The Lorax and market failure.

Dr Suess’ “The Lorax” has been a staple video of mine for a long time when teaching the market failure topic - there are numerous examples of negative externalities of production (and consumption), all set to music. Now a movie length version has been released in the USA and will follow in other markets around the world over the next couple of months.

The traditional interpretation of the book (and the original cartoon version which is very faithful to the book) is that it is a warning against greed and the pursuit of profit and the destruction of the environment that follows. The movie version has come under criticism from both sides, with environmentalists thinking that these principles have been watered down, with Mazda using the movie to sell SUV’s. Others think that it is anti big-business propaganda from the environmental movement, aided by Hollywood liberals.

Five different interpretations of The Lorax can be found here.

My interpretation that I give to my students is slightly different. After discussing with the students the things that they can think of that the government does, I tell them that we are going to watch a short video that shows what our country would look like if we had no government. After watching it we talk about the role of the government to establish and enforce property rights. If no-one owns the land and other resources then negative externalities and a “tragedy of the commons” effect is very likely. We then try and identify all of the negative externalities shown.

The short cartoon version is just over 20 minutes long and if you don’t have the DVD it can be seen in two parts on youtube - part 1 and part 2.

My students now want to do a class trip to see the movie….we’ll see!