sequel, Scrooge is going to break all the windows in his house, to stimulate the ecnonomy.

  21. 21 21 Paul T

    SL: “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.”

    Extending this reasoning, if everyone were so inspired, we’d enjoy a medieval lifestyle.

    Perhaps there’s a problem with the premise -

  22. 22 22 Ken B

    @19: yeah, but if the rest of you are and I am not, more for me. This is why we should subsidize male homosexuality.

  23. 23 23 Tristan

    @Paul T: You said “Extending this reasoning, if everyone were so inspired, we’d enjoy a medieval lifestyle.”

    The key phrase here is “if everyone were so inspired”. If everyone was truly satisfied with the lifestyle then the best thing would indeed be for a lot of people to live in a medieval lifestyle. If that seems weird it’s only because the assumption we made was weird.

  24. 24 24 Steve Landsburg

    Tristan:

    The key phrase here is “if everyone were so inspired”. If everyone was truly satisfied with the lifestyle then the best thing would indeed be for a lot of people to live in a medieval lifestyle. If that seems weird it’s only because the assumption we made was weird.

    Thanks for saying this so that I didn’t have to.

  25. 25 25 Walter Clark

    So if this bit of wisdom is valuable…
    “A philanthropist serves a favored few while the miser spreads his largess far and wide.”
    Are we assuming the miser is also trying to get the most for his investment?
    What if he instead bought assets that do not get to an entrepreneur or to a capital investment that make things more cheaply?

  26. 26 26 Steve Landsburg

    Walter Clark:

    What if he instead bought assets that do not get to an entrepreneur or to a capital investment that make things more cheaply?

    Does he *use* those assets? If so, I wouldn’t call him a miser. If not, then someone else gets to use them.

  27. 27 27 Joel

    Economics 101, we learnt that money is essentially an IOU.

    Scrooge, as a highly paid professional, presumably gets paid to do services that others desire. (Otherwise, why would they willingly give him their money?) Scrooge has essentially lent his services to others for money, or equivalently, the obligation to get something in return for the services.

    By haording his money, Scrooge never demands anything back for the services he has provided. What can be more charitable than giving a needy person (the one who was in need of his service at the time it was performed) a loan, and never collecting?

    Scrooge has essentially performs services for others, and never demands anything in return. What can be more altrusitic than this?

  28. 28 28 nobody.really

    If Landsburg is going to revise his greatest hits, so will I. Here’s my ledger of Scrooge, pre-conversion:

    1. Scrooge is wealthy and reputed to be an “excellent man of business,” suggesting that he’s productive. (What exactly does Scrooge produce? Not specified. His business involves “cash-boxes, keys, padlocks, ledgers, deeds, and heavy purses.” Scrooge maintains a “counting house,” and “banker’s book,” and retained clerk to copy letters.) In particular, Scrooge states that he invested 100% of his time on his business, which “occupies [him] constantly,” leaving him no time to learn about the plight of the poor. (Scrooge does find time to read “all the newspapers,” however.)

    2. While producing much, as Landsburg notes, Scrooge does not appear to consume much. Scrooge lives simply. Admittedly, Scrooge’s house is rather elaborate, with a wide staircase and ornate fireplace. But Scrooge appears to have inherited it from Marley; perhaps the transaction costs of selling it are too high? In any event, Scrooge rents out many of its rooms as offices, reducing his own net consumption.

    3. Scrooge generates negative externalities in that he produces bad feelings in everyone he encounters. People flee his presence on public streets. This quality strikes people as especially pernicious at Christmastime, when people expect greater goodwill from even passing strangers, and when Scrooge seems especially cross. How you score this aspect of Scrooge will depend upon your outlook: We don’t like negative externalities, but generally tolerate some externalities in the interest of maintaining personal autonomy.

    4. Landsburg suggests that people who produce and save (in effect, lend) are better philanthropists than those who produce and give. Scrooge is clearly in the former category. (Note that Scrooge does not express opposition to aiding the poor, but professes that he already contributes — via taxes? — to the maintenance of institutions that feed and house the poor: prisons, Union workhouses, “the Treadmill and the Poor Laws.” I believe that prisons housed both criminals and people who failed to pay debts.) Whether you embrace Landsburg’s analysis might depend upon your faith in the efficiency of markets to promote the welfare of the poor, especially in the London of the early 1800s. As an initial matter, we’d have to conclude that Scrooge’s miserliness would have achieved a better outcome than saving Tiny Tim’s life.

    5. However, the larger theme is that Scrooge is being wasteful by using his life suboptimally – “life’s opportunities misused.” Yes, he was productive – but he could be MORE productive in a manner that would promote the welfare of all, including himself.

    How does Scrooge behave suboptimally? First, Scrooge fails to invest in maintaining the social networks that are associated with a prolonged productive life. But more importantly, Scrooge forsakes efficient opportunities for interpersonal expressions of compassion – opportunities that would be inexpensive for Scrooge to pursue, but would be expensive for others. Marley does not dismiss the idea that commerce contributes to the public welfare, yet he concludes that “The dealings of my trade were but a drop of water in the comprehensive ocean of my business!” The Spirits of Christmas Past and Present emphasize the role that direct, interpersonal actions play in enhancing people’s utility – even by acts that command no market value, such as the Fezzywigs’ Xmas party.

    Specifically, the story suggests that Scrooge has a unique capacity to target small amounts of resources – time, money, attention – in a manner that would generate large increases in utility for his nephew, the Cratchets, and himself, and at least some increase in utility for third parties. Now, how can the reader know that Scrooge’s time, money and attention would generate greater utility invested in this manner than in some other manner? It’s merely implied – just as the story of the Good Samaritan implies that the optimal use of the Samaritan’s time, money, and attention was to rescue the guy who was beaten and dying in the street and not, for example, rushing to perform life-saving emergency surgery on a dozen people waiting at the emergency room.

    6. Arguably, the larger econ lesson in A Christmas Carol is to challenge the idea that people always know what is best for themselves. While people need to make their own choices, sometimes people benefit when those choices are informed by an intervention – even an unwelcome one.

  29. 29 29 Paul T

    PT: “Extending this reasoning, if everyone were so inspired, we’d enjoy a medieval lifestyle.”

    Tristan: “The key phrase here is “if everyone were so inspired”. If everyone was truly satisfied with the lifestyle then the best thing would indeed be for a lot of people to live in a medieval lifestyle. If that seems weird it’s only because the assumption we made was weird”

    You mean, the assumption that everyone acts admirably altruistically, is unrealistic? Indubitably so.

    Hence, while Scrooge’s miserly behavior is morally laudable, if EVERYBODY were moral, it would be disastrous. huh? Like, there’s an optimal magic number of moral citizens which we can tolerate? All things in moderation, including goodness?

    I dunno, I expect that, even in matters of morality, logic and consistency should prevail.

  30. 30 30 Ken B

    @PaulT
    I think they mean if everyone preferred that, the result would be good. That is not the same point as the post. If you have a claim on half the milk but choose not to exercise it, more milk for the rest us.

  31. 31 31 Steve Landsburg

    Paul T: You seem to have stopped making any sense at all.

  32. 32 32 John

    Re #28 KenB,

    And if I’m understanding Steve’s earlier comment correctly regarding marginal benefits vs costs, not only is him leaving half of the milk he has a claim to for everybody else to enjoy better for everybody else, but it’s also better for the world as a whole (when you include Scrooge along with everyone else)because Scrooge is in theory at his indifference point regarding whether to purchase the milk? That is, if you were God and looking at the world, if it’s hurting Scrooge to give up the milk then that might offset any gains given to the rest ofthe world, but we don’t believe that to be the case at the margin.

  33. 33 33 Ken B

    @John
    Yes I think that is right.

  34. 34 34 Steve Landsburg

    John: Yes, exactly.

  35. 35 35 Paul T

    Ken B: “… If you have a claim on half the milk but choose not to exercise it, more milk for the rest us.”

    We seem to be on a ferris wheel, but I’ll go one more round – putting it as simply as I can: if a few are moral, that’s good, but if many are moral, that’s bad?

    Please explain why that isn’t contradictory.

  36. 36 36 Ken

    Paul T,

    Please explain why that isn’t contradictory.

    It isn’t contradictory because choosing to consume or choosing to consume is not in any way moral. Consuming a little while producing doesn’t make a person moral and a person who consumes as much as he produces is not immoral. The choice to consume is not a moral one, as you want to claim.

    The point is that if you want to live a life such that you make products more available to others, then the best life to live is as Scrooge lived: being a hard worker and being miserly. If you choose not to live like this, that’s fine too. Living either life doesn’t make you moral or immoral.

    The main problem with economic analysis is people like you who assign some choices and preferences as moral and others as immoral, when neither is the case. The choice to buy a gallon of milk vs only a half gallon, or even not milk at all, is not a moral one, but sadly someone like wants it to be.

    Why? Is it an effort to make yourself seem superior, when in fact you are not? Is it an effort to demean others who have different preferences than you? Is it a willful effort on your part to not understand how to economicall analyze a situation?

    If only a few people to live a life as the average person did during medieval times, and many do not, that’s fine. If many choose to live a life as the average person did during medieval times, and only a few do not, that’s fine too. Neither case is more moral or more immoral than the other. Only your superficial understanding of the economics, and weak morals, would say that one is morally superior to the other.

  37. 37 37 Ken B

    @PaulT:
    You and I jointly win a gallon of milk. I hate milk so I let you drink it. How have you acted immorally, and how have I? Neither of us is immoral here right? Well your hypothetical was as if most people hate milk so the remaining few drink it all. That IS likeyour hypothetical because you imagine people PREFERING to consume less. You change preferences so they want less, but then seem to argue that letting them do so is immoral. In that case letting me pass on milk I hate is immoral.

  38. 38 38 nobody.really

    Hence, while Scrooge’s miserly behavior is morally laudable, if EVERYBODY were moral, it would be disastrous. huh?

    I understand this entire discussion focusing on the classic Paradox of Thrift. http://en.wikipedia.org/wiki/Paradox_of_thrift

    I sense Paul T refers to the idea of living parsimoniously as “moral,” and is referring to the idea that increasing social utility generally involves SOMEONE increasing consumption (or, more prosaically, the idea that “we are a consumer-driven economy”). Others don’t share Paul T’s understanding of the situation.

    To characterize a situation as “disasterous” suggests that we know of a different state of affairs that we prefer – and perhaps that we could characterize an optimal state of affairs. In short, what is the goal toward which parsimonious living is an impediment?

    What causes Scrooge to behave the way he does? In the absence of contrary info, I assume he acts as he prefers – that is, in the manner that he believes (perhaps wrongly) will maximizes his utility. Under this hypothesis, Scrooge has the resources to consume more – but as far as he’s concerned, the consumption would be wasted on him. So Scrooge leaves his resources unconsumed, which has the effect of permitting OTHERS who have different tastes and preferences to consume those resources instead. Ideally, an efficient market would permit resources to flow to the people who value them most.

    Under this hypothesis, Scrooge is not engaging in self-sacrificing behavior. He’s living frugally because that’s what he prefers. Maybe he likes living in a cold house. Or maybe he would prefer to live in a warmer house – but he places an even higher value on the opportunity to save money, money that provides him opportunities for future consumption (including a hedge against unforeseen future liabilities). Or maybe he would get satisfaction from living in a warmer house, but derives even greater satisfaction from living a Spartan life of self-denial. In any event, Scrooge is acting in a manner to suit his own preferences, without (undue) regard for other people’s preferences.

    By this analysis, I don’t share Paul T’s concerns about Scrooge’s immorality or the “disastrous” results that might accrue if more people found themselves in Scrooge’s circumstances.

    That said, reflect on the idea that the growth in welfare – individual or social – depends upon the idea that people have unmet desires. If all people were to become fully actualized and all their wants were met, then arguably there would be no more opportunity for growth. I have hypothesized that Scrooge is rather close to this state of affairs: the fact that he has resources to consume, but chooses not to consume them, suggests that he has maxed out his opportunities to increase his satisfaction via consumption.

    I sense that this state of nirvana is what Paul T characterizes as “disastrous.” And indeed, this state of affairs might well trigger major changes in behavior. But because I don’t anticipate reaching this state of affairs any time soon, I’m really not going to expend a lot of brain cells on it.

    Now, I can’t fault Paul T for suggesting that it would be “disastrous” for everyone to be in Scrooge’s shoes, in part because Scrooge seems so unhappy. This unhappiness seems to reflect two phenomena: First, he seems to lack the capacity to derive satisfaction from many things that other people take satisfaction in. Second, the things that would give him satisfaction – controlling the (apparently foolish) behavior of others – are not things he can obtain to any great degree. Let me discuss them in turn.

    Perhaps Paul T is remarking on the idea that if ever more people found themselves in Scrooge’s shoes – that is, unable to derive satisfaction from their lives, regardless of their material wealth – this would be disastrous relative to our status quo. Fair enough. And, by extension, we might imagine a parallel universe in which people lived a life identical to our own, but could also derive great satisfaction by pricking themselves with pins. They might similarly regard it as disastrous to find themselves in our shoes, unable to derive satisfaction from pin pricks. Disaster is relative, I guess.

    But perhaps Paul T is remarking on the fact that Scrooge’s unhappiness seems related to his inability to control others. What makes Scrooge so cross with others? One option is that Scrooge anticipates that his resources will be used to bail out others who act less prudently/parsimoniously than he does. Fair enough.

    But another option is that the previous analysis of Scrooge’s behavior is wrong. Perhaps Scrooge is NOT acting as he prefers. He IS engaging is self-sacrificing behavior. And he resents the idea that others are enjoying life when he is choosing to forgo these enjoyments.

    God loves the cheerful giver. Scrooge had long been a “giver” in the sense that he (arguably) produced more than he consumed. Perhaps the gift of the Ghosts is to help Scrooge experience some satisfaction from the giving. And with this increased satisfaction, Scrooge altered his pattern of giving. Consider how Scrooge alters his resource allocations after the visit of the Ghosts: He buys a turkey and sends it to the Cratchits’. He gives money to a charity. He socializes with strangers and family. He raises Bob Cratchit’s salary, “endeavor[s] to assist [his] struggling family,” buys more coal for the office fire, and spends part of the afternoon of 12/26 socializing with Cratchit. But there’s no reference to him putting more coal on his home fire, or altering his home diet, or buying fancier clothes. His new satisfactions seem not to come from increased personal consumption (except perhaps consuming time for socializing) but rather from enjoying the idea that others were benefiting from his efforts.

    Yes, some people belittle the change in Scrooge. Some people laughed to see the alteration in him, but he let them laugh, and little heeded them; for he was wise enough to know that nothing ever happened on this globe, for good, at which some people did not have their fill of laughter in the outset; and knowing that such as these would be blind anyway, he thought it quite as well that they should wrinkle up their eyes in grins, as have the malady in less attractive forms. His own heart laughed: and that was quite enough for him.

  39. 39 39 Steve Landsburg

    nobody.really:

    I think that trying to make sense of Paul T’s comments is probably not a good use of anyone’s time.

    That said, the first half of your comment is of course correct and well put. I haven’t yet read the second half.

  40. 40 40 Harold

    Happy new Year. Bit late for the Christmas post. I take the Scrooge story to be on the theme of rationality and information. The ghosts did not compel him to change, they only educated him. After his education he voluntarily pursued different behaviours. Nothing else about his position had changed from Christmas eve to Christmas morning.

    Nobody.really makes essentially the same point. Econ 101 tells us that efficiency is maximised when each person is allowed to pursue their utility maximising behaviour unhindered. Since there is no compulsion either before or after the supernatural visits, then do we conclude that efficiency arises from both Scrooges miserly and generous behaviour?

    I think Dickens intended us to believe that Scrooge was actually deluded. He was pursuing activites that did not maximise his utility, and hence would not lead to economic efficiency.

  41. 41 41 Paul T

    Ken B: “It isn’t contradictory because… The choice to consume is not a moral one, as you want to claim.”

    As I want to claim? I’m not the source of the Scrooge essay! I’m merely extending its implied message.

    “If only a few people to live a life as the average person did during medieval times, and many do not, that’s fine. If many choose to live a life as the average person did during medieval times, and only a few do not, that’s fine too.”

    Fine with me. too. But you have misread me – I’m not the one lionizing the miser, I’m following the insinuation of the author.

    It’s the norm, in such an encomium, that the person lauded is a hero, hence a role model, i.e. to be emulated. That’s part of the hero deal: he’s a paragon of MORAL BEHAVIOR. Can you offer any counter-example?

    Think:
    “Class, today we’re going to study George Washington. He chopped down a tree, then owned up to it, honestly and bravely, taking his licks.”
    “Teacher, does that mean we should do the same?”
    “Yes, even though it’s hard, and you might suffer, it’s the right thing to do.”

    Notice the teacher does NOT reply:
    “If you do, you’ll get into hot water! So if you deny and evade and pass the buck and cover your ass, that’s cool too!”

    And, observe the phrasing: “… the primary moral of A Christmas Carol …”
    Consider:
    “the primary point”
    “the primary lesson”
    “the primary moral”

    Distinct connotations, wouldn’t you say? What does ‘moral’ connote?
    A head shrink might call it a Fraudian slip -

    Hence you missed a crucial point the author’s missive. And so did he.
    It’s embarrassing when it’s necessary to spell these things out.

  42. 42 42 Steve Landsburg

    Paul T:

    You have well and fully missed the point. Please stop inventing new (and silly) points and attributing them to me.

    My life (and yours) is better because Edison invented the light bulb. My life (and yours) is made worse when Edison-like inventiveness is discouraged by the tax system. Those are true statements with no moral content. They certainly do not suggest that anyone has a moral obligation to be an inventor. It *does* suggest that when someone *wants* to be an inventor, the rest of us should celebrate.

    My life (and yours) is better because the Scrooges of the world consume less than they could, leaving more for me and you. My life (and yours) is made worse when Scrooge-like behavior is discouraged by the tax system. Once again, those are true statements with no moral content. They certainly do not suggest that anyone has a moral obligation to be a miser. It *does* suggest that when someone *wants* to be a miser, the rest of us should celebrate.

    If you continue to insist on what seems to me to be purposeful misreading, then I’m going to have to ask you to take a break from posting for a while. You are hijacking a thoughtful discussion by demanding that others respond to your completely off-topic comments and remarks.

  43. 43 43 Harold

    The problem here is because part of the message in “A Christmas Carol” is about Scrooge, how he had “gone wrong” and was damaging himself. The message Steve expresses is a different one, about the effects misers have on everyone else.

    It is surprising that misers benefit others, because “conventional” wisdom says the opposite. Indeed, the another part of the message in the Scrooge story suggests that the general good is enhanced by Scrooge becoming generous.

    I have argued that Scrooge did not actually “choose” properly to be a miser, and so the overall benefit of his conduct may have been negative when the effects on Scrooge himself are counted. This is a side issue – SL’s argument is that he still provides the rest of us with benefits.

    Why is the conventional view so different? And are there circumstances where the conventional view is correct?

    Steve replied to Cos’s point about marginal trades adding no net value, buit not the point about an economy with unemployment. If for some reason there is unemployment (of those wishing to work), then clearly the market is not working. This may be due to any reason – maybe minimum wage regulations – but if this situation is occuring, then is it possible that misers could be causing damage to others?

    Perhaps a better solution would be identify why the market was not workng and solve that, but in the meantime, could a miser improve the situation by spending a bit more?

  44. 44 44 Ken B

    “I think that trying to make sense of Paul T’s comments is probably not a good use of anyone’s time.”

    As I have learnt. Experience is the harshest teacher: you fail the test before you learn the lesson!

  45. 45 45 Ken B
  46. 46 46 nobody.really

    It is surprising that misers benefit others, because “conventional” wisdom says the opposite. Indeed, the other part of the message in the Scrooge story suggests that the general good is enhanced by Scrooge becoming generous….
    Why is the conventional view so different?

    I also find this question intriguing. Three hypotheses:

    1. Empathy: Most of us like to consume, and identify with people who share our feelings on these (and other) matters. We have difficulty relating to people who don’t consume as much as we would in their shoes; they seem alien to us. We embrace A Christmas Carol because it depicts someone who we find alien being converted into someone we can more readily relate to.

    2. Authenticity: Some people prefer an austere life. But others embrace austerity inauthentically, feel aggrieved, and then play the role of the martyr and take out their frustrations on everyone round them. We embrace A Christmas Carol because we’re sick of these martyrs. Or, more charitably, because we like to see someone achieving the satisfaction that comes from leading an authentic life – one more in keeping with his true values, rather than the values he feels he ought to embrace.

    3. Puritanism: We want to consume, but feel guilty about doing so. So we like stories that tell us that people who refrain from consuming are not merely unhappy, but actually villainous. We embrace A Christmas Carol because it assuages our guilt about consuming. (Whether or not this reflects an accurate reading of A Christmas Carol, it may be an accurate reading of the zeitgeist surrounding the story.)

  47. 47 47 Steve Landsburg

    nobody.really: I like your three reasons a lot.

  48. 48 48 Ken B

    @46: Interesting but I think for Scrooge and the Christmas Carol it’s simpler. Scrooge is greedy and grasping towards everyone. He’s so greedy and grasping he’s even stingy with himself. This is Dickens’s way of showing just fully greed has consumed him. The happy ending comes not from him feasting on goose himself but giving a goose and spreading the wealth. It’s the end of greed not the end of delf-denial that is important.

    As for the underlying economic presumptions of the story, it looks mercantilist to me.

  49. 49 49 iceman

    Harold loves a good tale of delusion transformed via self-actualization (not just guilted or scared into submission) to social gain, and that does seem to be Dickens’ purpose. But the point of this post remains that, unlike in the case of discrimination perhaps, here for everyone besides Scrooge it’s a net wash (at the margin)…Tiny Tim eats goose but others collectively make do with one less.

    Ken B – wouldn’t Scrooge be the mercantilist, piling up gold or currency and believing this itself is wealth?

  50. 50 50 Ken B

    @iceman: yes but Dickens too I think, since he presents the money as wealth too. Now someone else has to go without that goose, and Dickens seems not to notice.

  51. 51 51 nobody.really

    Dr. Landsburg:

    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?
    Oh, it might be slightly more complicated than that. Maybe when Scrooge demands less coal for his fire, less coal ends up being mined. But that’s fine, too. Instead of digging coal for Scrooge, some would-be miner is now free to perform some other service for himself or someone else.
    Dickens tells us that the Lord Mayor, in the stronghold of the mighty Mansion House, gave orders to his 50 cooks and butlers to keep Christmas as a Lord Mayor’s household should—presumably for a houseful of guests who lavishly praised his generosity. The bricks, mortar, and labor that built the Mansion House might otherwise have built housing for hundreds; Scrooge, by living in three sparse rooms, deprived no man of a home. By employing no cooks or butlers, he ensured that cooks and butlers were available to some other household where guests reveled in ignorance of their debt to Ebenezer Scrooge.

    Countess Violet, Downton Abbey, Season 3, Episode 1:

    It’s our job to provide employment. An aristocrat with no servants is as much use to the county as a glass hammer.

    I hadn’t considered the possibility that people of means were expected to maintain a staff not solely for their own benefit, but as a form of wealth distribution. As I reflect on Dickensian England, I can understand that people might have drawn different conclusions that Landsburg does about Scrooge’s thoughtful generosity in not unduly burdening the labor market.

    Admittedly, Countess Violet was speaking roughly 80-100 years after Mr. Scrooge. But I suspect that, if anything, the labor market considerations had ameliorated somewhat by then.

  52. 52 52 idic5

    “It’s taxes, not misers, that need reforming.”

    Taxes = our gov’t (of, by, for the people) = the people.

    yeah, this needs correcting and adjustments all the time to get it better in an ongoing attempt to improving the people’s lot.

  53. 53 53 Economiser

    I liked this argument so much when I first read it years ago that I chose my internet handle as a tribute to it.

    A fascinating aspect of economics is its ability to demonstrate fallacies in the conventional wisdom. SL’s analysis of Scrooge is one of the more striking examples.

  54. 54 54 iceman

    #52 — which people?

  1. 1 A Ghost From Landsburg Past
  2. 2 A Ghost From Landsburg Past - Unofficial Network
  3. 3 A Ghost From Landsburg Past - Unofficial Network
  4. 4 Happy Christmas. Reflections about Ebenezer Scrooge - Yareah Magazine | Yareah Magazine
  5. 5 A virtude da poupança | 10envolver – Economia para todos
  6. 6 Some Links
  7. 7 Some Links - Unofficial Network
  8. 8 Merry Christmas!! - Airline Pilot Central Forums
  9. 9 Quote of the Day: Nobody is More Generous than the Miser
  10. 10 Lyhyesti rikkaudesta ja köyhyydestä – The straight line
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