Economics for Dummies #3: Tales of the Times
In Talking to My Daughter About the Economy, Yanis Varoufakis talks about the attitude of society towards debt, spending and saving at different times via 3 famous tales.
The first one is
from the 16th century. It is Christopher Marlowe’s tale of a demon
who promises Dr. Faustus 24 years of absolute power
and limitless pleasure. In return, at the end of that period, he must give his
soul to the demon. Faustus agrees. (This is the origin for that phrase, “Faustian
bargain”). But as the time approaches, he has regrets and tries to get out
of the deal. To no avail. The tale ends with his soul being taken by the demon.
A contract was binding – that was the mindset of the time.
The second tale is
the same story, except it was edited in one important way by Goethe at the dawn
of the 19th century. What was the change Goethe made? Faust, when he
has regrets as the 24-year mark approaches, performs lots of acts of public
service. This time around, when the time came, God’s angels come and take
Faust’s soul to heaven. Redemption was possible. Debts could be repaid in
different ways – that was the new mindset.
And the last tale
is Charles Dickens’s A Christmas Carol. Scrooge was a miser, collecting
mountains of money but never spending any of it. Until the Ghost of Christmas
Yet to Come pops up and shows him that the way he is living, he will die
un-mourned. Scrooge sees the light, starts spending his money, thus spreading
happiness all around.
“If we were all to be Scrooges – misers who saved all our wealth without borrowing or spending – then the economy of market societies would come to a complete standstill.”
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