If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three.’ As Winston Churchill noted, economists rarely agree on anything. And the topic of Christmas should be no different. Here is our guide to the macroeconomics of Christmas:
Keynesians – place a lot of emphasis on the ‘macro stabilization’ properties of Christmas. Ideally, they would vary the number of Christmases each year according to the state of the economy. This is best summarized by Paul Krugman’s depression paper ‘Wish it could be Christmas every day’, in which he also acknowledges his love of British glam rock. The Keynesians would like to see a larger role for the state, including publically-funded Santas.
Austrians – Believe Christmas is dangerous because it inevitably ends with a nasty January hangover. Also worry about the moral hazard implications of gift-giving and the propensity for overinvestment in Christmas decorations. Reject the idea of ‘public’ holidays, arguing the free market would lead to a better outcome. Monetarists – Convinced they are the only ones who know how Christmas ‘really works’ and quickly become frustrated with other economists’ lack of understanding. Their thinking can be reduced to a simple identity, though this is vulnerable to shifts in the velocity of Santa’s circulation. Hardcore monetarists believe in the tight control of chocolate coins to prevent the hyper-inflation of waist lines and the hyper-activity of small children.
Chicago School – argue Christmas has no meaningful impact because gift-giving nets out. Fully rational individuals will anticipate this and adjust their behaviour accordingly.
Macroprudentialists – busy thinking up ways to ‘smooth out’ Christmas. They would like to ‘lean against’ the festive season, perhaps by tightening credit and raising alcohol prices in mid-November and reversing these policies in early January. Some hardliners would like to introduce quantitative controls on Santa’s toy factory.
Secular stagnationists – claim Christmas hasn’t been as much fun since the mid-1990s, but can’t really explain why. Perhaps it has something to do with the music.
And, of course, the central banks are equally divided:
The Federal Reserve – big fans of Christmas and even have their own Santa lookalikey (though, unlike the real Mr C, he is set to retire soon). Becoming frustrated that Santa’s sleigh isn’t one of their policy tools and that they can only influence Christmas indirectly by giving presents to bankers and hoping they re-gift them to the rest of society.
The ECB – Generally in favour of Christmas but have a small and powerful minority who believe gift-giving is immoral and must eventually lead to hyper-inflation. President increasingly frustrated with this group’s sobering impact on their annual Christmas party.
The Bank of England – committed to enjoying Christmas on the 25th December, subject to several clearly specified caveats and ‘knock-out’ factors. Have produced a 24,000 page paper explaining how these work.
The Bank of Japan – spent 20 years telling everyone Santa didn’t exist and that Christmas was a waste of time. Have now changed their minds, but seem to have a credibility problem.
And not forgetting:
The UK government – See Christmas as a good opportunity for the Queen to educate the masses, but worried about its intrinsic ‘socialist tendencies’. Ideally would like everyone to work on Christmas day so the UK can better compete with China. (Plutocrats are excluded, to support the demand for yachts/jets/country houses.) Believes Santa should be re-deployed to take money from poor benefit recipients and re-gift it as state-subsidized mortgages to potential voters.
US Congress – It just won’t feel the same this year without their version of the traditional Christmas family row.