Consider the similarities: each Santa sits upon a throne and receives from strangers demands for free goodies. Each child who asks for things from Santa asks for these somethings free of charge. Others – Santa and his elves – bear the full cost of supplying little Johnny with his bicycle and little Suzie with her doll.
Therefore, from the perspective of each child, requests made to Santa are costless – there’s no reason to hold back. Each child will request many more toys than he or she would buy if he or she had personally to pay the cost of making the toys.
Politicians are surprisingly like shopping-mall Santas. Each elected official is routinely approached by representatives of this and that special-interest group – sugar farmers, trade unions, the steel industry, the textile industry, the plastic-bag industry and on and on and on. Each lobbyist asks elected officials for some special favour, usually a privilege that must be paid for by third parties.
There’s little reason, therefore, for lobbyists to moderate their requests. So they ask and ask and keep on asking. It’s actually quite a child-like arrangement. (Indeed, just as children often bellyache and whine when Christmas morning reveals that Santa did not fulfill every wish, interest groups often bellyache and whine when government doesn’t come through with every requested special privilege.) Of course, the analogy between shopping-mall Santas and politicians isn’t perfect.
Shopping-mall Santas are less harmful than politicians. To see why, imagine for a moment what the world would be like if shopping-mall Santas actually possessed some of the power possessed by politicians. Each Santa would receive the requests of all the little children visiting his mall. All of these Santas would then assemble in a grand building – say, a marble-domed edifice at the North Pole – and inform each other of the different demands that each Santa received from the children. Each Santa would seek to satisfy as many of “his” children’s requests as possible.
Satisfying such requests – assuming no elves exist – requires the House of Santas to get resources from third-parties. This is where our assumption that Santas enjoy power similar to that enjoyed by politicians comes in. With the best of intentions, the jolly old fellows tax and regulate the faceless masses in order to satisfy the requests of the cute little Suzys and the adorable little Johnnys.
Of course, the masses are not completely accommodating. If the Santas tax too heavily, they risk getting fewer, rather than more, tax revenues. So not each and every and all requests of each child can be completely satisfied. Bargaining among the different Santas assembled will determine just which demands are completely satisfied, which are ignored, and which only are partly satisfied.
But clearly the amount of society’s resources used to make toys will be excessive. Each child who registered his or her demands with a shopping-mall Santa was unconstrained in doing so. Likewise, in seeking to satisfy as far as politically possible each child’s request, each Santa is spending other people’s money. The world would have far too many toys and too little of those things that children don’t fancy.
We should be jolly happy that each shopping-mall Santa in fact immediately forgets each child’s request the moment each child hops down from his knee. Too bad members of Congress take their role as Santa much more seriously.
First published on the Cafe Hayek blog.