What Ebenezer Scrooge and George Bailey can Teach us about Economics and Humanity

Every year at this time I like to sit down with a glass of Chivas Regal at watch my favorite Christmas movies, A Christmas Carol  and It’s a Wonderful Life.  Over the years I have closely studied the themes of both films and I always find them topical, interesting,and very similar. Two of their prevailing topics are affordable housing and inequality, both the protagonist Mr. Potter in It’s a Wonderful Life and the per-intervention Mr. Scrooge are miser’s, landlords, and debt collectors. There exists other, albeit lesser known, Christmas moves of similar theme. The films We’re No Angles, It happened on 5th Ave, and The Christmas that Almost Wasn’t deal with the characters in finical ruin and face homelessness or eviction. Even the Thanksgiving movie Trains, Planes, and Automobiles, touches on homelessness in its final scene, one of the best endings in film history, in which Steve Martin’s snobbish character realizes that John Candy’s slobish character has no home and invites him to Thanksgiving dinner. But these two holiday classic are important because of their pragmatic and canonized message to humanity.

Now I know that not everyone is Christian, and thank god because there are enough Tebows in the world, but to be honest to me these movies depict a more secular holiday. To me most Christmas movies are as much about the birth of Christ as the film Independence Day is about the holiday celebrating America’s political freedom from British rule. In either move the holiday merely acts as a stage for social melodrama to play out. Take for instance the Charles Dickens’s A Christmas Carol; although there is a few references to the Christian dogma, such as Tiny-Tim’s pray, but for the most part the film seems to play to the human-moral aspect of the holiday spirit. Today the true themes of these films seem as relevant as ever in the face of the Global Economic malaise that is vilifying the rich and empowering the poverty stricken.

A central theme of both plots in  It’s a Wonderful Life and A Christmas Carol are affordable housing and financial debt. Affordable housing is as prevalent a topic of inequality in America today as it was in the time depicted in Frank Capra’s film and Dickens’s novel considering the resent housing and debt bubbles. Both stories offer contemporary views on the wealthy ruling class that nominate the political-financial mechanics of the world, from the perspective of the less wealthy and often poverty-striven lower class, the 99% in today’s terms.

So, What does these films teach us about economics and human morals? Let’s dissect them.

Although Frank Capra’s 1946 American Holiday Classic It’s a Wonderful Life centers on the Christmas holiday, to a close reader the film is more a timepiece capturing the American cultural and institutional transition. Starting at the end of the First World War and ending in post Second World War. The film clearly depicts episodes in American history of the roaring twenties, the great depression, as well as the Second World War, through the experiences of the main character George Bailey (Jimmy Stewart).  At first glance the theme of the movie may appear to be charity, but with a closer examination of the institutional mechanism at work concerning George Bailey’s profession, an owner and operator of a loan and residential construction agency. These institutional economic theories become more apparent when we observe Mr. Bailey’s antagonist Mr. Potter, slumlord, financier, and business elite.

In the film, George Bailey’s business is financing and brokering loans to common working class individual is of, the iconic fictional Northeast American Town, Bedford Falls. While the film depicts Mr. Potter’s business as paying low wage in factories and charging high rent in slums. This represents an analogy for the institutional practices that took over the American landscape in this same period of time, Mr. Potter represents the growing industrial power, while Mr. Bailey represents the lost tradition of entrepreneur service to one’s community. Nevertheless, there is more to be learned from this story than simply charity and community work, it is the entrepreneurial spirit and economic shift in resources combined with moral and ethical practices that Make George Bailey an important businessman to study.

It’s not charity that Mr. Bailey is engaged in rather he is simply selling his product, housing, for the correct market value. Compared to the Potter’s slums that are depicted as high rent. However, it is important to point out that in this time in history there was little to know affordable housing that an average American could hope to own. Furthermore, there was an abundance of Rent Control laws, the most notable where in New York City (some still exist today). That is to say he sells the houses he builds not for the highest price he can get but for what the average worker can afford. In the film these high rents and poor conditions were chalked up to potters greed, it truth they would be more aptly applied to poor public policies and economic market forces. Take rent control, this is when legislatures free that landlords are charging to high prices for tenements and the set a cap on the amount a landlord can charge for rent. This is also called price control, in economics price control leads to three economic conditions: Scarcity: when landlords cannot earn a profit or even a marginal profit on increasing their property they are less likely to expand their operation to meet demand, this leaves people homeless who otherwise could afford the rent. Cities with rent control laws often have higher rates of homelessness; this is particularly true of New York City throughout its history until the early 90’s. Decreased Quality (Maintenance of Property): With less elasticity in the price of the product, there is less incentive to provide a quality product; with fewer tenements to choose from tenets will not leave if there is no hot water or if the paint is peeling, this leads to sums. Hording/Black Marketeering: Those wealthy enough to afford a tenement will be less likely to give it up if he can also afford a house because of a change in his income. This is because the price of the rent controlled tenement is artificially low the tenet has incentive to hold onto it or even sublet it out at an artificially high price for a profit. However, all this led to a hole in the market that George Bailey could fill.

At this time in America, it was also uncommon for most Americans to own their own homes. Cost of house is significant; property, construction, materials, and liability are expensive resources. At this time, it was customary for prospective homeowners to acquire 10% of their mortgage payment up front, and prove that their income could sustain the impending mortgage payments. Bailey’s fictional Building and Loan business was an enterprise that allowed prospective homeowners to pool their resources to alleviate the upfront costs of building and maintaining a home. At least that is how it is explained in the climatic run on the bank scene, when George Bailey has to explain why the people cannot simple with draw their investments. This scene also depicts one of the great moral lessons that the Bailey Business model has to offer; in times of great economic strife Bailey reached into his own pocket and put, his own finances at risk for the business he believed had moral and economic value. This business model is one that publicizes the profit of the business and privatizes the risk. Unlike the Potter model, that places the gains of business in potters pockets and risk of business on the public. Latter in the story this model is put to the test when Bailey’s business partner (Uncle Billy) misplaces a sum of money George is endanger of not only losing his business but also of going to jail for unpaid debts. This demonstrates that George assumed all the risk and allowed his customers to enjoy the windfalls.

In the climax of the movie, those customers and friends pool their resources that they enjoyed from the Building and Loan investments with him and saved him from finical ruin. It’s a Wonderful Life  is sadly just a film, in the real world there are too few George Baileys and too many Mr. Potters of the world, Enron, Lehman Brothers, AIG, Halliburton, and BP, they are the ones who stand at the top with their golden parachutes, their public risk (bailouts, oil spills), and private profits. I don’t know about anyone else but I still get a slight chill in my spine in the finale scene what George’s brother, a decorated returning war hero, toasts “to my brother, the richest man in town.” Maybe it’s the fact I had forgotten that the word “rich” speaks more than just of monetary wealth, but also wealth of morals and spiritual fulfillment, or maybe it’s just from the bottle of Chivas Regal that now resides in liver.

Charles Dickens’s Classic 1843 novella A Christmas Carol tells the heartwarming story of another slumlord Ebenezer Scrooge. This tale helped to define the secular side of the tradition Anglo-American Holiday and is credited for the creation of the phrase “Merry Christmas”. Dickens created this tale as specifically to combat social, political, and economic inequality that he saw in England in the early 19th century. Dickens often wrote about inequality but A Christmas Carol held a special place in his heart, he would often conduct unabridged public reads complete with voice for all the charismatic characters, even well in to his later years when his voice and eyes were give out on him. The story has been adapted countless times with actors lining up to play the lead character of Mr. Scrooge( the best ones in order are Alistair Sims, George C. Scott, Patrick Stewart, and Micheal Cain), perhaps the most dynamic character in all English literature. If Dickens has one delight in the afterlife I would venture a bet it is that each year he is treated to a new rendition of his life’s greatest achievement.

In the story, Scrooge is depicted as an evil cold hearted business man that hordes his money like miser, contributes nothing to charity and suggest that the poor are better off dead than clogging the prisons and work houses. It is often suggested that Scrooge made his money in the world by acquiring properties and evicting tents that could not pay the rent, although in the original text Scrooge is noted only as a businessman, his firm Scrooge and Marley was referred to as a counting house. In those days, it was customary for a counting house to lend money to the lower class to pay rents and mortgages. In most film and stage adaptations of the Christmas Carol Scrooge is painted as evicting tenets and defrauding companies. This is all done in the name of making him more evil and thus his later transformation more sensational. In the original script Scrooge is just a good businessman with a lot of money that he choose not to share with the world. This is a point that American conservative writer Michael Levine published a libertarian critique defending Scrooge as a true entrepreneur. This description may make several critics baulk but it does bare some merit to a economist that reads the original Dickens text and negates all the post Dickens adaptations.

Nevertheless, the point that Dickens makes is that while Scrooge has great business acumen, what he lacks is humanity and a wealthy spirit. Or more simple put he might have had a lot of money but he was also real dick about. His only human complain in life besides his clerk, Bob Cratchet, died a year before the story begins. Marley and Scrooge were so compatible that they were even confused for one another and that did not bother Scrooge. When Marley returns to Scrooge as a ghost, he is burdened with the chains that represent the damage his benevolence contributed to mankind, Scrooge appeals to him stating that was so good at business. To which Marley replies that his business skills would have been better employed to help those in need. I feel this dialogue is important to the relationship between the entrepreneurial expertise and the philanthropic spirit.

Here is the main point I want to reach, that in the epilogue of the story Scrooge doesn’t scrap his life work to feed starving children, donate is entire wealth to charity, or join the peace corps to pick files off babies. No, he just tinkers with the margins and contributes to the local community and to those whose lives he touches regularly. Let’s not forget that Dickens may have grown up poor but he did a wealth man. What I think he was trying to say was simply put; there is nothing wrong with being wealthy just don’t be such a fucking asshole about it.

Many wealthy and successful businesspersons use their skills in organizing and funding charities, to name a few: Bill Clinton, George H.W. Bush, Bill Gates, Jimmy Carter Warren Buffet, Ted Turner, Tim Tebow, and many others. But there are also small donators and organizers of charities that is obtainable by the average American. There are many was to donate to charities, you can donate money of course(this is usually what they prefer in my experience) but you can also donate time or belongings, such as clothes, furniture, or old cars that can be sold at auction and the money used by charities. You can also get some nice tax breaks on this stuff, but that is not why we do of course.

Perhaps I had it wrong in thinking that Charles Dickens’s greatest pleasure in the afterlife was witnessing his life’s work be reproduced in countless renditions each year. Perhaps his favorite activity is seeing how A Christmas Carol is acted out not on the stage but in the real lives of the people who have grown up with such a great moral lesson each year.

” All that you can take with you is that which you have given away.” Bailey Family Motto

 Happy Holidays from the Step Aside Show

For Further reading on the effects of Rent and Price Control I suggest Thomas Sowell’s “Basic Economics: A Common Scenes Guide to the Economy”


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Dick Sharpe

Dick Sharpe is among that rare breed of men who crawled their way out of the gutter and in to the academic and political elite. Despite this accomplishment, Dick retains his sharpe wit and sense of low-brow humor that makes him such a great contributor to Step Aside Show Blog and Podcast. Although Dick is a wicked charmer, whose sexual exploits are still the talk of Yale, Columbia, and a small town in a northern border province of Iraq, he is also a domesticated man living with with two handsome yet annoying sons and his wicked hot but equally annoying wife in Seattle. Dick is an accomplished academic writer, an award-winning poet and a self-proclaimed wordsmith, a battle-tested Combat Officer of the US Army, as well as a world-renowned alcoholic. Working mostly in the public sector, Dick continues to use his unique set of skills to better the life of his fellow compatriots. Mr. Sharpe’s ideological beliefs are a bit at odds within themselves at times he is strong believer in social programs and liberal rights while at the same time a strong believer in neo-liberal economic policies and the power of the free market to shape the political landscape. Put simple Dick Sharpe is the kind of man men wish they could be, and women wish they can be with, but the truth is they can’t because there is only room enough for one Dick Sharpe in the World.