Ebenezer Scrooge is underrated, Tim Harford argues:
Dickens’s story is viewed as a journey of redemption; I am not so sure.
In his original, miserly form, Scrooge actually gives us much to admire. He was a model of inadvertent benevolence. He earned vast sums and avoided spending so much as a farthing if he could help it. The economic implication of this? Regardless of Scrooge’s motives, because he spent little, everyone else enjoyed more, as surely as if Scrooge had divided his fortune and sent a few coins to everyone in the country. As the economist Steven Landsburg once wrote: “There is nobody more generous than the miser — the man who could deplete the world’s resources but chooses not to.”
This isn’t an intuitive proposition but it is true. Scrooge reminds me of Bill Drummond and Jimmy Cauty, formerly of successful dance band The KLF, who in the summer of 1994 filmed themselves burning 20,000 £50 notes — £1m — on an island in the Inner Hebrides. People who wouldn’t have batted an eyelid if Drummond and Cauty had blown the cash on fast cars and drugs were outraged at the waste. As the Ghost of Christmas Yet To Come might have pointed out, the money could have been spent on a worthy cause. On a chat show, in front of a jeering audience, Drummond explained that “burning that money doesn’t mean there’s any less loaves of bread in the world, any less apples, any less anything. The only thing that’s less, is a pile of paper.”
Drummond was quite right. He had a claim on £1m worth of goods and services and by burning the money, he didn’t destroy those goods and services — he merely relinquished his claim and let others enjoy them instead. The likely economic effect is that everything in the country became a tiny bit cheaper. If the Bank of England had worried about the (minuscule) fall in the money supply, it could have printed replacement banknotes for a couple of grand.
Probably too subtle a message for today’s consumerist world.
I’ve been reading a bit about the sugar and spice trade of old. Appears to have made some people rich, but I wonder from whence came the wealth to enrich the merchants? Did someone have to get less for the spice merchant to get more? Spice and sugar in themselves hardly seem like wealth creating agents; almost the opposite, in so far as they lead one to morbid obesity.
Maybe it is a Keynesian thing, where the money was under a mattress until a spice merchant showed up to garner the coins. Thus, the lesson of Scrooge is that an entrepreneur needs to rise up and bring forth a product that will entice the miser to part with his savings.
The trouble with worthy causes is accurately identifying them. Not everyone with a sob story deserves your money. There’s a Blackadder version that shows just what’s wrong with being too generous.
Scrooge got screwed over by his girlfriend. She didn’t even put out. That must have black-pilled him something fierce.
Given a fiat currency, the miser is an anti-inflation hero. What of those who hoard valuable commodities?
As a Brit, I wasn’t worried by KLF’s bonfire: they were after all just promissory notes and if the Bank of England went down then those bits of paper were either only good to light a fire or wipe one’s rear.
As a band like KLF (who as far as I know weren’t the rivals to the fame won by the Beatles or the Stones) required publicity maybe it was small price to pay. They are probably far more noted for that one act than any bit of music they produced.
My only question would be: do fifty quid notes burn brighter than twenties?
This is just the kind of generically nonsensical, self-aggrandizingly counterintuitive, essentially ineffectual midwittery that you would expect from a journalist and economist. Bravo.
It’s a poor accountant that doesn’t tally up all the numbers.
Scrooge, in addition to being a burden to those around him, was also personally miserable and inhuman. By changing, he improved those around him and his own personal happiness.
There’s only five things you can do with money really, save it, invest it, spend it, give it to a charity, or give it to the government.
When you hoard it, or just burn it, can they really prove that’s a better option than the other four?
Hoarding is a contingency plan reduced to absurdity. It’s also a hard habit to break, especially if you’ve been indoctrinated into it: “waste not, want not.”
Scrooge adopted a scarcity mindset to deal with an uncertain world. And the world is in fact uncertain. The only question is what’s the best way to cope?
Have multiple sources of income if you can manage it. But beware the hucksters. MLM is not owning your own business.
Or just splurge at a certain age. Better to die poor than to live as if poor. This was Kierkegaard’s practice. He lived well and died poor.
Whatever you do, don’t play Galahad to a girl with a sob story.
Jim,
I’m beginning to sense a trend. You don’t quite grasp something, so you leap for its throat.
The story above is not any of the things you say.
If tomorrow Elon Musk decides to buy out every grocery store in your town — heck, if he goes right to the fields and buys the crops at a premium — you will have more trouble getting food, and the food you do get will probably cost more. If he does that enough times, or enough rich folks join in, they may make the current supply of certain goods disappear.
For the time being, yes yes, but the market signal they send will encourage producers to produce more. Maybe. Unless the producers don’t, or can’t, or the rich keep buying up those goods — which they can do at a higher price because they have more money. The font of goods isn’t unlimited. Aren’t you the hard-headed fellow talking often about the realities of starting a business?
If Musk and other self-made billionaires had wealth in liquid assets, rather than in shares in the companies they founded (the value of which will drop if they try to take out too many at one time, by the way, since the captain in the rowboat does not instil confidence in the sailors), they could really do some damage to the purchasing power of the average person.
The supply of goods at any one time is limited, and the total savings of a society vastly exceeds the goods available (at current prices).
If you can explain how it’s a thought experiment that doesn’t translate to the real world, have at it. Your brand of rejectionism is very tiring.
Shorter way to put it:
Think of it like a bank run, but instead of withdrawing paper notes, the rich are withdrawing real goods. They have more wealth to withdraw, and they can withdraw it faster, since wealth brings with it preferential service.
The vault only has so much money.
I think confusing money for stuff is the height of midwittery (which is a stupid term, the ultimate ‘self-aggrandizing’ term, and anyone who uses it deserves to have it thrown back at them).
I may or may not later post at more length, but suffice it to say that investment is the process whereby capitalist-freemen make goods and services more expensive for wage-slaves.