Friday, December 10, 2004

"There's something really sexy about Scrooge McDuck"

There's an interesting piece at Slate today by economist Steve Landsburg on why Ebenezer Scrooge is, contrary to popular belief, a generous guy. The basic argument is that he consumes very few human and non-human resources, leaving more for others to enjoy. His "generosity" is widely dispersed and invisible, but real nonetheless. I'd never thought about it that way!

Just for kicks I looked at the responses to the piece posted in Slate's forum "The Fray." As usual, most of the posters think Landsburg is a morally obtuse idiot, but they fail to see the value of the basic idea.

I've been reading Landsburg's pieces for a while, and this is typical. He usually makes some statement that is widely believed (e.g. "Scrooge is a bad guy") and attacks one or more of its foundations. He usually oversimplifies, but he gets at some core issues in a novel way. Readers who are too quick to object are missing the whole point. The value of the column is not that Scrooge is actually a good guy (he isn't), but that he's not bad for the reasons you may have thought (because his hoarding of money impoverishes others). The right reaction is not indignation, but to think of what Landsburg might have left out and whether that might change the conclusion somewhat (e.g. what if Scrooge passes his wealth on to his children and they spend it). Years ago Paul Krugman wrote a great essay about how people tend to overreact to simplified economic models rather than learn from them.

My favorite Landsburg column explains why nobody should be upset about the budget deficit (if you don't know why, you should read the column). I'm still upset about the deficit, but not as strongly and not for the same reasons as I was before I understood his argument. A somewhat related idea is that privatizing social security is nothing more than a "debt-swap," which I posted about here.

One aspect of the miser-as-benefactor argument that Landsburg doesn't address is the difference between putting your money in a mattress and lending it out to a bank. If you lend it, it lowers the interest rate, helping borrowers (who tend to be poor) but hurting lenders (who tend to be rich). If you put it in a mattress, it increases the value of the money held by those who have it (the rich). So in this respect Ebeneezer Scrooge is preferable to Scrooge McDuck, but both are still more "generous" than if they consumed resources themselves.

Bonus trivia: what movie does the title of this post come from?


Anonymous Anonymous said...

Thanks for your many kind and insightful
comments. But regarding your final paragraph:
Why would you assume that the rich hold
disproportionate amounts of money? I don't
have any data on this, but I wouldn't be
surprised if the average lower middle class
worker holds more money than the average
billionaire---the billionaire, of course, will
have more stocks, bonds, houses, real estate,
etc. When you hoard money, the people you're
helping most are the people who carry a couple
thousand dollars in their pockets. And I'm
guessing that's not Bill Gates.

---Steve Landsburg

9:50 AM  
Blogger ed said...

Interesting comment...thanks for stopping by. I would think that deflation would affect not just green pieces of paper, but any dollar-denominated assets, including bonds and any kind of bank deposits or CDs. I bet Bill Gates has a lot more of these assets than most people(although they would be small as a portion of his total wealth.)

Of course, long-term-bond holders would be helped by interest rate rises too, as the value of their bonds would increase.

10:26 AM  

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