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Santa Claus and capitalism

In a ritual I don’t understand, parents get great pleasure out of tricking their children into believing that a fat guy in a fluffy red outfit is going to come down their chimney on Christmas Eve and leave them gifts.

Leaving aside the wisdom of taking advantage of children’s gullibility (why would they not believe what their parents tell them is true?), the concept of Santa Claus teaches children to reject capitalism and embrace socialism.

The basic rule of economics is that resources are limited, and can only be increased through the application of work. My dad had a more succinct way of putting it. “You don’t get nothin’ for nothin’,” he said. Robert Heinlein said that “there ain’t no such thing as a free lunch.” I have a similar statement that extends beyond capitalism and reaches out to all other human endeavors. “If something seems too good to be true, then it’s probably not true.”

Getting free gifts with no quid pro quo definitely falls under the category of “too good to be true.” Never a week goes by where I don’t get something in the mail (both regular mail and email) enticing me with something for free, but always it comes with some kind of catch. I think it is the adult Santa Claus mentality that causes people to fall for these kinds of marketing gimmicks.

The Santa Claus mentality extends beyond marketing campaigns and reaches deep into our society. The most glaring example of the Santa Claus mentality is our Social Security system. People get free money from the government. People feel that they are entitled to free money from the government. But the reality is that the money isn’t free, it’s being taken from young people who are often a lot poorer than the old people to whom it’s being given. And the system will completely break down as the ratio of old to young increases over the coming decades.

Even people who aren’t ordinarily socialists fall victim to the Santa Claus mentality. The book Dow 36,000 represents the investor class’s version of Santa Claus. The market will give you boatloads of money, all you have to do is believe. Unfortunately for investors, believing in a never ending bull market had serious consequences.

In Galt’s Gulch, the perfect society envisioned in Ayn Rand’s book Atlas Shrugged, the very giving of gifts was illegal. Personally I think this was one of Ayn Rand’s dumber ideas: it violates the principle that government laws should be kept to a minimum, and the principle that people should be allowed to do with their money as they wish. Furthermore, how do you enforce such a law?

My advice is to give gifts to your children, but don’t tell them the gifts are from Santa Claus. Children should know that the gifts come from their parents, and that they aren’t made by elves, but rather they are purchased through the fruits of their parents’ labor. Thus a lesson in socialism (a wise and all powerful benefactor gives stuff away for free to children who “deserve” it) becomes transformed into a lesson in capitalism (work creates resources that are bartered for toys).

posted Saturday, December 11, 2004