It looks like Steve Landsburg and I will have this disagreement as an annual tradition now. He re-posted his thoughts on Ebenezer Scrooge, which include this line of argument:
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…
Of course I understand the point Steve is trying to make here, but this train of thought just doesn’t sit right with me. A major difference between saving and philanthropy is that with the former you can undo your “generosity” once you consume. So for Steve’s accounting to work, a saver is being altruistic, while a consumer is being greedy.
There’s a certain logic to that, but it seems contrived to me. Consider the following scenarios:
(A) Jim earns $100 at his job. He uses the money to buy a steak dinner ($100) today for himself.
(B) Jim earns $100 at his job. He uses the money to buy two pasta dinners ($50 each) today for a date and himself.
(C) Jim earns $100 at his job. He uses the money to buy a ticket to the Superbowl, which won’t occur until next year.
(D) Jim earns $100 at his job. He uses the money to buy a ticket entitling him to two steak dinners (for him and a date) but it won’t become active until next year.
(E) Jim earns $100 at his job. He buys a one-year bond at 100% interest and then a year later, uses the $200 to two steak dinners for himself and a date.
How does altruism/selfishness play out in the above scenarios? (Oops! This is confusing, I just realized. Don’t worry about him and the date being selfish or altruistic; I mean, is Jim being altruistic toward the rest of the world, versus Jim spending money on his own narrow interests.) For example, would Landsburg say Jim is more altruistic for 12 months in (C) compared to (A), at which point the selfishness kicks in? I would rather say there is the same level of selfishness in both transactions the whole time; in either case, Jim is using his income to buy the consumption good he prefers. It just so happens that the flow of services from the Superbowl ticket doesn’t start for a year. Why is buying future consumption morally different from buying present consumption?