Category Archives: Christmas

The Economists Who Stole Christmas – Yanis Varoufakis. 

To welcome the New Year with a cheeky take on the clash of economic ideologies, how might opposing camps’ representatives view Christmas presents? Levity aside, the answer reveals the pompousness and vacuity of each and every economic theory.

Neoclassicists: Given their view of individuals as utility-maximizing algorithms, and their obsession with a paradigm of purely utility-driven transactions, neoclassical economists can see no point in such a fundamentally inefficient form of exchange as Christmas gift-giving. When Jill receives a present from Jack that cost him $X, but which gives her less utility than she would gain from commodity Y, which retails for $Y (that is less than or equal to $X), Jill is forced either to accept this utility loss or to undertake the costly and usually imperfect business of exchanging Jack’s gift for Y. Either way, there is a deadweight loss involved.

In this sense, the only efficient gift is an envelope of cash. But, because Christmas is about exchanging gifts, as opposed to one-sided offerings, what would be the purpose in Jack and Jill exchanging envelopes of cash? If they contain the same amounts, the exercise is pointless. If not, the exchange is embarrassing to the person who has given less and can damage Jack and Jill’s relationship irreparably. The neoclassicist thus endorses the Scrooge hypothesis: the best gift is no gift.

Keynesians: To prevent recessions from turning into depressions, a fall in aggregate demand must be reversed through increased investment, which requires that entrepreneurs believe that increased consumption will mop up the additional output that new investments will bring about. The neoclassical elimination of Christmas gift exchange, or even the containment of Christmas largesse, would be disastrous during recessionary periods.

Indeed, Keynesians might go so far as to argue that it is the government’s job to encourage gift exchanges (as long as the gifts are purchased, rather than handcrafted or home produced), and even to subsidize gift giving by reducing sales taxes during the holiday season. And why stop at just one holiday season? During recessionary times, two or three Christmases might be advisable (preferably spaced out during the year).

But Keynesians also stress the importance of reining in the government deficit, as well as overall consumption, when the economy is booming. To that end, they might recommend a special gift or sales tax during the festive season once growth has recovered, or even canceling Christmas when the pace of GDP growth exceeds that consistent with full employment.

Monetarists: Convinced that the money supply should be the government’s sole economic-policy tool, and that it should be used solely to maintain price stability through equilibration of the money supply vis-á-vis aggregate production, the central bank should gradually increase nominal interest rates once summer ends and reduce them sharply every January. The changes in nominal interest rates they recommend depend on the central bank’s inflation target and the economy’s underlying real interest rate, and must reflect the rates necessary to keep the pace of change in consumption demand and large retailers’ inventories balanced. (Yes, it’s true: Monetarists are the dullest economists to ever have walked the planet!)

Rational Expectations: These Chicago School economists disagree with both Keynesians and monetarists. Unlike the Keynesians, they think a fiscal stimulus of Christmas gift spending in recessionary festive seasons will not encourage gift producers to boost output. Entrepreneurs will not be fooled by government intervention, and will foresee that the current increase in demand for gifts will be offset in the long run by a sharp drop (as government subsidies turn into increased taxation and fewer Christmases are observed during the good times). With output and employment remaining flat, government subsidies and additional Christmases will merely produce more debt and higher prices.

Austrian School libertarians: Supporters of Friedrich von Hayek and Ludwig von Mises have two major objections to Christmas. First, there is the illiberal aspect of the holiday season: the state has no right, and no reason, to force entrepreneurs to close down, against their will (for four days December 25 and 26, and January 1 and 2) over the course of a fortnight. Second, the ever-lengthening pre-Christmas consumption boom tends to expand credit, thus causing bubbles in the toy and electronics market during the fall that will burst in January, with potentially damaging consequences for the rest of the year.

Empiricists: Convinced that observation is our only tool against economic ignorance, empiricists are certain that the only defensible theoretical propositions are those derived from discerning patterns whereby changes in exogenous variables constantly precede changes in endogenous variables, thus establishing empirically (for example, through Granger tests) the direction of causality. This perspective leads empiricists to the safe conclusion that Christmas, and a spurt in gift exchanges, is caused by a prior increase in the money supply and, ceteris paribus, a drop in savings.

Marxists: In societies in which profit is derived exclusively from surplus value “donated” (as part of the capitalist labor process) by workers, and which reflects the capitalists’ extractive power (bequeathed to them by one-sided property rights over the means of production), the Christmas tradition of gift exchange packs dialectical significance.

On one hand, Christmas gift giving is an oasis of non-market exchange that points to the possibility of a non-capitalist system of distribution. On the other hand, it offers capital another opportunity to harness humanity’s finest instincts to profit maximization, through the commodification of all that is pure and good about the festive season. And purists – those who still defend the “law of the falling (long-term) rate of profit” – would say that capital’s capacity to profit from Christmas diminishes from year to year, thus giving rise to social and political forces which, in the long run, will undermine the festive season.

Obviously, none of these theories can possibly account for why people participate, year in and year out, in the ritual of holiday gift giving. For that, we should be grateful.


Yanis Varoufakis, a former finance minister of Greece, is Professor of Economics at the University of Athens.

Project Syndicate 

Coca-Cola won the day. Why Santa is red – Stephen Moss. 

Santa Claus is a New Yorker of Dutch descent who emerged in the early part of the 19th century. Christmas in New York in the late 1700s was a riotous affair, and the only seasonal gift you were likely to be given was a punch on the nose. Middle-class New Yorkers fancied a more sober celebration. and in 1804 the antiquarian John Pintard founded a historical society and hit on the 4th-century St Nicholas – patron saint of children and gift-giving – as the benevolent new symbol of the city.

The date of St Nicholas’s death, 6 December 343, had been widely observed in Europe throughout the Middle Ages, and especially in the Netherlands, where to this day 5-6 December is still the principal occasion for present-giving, when Sinterklaas and his politically incorrect helper Zwarte Piet (Black Pete) dish out rewards to good children. 

Pintard took these traditions and grafted them on to the celebration of Christmas in New York, where a large part of the population was of Dutch heritage, with Sinterklaas (itself a contraction of Sint Nicolaas) emerging as Sancte Claus.

At this point, images of Sancte Claus – as drawn, for example, by the artist Alexander Anderson for Pintard’s St Nicholas Day dinner in 1810 – were still in black and white and decidedly episcopal, showing St Nicholas in one frame and some sleepy children hanging up their stockings next to the fireplace in an adjoining one. The church and commercialism were starting their 200-year-long battle.

Sancte Claus was quickly fleshed out in the years after 1804, first by Washington Irving, who made fun of Dutch traditions in his History of New York, and then, crucially, in the 1823 poem “A Visit from St Nicholas”. Published anonymously in the Troy Sentinel, the poem was later claimed by Clement Clarke Moore, though some scholars believe it was written by Henry Livingston Jr. It was this poem, better known as “The Night Before Christmas”, which heralded the modern notion of Santa Claus.

The poem gave us the reindeer – “So up to the housetop the coursers they flew. With the sleigh full of toys, and St Nicholas too” 

– and a potent image of Santa. 

“He was dressed all in fur, from his head to his foot, And his clothes were all tarnished with ashes and soot; A bundle of toys he had flung on his back, And he looked like a pedlar just opening his pack. His eyes – how they twinkled! his dimples, how merry! His cheeks were like roses, his nose like a cherry! His droll little mouth was drawn up like a bow, And the beard on his chin was as white as the snow; The stump of a pipe he held tight in his teeth, And the smoke, it encircled his head like a wreath; He had a broad face and a little round belly. That shook when he laughed, like a bowl full of jelly.”

The jolly, impish, ho-ho-ho-ing Santa – a contrast to the more severe European figure, who was quite likely to give naughty children a whack with a cane – was born. But he was not yet dressed in red, and was more likely to be apparelled in an unappealing shade of brown, though plenty of other colours featured too – in an 1864 edition of “The Night Before Christmas” a curiously feline Santa is pictured in a fetching shade of yellow (even his sack is yellow).

The tradition of him wearing red began in the 1870s with the American cartoonist Thomas Nast, who introduced the red suit and cap, white fur lining and buckled black belt. Nast produced numerous drawings of Santa for Harper’s Weekly over a period of more than 20 years and, having first portrayed him in the Stars and Stripes (Nast was a passionate supporter of the union side in the American civil war) and in green, eventually achieved a representation of the Santa we know that owed much in spirit to “The Night Before Christmas”. His 1881 image of Santa quickly became something akin to an official portrait. 

Why Nast settled on red is hard to say. Some have suggested there was a link with the iconography of the original St Nicholas, who is often depicted in red robes, but more likely is that it just felt aesthetically right, chiming with the rosy-cheeked, red-nosed Santa of the poem, and with the red outfit playing off the whiteness of the fur, beard and snow – Nast was the first to portray Santa as a native of the North Pole. 

Nast’s Santa may also have owed something to the English tradition of Father Christmas, which is quite different from the St Nicholas story. The latter was written out of Christmas celebrations in England after Henry VIII’s split with Rome in the 1530s, and, Brexit-style, we settled instead on our own lord of misrule, a champion of revelry used as a stick with which to beat the Christmas-hating puritans. The Ghost of Christmas Present in Charles Dickens’ A Christmas Carol is a direct descendent of the generous, expansive, free-spirited 17th-century Sir Christmas or Lord Christmas, and, even though he wears a fur-lined green robe, his energy and sense of fun are akin to those of Nast’s Santa.

Despite Nast’s huge influence, the red-robed Santa had still not banished all rivals by the turn of the 20th century, and L Frank Baum’s 1902 book The Life and Adventures of Santa Claus was perfectly happy to put a grey-suited Santa on its cover. But within a generation the battle was over, and by the mid-1930s no self-respecting Santa would have been seen in anything but red.

The first part of red’s triumph came with the illustrations of JC Leyendecker and Norman Rockwell, especially their covers for the Saturday Evening Post in the 1920s. Both took the externals Nast had laid down but sought to humanise Santa by portraying him more naturalistically than their predecessor.

The definitive image of the red-robed one was, however, the product of hard-nosed commercialism. Coca-Cola wanted to boost its winter sales and hit on the idea of Santa being a coke drinker in a campaign tagged “Thirst Knows No Season”. They used Santa imagery throughout the 1920s, but only in 1931 did they produce an ad the public really warmed to when they commissioned a painting by Haddon Sundblom, an American artist of Swedish and Finnish heritage (many of the Americans responsible for creating the modern Santa have roots in the Europe of St Nicholas

Sundblom conjured up an idealised Santa – vast of stomach, red of face, with little round spectacles; so perpetually jolly and grinning that it must have been exhausting for the old fellow

Sundblom carried on doing Coca-Cola’s Christmas ads until the mid-1960s, and 30 years of his coke-swigging Santas meant St Nick could never again be dressed in anything other than red or, indeed, be seen scowling at naughty children. Traditional ecclesiastical practices may be strong, but they are no match for Madison Avenue.

The Guardian 

Christmas has been ‘taken hostage’ by Materialism – Pope Francis. 

A world often obsessed with gifts, feasting and self-centredness needs more humility.

“Jesus was born rejected by some and regarded by many others with indifference. Today also the same indifference can exist, when Christmas becomes a feast where the protagonists are ourselves, rather than Jesus; when the lights of commerce cast the light of God into the shadows; when we are concerned for gifts, but cold toward those who are marginalised.”

“This worldliness has taken Christmas hostage. It needs to be freed.”

The Guardian