Ebenezer Scrooge is one of the most generously charitable fictional characters I can think of. I'm not talking about Post-Christmas-Ghosts-Scrooge either. I'm talking about the cold-hearted, tight fisted, greedy man, who despises Christmas — Scrooge from the beginning of Dickens's story. Last Saturday, I attended IPR's live radio broadcast of "A Christmas Carol." Listening to the timeless story, I couldn't help but notice the unfair attacks upon Scrooge. I then remembered an article that I read my freshman year about Scrooge.
The article was written by economist Steven Landsburg called "What I Like About Scrooge." Landsburg took the traditional economist's view by looking past the outward appearances and analyzing the actions. After all, outward appearances and good intentions mean little; in the end, actions and their effects are what matter.
Landsburg wrote that Scrooge, by living frugally, is actually very generous. He says, "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?" Scrooge's actions paint him as a callous stingy old man, but actually he was an asset to his neighbors.
Scrooge was very tight with his money. He presumably was a savvy investor and kept the bulk of his money invested, as opposed to his Disney incarnation, Scrooge McDuck, who kept his money in a giant vault in Duckburg. Scrooge's conservatism and risk aversion probably kept him away from venture capital and stocks, so his money was most likely invested in a bank. All of Scrooge's wealth was available to the community. People could get a loan from the bank, and they had Mr. Scrooge to thank. Usually for every $1 a bank holds in reserves, $10 is loaned out. If we assumed Scrooge had $100,000 invested, he likely indirectly loaned $1,000,000 to the community. That seems a great deal more generous than donating a few hundred dollars to a charity. Charity donations are the way people (and Dickens) value a person's goodwill.
Not only did the bank have more money to lend out, it may have had to lower the interest rate. An increase in the supply of money will lower the cost, e.g. the interest rate. So Scrooge's "stinginess" again is inadvertently helping the masses. Even if Scrooge did not invest his money and kept it in a vault or in a mattress, he is still helping his neighbors. By doing this, he effectively lowers the money supply. A decrease in the money supply leads to an increase in purchasing power — meaning all of Scrooge's neighbors get more bang for their buck. As it turns out, saving is philanthropy.
But maybe these effects would be easier to understand in the real world, as opposed to Dicken's world. Pretend China is Mr. Scrooge. I often hear people complaining about China taking all of our dollars. It's true, China has accumulated huge amounts of dollars, like Scrooge. Is this a problem? No. Famous economist Milton Friedman put it best when he was asked this question. He answered, "What are they going to do with them [the dollars]? Eat them?"
The fact is that China holding dollars is not a problem. The only place China can spend those dollars is in the U.S. If they choose not to spend them, we win. It is as if we wrote China a check for all the goods that we received and consumed and they never cashed the check. It's like we got the goods for free. If, and when, China eventually spends the dollars, they will have to be spent in the U.S. Presumably, U.S. businesses will be operating profitably, so there is no problem. Again, it's a win-win.
Scrooge may be an old, mean, stingy, greedy and bitter miser, but his actions ended up helping everyone around him. Likewise, China and other countries are financing the debt of the United States. They are akin to old Ebenezer. We should thank them for their kindness. We should all remember Scrooge for the philanthropist he truly was.
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