Monday, December 21, 2015

Santa Needs Prices

Leave it to Robert P. Murphy to explain why Santa Claus needs prices. Murphy, the author of Choice: Cooperation, Enterprise, and Human Action--a book that makes Ludwig von Mises's masterwork in economics and social philosophy accessible to general readers--has a gift for illustrating important economic principles with clever examples. In his latest piece for The Freeman, Murphy tells us why Santa, as hardworking and conscientious a worker as any that ever lived, would do an even better job of delivering toys to all the world's good girls and boys if he were to use market prices to help guide his decision-making. READ MORE

Santa Needs Prices, by Robert P. Murphy (The Freeman, 12/15/15)

Robert P. Murphy
A superficial observer might argue that Santa Claus has no relevance to economics, because in Santa’s world, there is no scarcity. But Santa, though magical, is not omnipotent. He faces constraints.

First, Santa only delivers tangible, conventional presents to boys and girls. If someone wrote him a letter asking for world peace, cold fusion, or a resolution of the Riemann hypothesis, I don’t think Santa could deliver. Santa is a nice guy, and he surely recognizes that, say, perpetual nutrition for the world’s poor is more important than giving Jimmy in Boise a new toy train. So we must conclude that Santa is only capable of creating and delivering specific material items to the lucky recipients on Christmas Eve.

How does Santa decide what orders to give his elves to fill that bag? ....Santa knows that if he wanted to give Susie one more doll, then at least one other kid on Earth would have had to get a different mix of toys. .....will make one child happier only by making at least one other child less happy.

My Comment: The above is reposted from The Freeman. Robert P. Murphy is a Research Fellow at the Independent Institute and Research Assistant Professor with the Free Market Institute at Texas Tech University. Robert P. Murphy is a Nashvillian and is an occasional attendee at the monthly Liberty on the Rocks gatherings and I have had the pleasure of meeting him. Unfortunately even grown up liberals still believe in Santa Claus and that all wants can be satisfied by the magic of government spending and there are no constrains or limits if we all just believe. It does not make you a scourge to accept reality. The market can deliver more goodies to more people than the magic of good intentions. 

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