The Economics of The Lorax — Steven Horwitz, The Freeman

Where are the Property Rights?

“The release of the movie version of Dr. Seuss’s The Lorax has already generated some commentary about the economics of the land of the Truffula Trees. Having used the book in my introductory economics classes for over a decade to teach students how to apply the economic way of thinking to environmental issues, I will add a few more words.

For those who don’t know the story, the Once-ler comes to the land of the Truffula Trees and discovers they can be chopped down and made into Thneeds, an article of clothing that “everyone needs.” He begins to cut the trees to make Thneeds, slowly at first, but as demand grows he begins to cut more and more and adds a factory that spews pollutants into the air and water, destroying the flora and fauna of the forest. The Lorax is a forest dweller who warns the Once-ler of his evil ways and how he will destroy the whole forest to satisfy his greed, but the Once-ler pays him no mind. Eventually the trees are clear-cut and the animals and plants are severely harmed, with only one Truffula seed left to protect.

Dr. Seuss clearly portrays greed and profit-seeking as antithetical to environmental health. Is he right? Must profit-seeking always end in environmental disaster? The answer from economics is a definite no. The key, as is almost always the case in these matters, is property rights.

The problem in The Lorax is that Dr. Seuss never clearly indicates who has the property rights over the trees. If the animals of the forest do, then the Once-ler clearly violates their rights by cutting down the trees, not to mention the pollution he creates. However, if the Once-ler has the rights, then he may cut down the trees, though the pollution he creates might still be a violation of the rights of the animals.

Clear-Cut Irrationality

If the Once-ler does have the right to cut down the trees, would we imagine that he would clear-cut the forest? Read complete article

Categories:     Tags: Environment, Greed, Movies, Property Rights, Steven Horwitz