Wednesday, September 20, 2006

Economic Aphorisms and Ivan Denisovich, Part III

This is my final post (planned post, that is) regarding economic thoughts in Solzhenitsyn's A Day in the Life of Ivan Denisovich. And it involves a comment that comes about halfway through the book. The character Shukov is wandering over the worksite when he comes upon a piece of scrap metal. He can't think of an immediate use for it, but decides to place it in a pocket. "It's better to be thrifty than wealthy."

Those of us who teach economics or personal finance can certainly expound on this statement. Ultimately, being thrifty creates wealth. Unfortunately wealth doesn't always create thrift. In a personal finance context, budgeting, planning, investing, all of these are connected with thrift. In budgeting we teach "pay yourself first." We encourage students to have a plan for their savings (short-term, medium-term, long-term goals), and to examine how they want to invest. In a larger economic context, it is thrift (saving) that ultimately creates capital. How often when we hear people bemoan the trade deficit, is it followed by a connection to our nation's poor job of saving? ("If we can't provide the capital for our own growth, we should be glad that someone can.") All of this, in my mind, speaks to thrift's role in creating wealth.

As far as wealth creating thrift, it would seem on the surface that accumulated wealth does not create an incentive for thrift. While it is possible that habits built in the accumulation of thrift may carry on for a while, one need not look far to see examples of individuals who were not responsible for creating wealth, or who seem to have little regard for maintaining it. In some respects, this takes us back to the statement that was the subject of the first of the posts sparked by this novel.

It would seem that "It's better to be thrifty than wealthy." has the potential to generate discussion in a number of classes and on a number of levels. Your thoughts and experiences are welcome. Please share them.

Posted by TSchilling at September 20, 2006 3:03 PM

Economics are not only in the marketing of their goods. Economics are in the manufacturing and in the marketing of our goods and making more of the money is not only profit making. You are selling what you have produced.

Posted by: Gem Hudson at September 20, 2006 4:24 PM

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