Scrooge Good

December 10, 2004 11:54 PM

Scrooge Good Dr. Landsburg is not always correct or clear when he tries to show how us how to best think counter-intuitively. But, he might be onto something here. His recommendation to make "saving" more tax free is probably a great one.
posted by narebuc (11 comments total)

I'm sorry, but this article is full of nonsense. If Scrooge didn't use a gallon of heating oil, then that gallon would be sold to someone else, someone who could afford it. People who were too poor to buy the oil would be too poor to buy it regardless. And if you think that not buying that gallon of oil reduced demand and, consequently, the price for other customers, then I ask you to think about the current petroleum market. When demand for oil declines, Oil producers simply scale back production.

Worse, though, is the author's argument that putting one's money in a bank is the equivalent of giving it to charity. Banks like to loan money to people who want to buy houses or start businesses; enterprises that generate either profit or equity. And of course they always insist on some sort of collateral. They don't loan money to sweat shop workers who need medical care or to homeless children.

As long as everyone pays for what they consume, reducing your consumption doesn't help the poor. If everything you decided not to consume were taken and distributed, free of charge, to people who needed it... well, that'd be a different story.
posted by Clay201 at 12:35 AM on December 11, 2004

Dead on, Clay201. Sentences like "Who is more benevolent than the man who employs no servants, freeing them to serve someone else" sound, fittingly enough, like something out of a Dickensian villain.

This article would be a lot funnier, though, if you didn't get to the end and find out that understanding economics is supposed to be this guy's specialty.
posted by Simon! at 2:42 AM on December 11, 2004

In summary: Bah, humbug.
posted by rusty at 6:19 AM on December 11, 2004

Oh my god, 3 posts and no one has criticized this post's FP worthiness! Shocking! Call in the FPP critics! Where are they when you need them? [/sarcasm]
posted by PigAlien at 7:23 AM on December 11, 2004

I think Landsburg is actually not far off the mark. By excessive consumption you push inflation up, making goods and services more expensive for everybody else. If, moreover, that excessive consumption is not based on revenue but credit, you are also pushing interest rates up, thus making credit more expensive for everybody else, including those who need credit for investment so as to increase production.
Moreover, if what you consume is a non-renewable resource, you are not just making it more expensive for others, but also putting it altogether out of the reach of future generations.

On the other hand, of course, if you generate wealth and just put it away, nobody gets to profit from it. Somebody with a retinue of hundred servants may be profligate, but at least he is giving work to hundred people.

So, consume less? Well, it depends. If you are living above your means (as a certain hyperpower seems to be doing right now), maybe you should rein in the expenses. But, above all, try to consume more intelligently. Some people just deserve your money more than others. So, if you drive a gas-guzzler, consider that each drop of oil it burns makes certain unpleasant characters richer, while making heating and cooking fuel more expensive for people in the Third World.
posted by Skeptic at 7:58 AM on December 11, 2004

Clay201: Do you have any evidence that oil prices are perfectly inelastic, or are you just talking out of your ass?
posted by trharlan at 9:11 AM on December 11, 2004

People who can't understand his logic clearly are correc he can really confusing so much so that it's harder to believe what he states....go back to some of his older articles on Slate and you'll see why.

But, he does make the point that it only is good if you HAVE MONEY and, then, not spend it. The money you do have already provided the service or helped someone get what they wanted -- I guess.

I guess taken to an extreme if everyone who did have money just stopped spending it.....well, I guess that's not very supply side. Still, if someone who could pay a lot for something but won't that does reduce the price for those want that thing -- a la Skeptic's argument on inflation.

PigAlien....that was funny. I tried being careful. The way that poor new person who posted the Girls = Evil post was hammered is a lesson for all us (even though the comments there bore out what is so great about metafilter and had me thinking it was a great post after all).
posted by narebuc at 10:03 AM on December 11, 2004

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. [From the article by Landsburg]

Ignoring the policy implications of this proposal, for the moment, the practical problems of such a proposal are staggering. Exactly what is savings for an individual? If my bank account increases from $10,000 to $20,000, have I saved $10,000? (What if my debts increased by $15,000 during the year?) If I purchase a house (putting 20% down), can I claim the down payment doesn't affect my savings?

In short, in order to claim any such deduction, would I need to provide the IRS with balance sheets (beginning and end of year) and a cash flow statement for the year? And how would those be interpreted? If I sold stocks at a profit, would the gain count as "savings"? If I held stocks that had increased during the year, could I count that as savings as well? Offset that with unrecognized stock losses? Does a large cash gift that I get during the year, and put in the bank, count as savings? If the value of my house increases? If I borrow against the increased value of my house, and put the borrowed amount into savings rather than spend it. If I sell my house and make a lot of money from that?

Landsurg: lets move away from an opportunity society (everyone has somewhat of a reasonable chance to do well) towards an ownership society (those who have get yet more from the government).
posted by WestCoaster at 11:21 AM on December 11, 2004

I was under the simplistic impression that steady and reliable circulation of currency through an economy is for the best, and that gathered and unmoving wealth is the reason for taxation to keep it in motion.
posted by TwelveTwo at 3:14 PM on December 11, 2004

It's probably not worth taking to MetaTalk, but I'll note it here for posterity - I think there is minimal value in a FPP like the one above, with:

* only one link,

* where the one link is to an article on a website (in this case, Slate) that is widely known and which publishes several dozen articles each week; and

* where the website already has a discussion space for comments on that article.
posted by WestCoaster at 4:50 PM on December 11, 2004

It's worth noting for posterity that:

1. Lots of pieces from Slate are posted here (including just a couple recently) AND
2. The "fray" at Slate is a terrible interface that does not come up to Metafilter's level of discourse -- IMHO.

In another post -- someone is yelling about too many links. Oh well.....I'm new.....I'll have to learn and tolerate such comments.....until later.....for now, I'm new (as are, strangely, you WestCoaster.)
posted by narebuc at 9:40 PM on December 11, 2004