Economic Theory

Friedrich Hayek’s Christmas Letter


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Tax and Fiscal Policy
December 24, 2018

Dear (Saint) Nicholas,

Thank you once again for your peer review of my latest work, The Road to Krampus. I found your comments illuminating, although I suspect few will require editorial changes.

To refresh our memories, the core narrative of the paper is how some of the North Pole’s apparently well-intended ‘Social Justice’ policies are causing a dangerous slide towards tyrannical outcomes you may not have intended.

For example, while I appreciate the centrality of the ‘naughty or nice’ list to your distribution model, and that there is much to commend an approach based on merit rather than outcome equality, does this degree of central planning really work?

I note for your information the economic calculation fallacy, you cannot possibly accurately forecast who will get want or what impact this might have on production using your model. No amount of ‘getting the right experts’ in the room will change this. The approach is flawed.

In a free market for giving parents determine the behavioural merits of their own offspring, and decide the implications, if any, for both birthdays and other festivals. There is no organising principle to these decisions. They result from culture and custom, changing only in their scope and generosity as a result of (usually) rising prosperity. The result is a wonderous riot of gifts and fun, at all times of the year, contributing to the happiness of children the world over.

Contrast this with the gift experience as delivered by the Central Committee of Elves. Definitions of naughtiness or niceness are arbitrary, and entirely divorced from the personalities or circumstances of the individual children they seek to assess. It results in a crude scoring system and a hard line between the two outcomes that ignores marginal cases. Young Boris for example seems entirely at a loss which letter to send the Prime Minister this year in order to stay the right side of the line.

Not only this but the data collection mechanisms required to deliver this dubious assessment of worth are entirely intrusive. You say that the ‘Elf on the Shelf’ is a entirely beneficial companion. But I question how having a delegated civil servant, permanently in my house to calculate the efficacy of my children’s play is anything other than grotesque invasion of privacy. And you don’t want to know what my offspring walked in on when the Fairy Inspector from the Department of Teeth stopped by for an unannounced rummage under the pillows. These horrors though are a direct consequence of your policies.

Then there is your delivery mechanism. I do appreciate that hypersonic reindeer-powered sleighs are a wonder of the modern age. Indeed my friend Mariana Mazzacuto cites them as an example of something that can only be delivered by state-financed support for innovation. But the market has given us Amazon!

Personally, I prefer receiving my gifts in a pre-planned one hour slot by van, rather than spending Boxing day hosing down the tiles after Rudolph’s latest unsolicited extra presents, or hoovering up coal dust from the carpet by the tree. How quite that gets there when we have central heating is perhaps a mystery for another time.

Then we come to the elephant, or rather goat-horned hairy demon in the room, Krampus. As an Austrian I appreciate you need to respect tradition, but was there really any need to deploy an entity from the pagan practices of Alpine tribes to beat children with whips and twigs, let alone throw them in sacks, or cart them off to Hades for coming bottom of the list?

This Nicholas is where your utopian vision of a Christmas has led. Vast regions of Lapland have been converted into elven sweatshops with impossible output targets, incentivised only by vague assurances about promoting yuletide joy for all. The miserable workers produce wooden tat that hasn’t been popular since I was a boy; and appear to have deforested half of Karelia in the process.

The distribution points across the world involve children queuing, sometimes for hours, in order to be made uncomfortable by a Santa Party official dressed in homage to you, the Dear Leader, in a costume you appropriated from Coca Cola. I feel we should discuss my papers on psychology and dictatorship further, on this point, at a later date.

Meanwhile the Danes came up with Lego, which can be purchased for money, at a till.

And doesn’t require anyone to go to hell in a hessian sack.

I strongly urge you to rethink your approach. Trust the people to spread happiness at Christmas. Allow the organised spirit of giving to emerge spontaneously from their efforts. Above all please sack the hircine stormtrooper and release the little folk from their bondage.

Yours in the spirit of a free Christmas,

Frederick von Hayek

 

Andy Mayer is Chief Operating Officer at the IEA. Andy worked as Head of Public Affairs, UK & Ireland at BASF plc for seven years. He has over 20 years of experience in strategic communications and the operations that support them in the business and think tank worlds.


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