The utmost exertion of the average individual who lives apart from human society will scarcely suffice to secure for him the necessaries for efficiency. Therefore when an individual is able to secure not only the necessaries but also the comforts and luxuries of life the presumption is that society has aided him in producing them and therefore that society has the right to be consulted regarding their use. Any expenditures for luxuries, therefore, which are positively injurious to society are wrong, just as any expenditures are wrong which injure the individual making them. Such justification as there is for permitting some individuals to enjoy luxurious consumption while others have to go even without the necessaries for existence is to be found in the fact that these luxuries represent the price which society pays to secure the use of the productive power of specially gifted producers. But when an individual secures the luxuries without giving to society a corresponding service for them the luxurious expenditure is unwarranted.

The attempt is sometimes made to justify wasteful expenditures made by wealthy people on the ground that such expenditures are beneficial to the poor. When, for example, extravagant sums are expended upon a fashionable dinner it is sometimes thought to justify the expenditure on the ground that the wealth is not wasted but goes to the benefit of waiters and florists and butchers and bakers and grocers and dressmakers and jewelers who would otherwise be without this employment. The fact is, however, that there are many ways in which the money might be spent more usefully. Even if it were not spent at all by its owner but were allowed to accumulate in a bank it might furnish employment to just as many persons and in more useful ways. For a business man might borrow the purchasing power and through its use give occupation to persons who would produce not a little extravagantly expensive food for a few persons, but much simple food for a large number of persons, with the result that instead of giving a few wealthy persons indigestion through overindulgence in too rich food, many persons would be supplied with wholesome food.

Or suppose that instead of spending the money on the extravagant dinners it were used to beautify a public park. This use of it would also give employment to many workers and at the same time it would ultimately give enjoyment to a great many persons who have already too few enjoyments, instead of being wasted upon persons who are better off without the luxurious expenditure.

Questions

1. What is meant by the consumption of wealth? Illustrate.

2. Is it possible to satisfy any one of a person's wants? All of a person's wants?

3. What is a good as the term is used in economics? A free good? An economic good?

4. Define utility. As used in economics does the term refer to things which are morally bad as well as to things which are morally good?

5. State and illustrate the law of diminishing utility.

6. As the supply of the good increases does the total utility increase or decrease? The marginal utility?

7. What is meant by the margin of consumption?

8. What is the meaning of value in use? How was this term used by Adam Smith?

9. State Engel's laws. Are these laws borne out by American experience? Explain your answer.

10. What is economic demand? State the law of demand.

11. What is elastic demand? Inelastic demand? Give examples.

12. What is meant by composite demand? By joint demand?

13. How do our estimates to-day of the utility to us of a good which we can have to-day compare with our estimates to-day of the utility to us of a good which we can have a year from to-day?

14. What is meant by necessaries for efficiency? By comforts? By luxuries?

15. Are luxurious expenditures justifiable? Explain your answer.

Supplementary Reading

Devas, Book I, Chaps, vi.-ix.

Johnson, Introductory Economics, Chap. ii.

Marshall, Principles, Book III.

Seager, Principles, Chap. v.

Seligman, Principles, Chap. xii.

Von Wieser, Natural Value, Chaps, i.-xi.