Economic Lessons in “The Lorax”
Most children have heard about “the far end of town, where the Grickle-grass grows,” and can envision Dr. Suess’s truffula trees with their cotton candy tufts and strange bendy trunks. The tale of the Lorax is a household item because it demonstrates impermanence and environment to young minds. Upon further investigation, the Lorax goes much deeper in revealing the timeless issue of exploited public goods, and is a jumping off point for discussions of stakeholders in development economics. Although the book was published in 1971, it illustrates the timeless issue. This analysis seeks to clarify the children’s book The Lorax using modern economic theory and real world examples.
In the Lorax, the coexistence of the truffula trees, swomee-swans, brown bar-ba-loots, and humming-fish is a comfortable equilibrium for both the consumers and the environment. Upon his arrival, the Once-ler took advantage of the truffula trees because the inhabitants that benefited from the trees were unable to organize and oppose the Once-ler taking advantage of their resources. Apparently for the Once-ler, “Business is business, and business must grow,” no matter the cost to others. The truffula trees perfectly illustrate the “tragedy of the commons” because they are a resource that should be public for the swomee-swans, the brown bar-ba-loots, and the humming-fish, but because they are unprotected they fall victim to overuse that is not socially optimal.
The tragedy of the commons describes the phenomenon where a public good is depleted because of unregulated use by a group, the classic example being Hardin’s description of a common pasture which overgrazed because the whole village wants their cows to benefit, which results in ruined pasture for everyone (Wilson). Economic research around this issue formed few real conclusions until Elinor Ostrom published her empirical principles that were shared in societies where common assets were successfully distributed among the members of the society.
For these contributions to economics, Elinor Ostrom became the first woman to win the Nobel Memorial Prize in Economic Sciences, in 2009. It would take an entirely different written analysis to tackle new trends in feminist economic theory, but it is still relevent to bring up in this analysis of the Lorax and the commons because of the connection of including diverse perspectives in order to create sustainable development instead of development that marginalizes groups. When Ostrom won the Nobel Prize in economics, economists everywhere were forced to realize that voices contrary to the mainstream ones really do have critical messages to offer (S.K.).
Now, to back up to the issue at hand, although it would be inappropriate to suggest that the challenges that women face in economic theory (and in the application of economic principles) are synonymous with the issues that the brown bar-ba-loots face in the truffula forest, there is a comparison to be drawn. The needs of the local population of brown bar-ba-loots was not considered, and this led to a gross misuse of resources. This is something that can be seen all across the globe, especially with the environmental crisis that the planet created for itself. Global resources like the oceans, the arctic, and forested areas are all under threat of overfishing, exploitation for oil drilling, and deforestation (Sachs).
There is something notable at work in terms of the commons and the truffula trees, though. This case could diverge, because the tragedy of the commons would primarily suggest overuse of the truffula trees by the swomee-swans, brown bar-ba-loots, and humming fish themselves, but this case also incorporates an industry with a negative externality, which somewhat changes how economists would look at the scenario.
The Once-ler produced a private good with a negative public externality, because the production of thneeds required deforestation which led to famine, and his production process led to air and water pollution (Suess). A negative externality describes production or consumption of a good that causes harm to others without appropriate compensation for the negative outcome. In this case, the other residents of the region were forced to relocate because they did not have access to food, the air was of unfit quality to breathe, and the fish could not live in the water that contained runoff from the thneed production factories. In an ideal world, negative externalities would be combated by the process of internalization, which essentially compensates for the negative outcome (Todaro, 515). Internalization can be used for positive or negative externalities through subsidization of positive industries or taxation of negative industries, but is difficult to achieve in practice.
Without intervention, the Once-ler’s demand for the truffula trees was higher than the rest of the ecosystem’s demand for the truffula trees, but more importantly, the quantity of truffula trees that the Once-ler demand is higher than the socially optimal level of production, thus the negative externality. A possible solution in order to maintain the socially optimal level of production would be to tax the damaging industry in order to decentivize over-production. In the case of the Lorax, much like in the real world, this tragically does not happen and the Once-ler ruins the entire environment for others, as well as for himself because his industry eventually uses up all of the resources.
What makes the case of deforestation particularly fascinating is that the forest as a whole is a public, a non-rival, non-excludable good, but after being cut down, a truffula tree turned into a thneed becomes a private, rival, excludable good. As stated previously, this analysis can take two directions because the Once-ler’s production incorporates negative externalities, but the forest itself represents the commons.
In the commons, all the inhabitants are free-riders because they benefit from the truffula trees without having to contribute to their protection and care. Because, as noted, the forest appears to be a traditional economy transitioning to a modern one, the concept of allocational inefficiencies comes up, which describes the way that resources are divided between the traditional consumers (the swomee-swans, brown bar-ba-loots, humming-fish) and the producer of the new economy (the Once-ler). In order to maintain the ecosystem’s equilibrium, the truffula tree market must achieve the proper allocational efficiency, which is a characteristic of endogenous growth theory. As with much in economics, the simplified environment of the Lorax case is easy to look at through the lens of endogenous growth theory because it is a single-sector case, but real-world applications are more difficult because of the additional variables that complicate the whole matter. Furthermore, endogenous growth theory puts an emphasis on long-term growth factors, which puts consumers like the brown bar-ba-loots at a disadvantage because their profit from the consumption of truffula trees is not considered in modern conceptualizations of economies.
In the case of the Lorax, no provisions were in place to protect the inhabitants. Ostrom stated that characteristics of a successful commons calls for clearly defined boundaries, collective choice arrangements, and polycentric governance. None of this was present for the truffula forest. The truffula trees were not officially protected land… only the Lorax advocated on their behalf, and there was no enforcement institution to monitor the situation.
As noted in the lecture, in some cases, traditional societies have responded effectively with social enforcement mechanisms, but this was not possible in the Lorax case, and has not been recognized on an international scale in other cases because often the international realist or neoliberal view literally bulldozes the needs of groups who don’t use land or resources in ways that international (read: realist or neoliberal) powers see as productive. This, once again, has a connection to broader conversations about stakeholders in development economics. For example, feminist economics highlights how mainstream economists are not asking the right qestions, which results in the continuous “systematic undervaluing of their contribution to society” (S.K.) which is a shared characteristic across different economic perspectives (feminist and mainstream), as well as different economic models (traditional and modern).
On a global level, this type of conflict can be seen where the Waorani in Ecuador organizing to prevent land being auctioned for oil drilling that would impact their waterways (Riederer), or the Conga Mines in Peru where an American mining company wanted to displace indigenous people in order to dredge their lakes and mine gold (Aquino). The Lorax may be a highly simplified case, but there is a reason that it is a piece of classic children’s literature — it contains lessons for all ages. The case of the Lorax reveals how public goods are at risk of exploitation, and how traditional needs are often scaled differently than producers in transitioning economies. Ultimately, as the world continues to develop, production continues to advance, and the climate continues to be at risk, the world is headed down a dangerous path. Unless, Dr. Suess suggests, there are individuals who are willing to work on behalf of the collective to consider the needs of every level of consumer, and create an environment for sustainable economic development.
Works Cited
Aquino, Marco, et al. “Peru Supreme Court Rules against Newmont in Dispute over Gold Mine.” Reuters, Thomson Reuters, 3 May 2017, https://www.reuters.com/article/peru-mining-newmont/peru-supreme-court-rules-against-newmont-in-dispute-over-gold-mine-idUSL1N1I51GN.
Riederer, Rachel. “An Uncommon Victory for an Indigenous Tribe in the Amazon.” The New Yorker, The New Yorker, 15 May 2019, https://www.newyorker.com/news/news-desk/an-uncommon-victory-for-an-indigenous-tribe-in-the-amazon.
Sachs, Jeffrey D.. The Age of Sustainable Development, Columbia University Press, 2015. ProQuest Ebook Central, https://ebookcentral.proquest.com/lib/gwu/detail.action?docID=1922296.
Seuss. The Lorax. Random House, 1971.
S.K. “The Thinking behind Feminist Economics.” The Economist, The Economist Group, 20 Oct. 2015, https://www.economist.com/the-economist-explains/2015/10/20/the-thinking-behind-feminist-economics.
Todaro, Michael P., and Stephen C. Smith. Economic Development. 12th ed., Pearson India Education Services, 2017.
Wilson, David S.. “The Tragedy of the Commons: How Elinor Ostrom Solved One of Life’s Greatest Dilemmas.” Evonomics, Evonomics, 29 Apr. 2018, https://evonomics.com/tragedy-of-the-commons-elinor-ostrom/.
