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Monday, December 24, 2018

Santa Claus and the Mythology of Centralized Systems

Like other centralized economic schemes, we can only continue to believe in the myth of Santa Claus if we also believe in magic.


Every year as the Christmas holiday approaches, young children are inundated with stories and media of everyone’s favorite jelly-bellied, red-clad, bearded gift bearer: No, not Karl Marx, Santa Claus. The mythology runs deep, spanning different cultural and religious roots, evolving through time, and adjusting to various social norms of the day. While modern interpretation and practice can vary widely from house to house—and even more so from nation to nation—with even Santa’s gender identity up for debate, the general concept of Santa Claus is sufficiently universal that the jolly figure is easily identifiable in much of the world.

But he doesn’t exist.

Sorry, Kids, Santa Ain’t Real, but If He Was…

Sure, Santa exists in our hearts, through our actions, and in our celebratory rituals, but the figure popularized in poetry and celebrated in song is not an actual person. There is no great co-working space at polar north inhabited by craftsman elves, no airborne caribou with luminescent muzzles, and no time-warping sleigh creating chaos for the sky watchers at NORAD.

None of this comes to pass through the actions of an actual Santa Claus.

The idea that a central figure can plan and execute the production and distribution of goods to people all over the world is a myth, and like similar myths of centralized production schemes, it is only able to sustain its existence insofar as a decentralized network functions to support it. Companies plan product launches and marketing campaigns that inspire children to write letters to Santa Claus seeking specific gifts. Parents and other adults plan and plot, shop and sneak around to keep gifts a secret so as not to dispel the great myth before they might deem appropriate. Media producers spin stories around Santa’s heroic feats. None of this comes to pass through the actions of an actual Santa Claus.

But what if it did? What if the prevailing version of Kris Kringle was an actual human responsible for countless holiday gifts and their production and distribution?

How would the elves know the correct quantity of each video game system or talking doll to produce?

Where would his elves obtain the necessary resources to meet their production quotas?

Would Santa have the localized knowledge to minimize the deadweight loss of gift-giving more so than personal friends and family members?

Is it possible that Santa’s naughty and nice lists might be populated with data collected via the NSA, or would his methods more closely resemble the social credit system recently implemented by the Chinese government?

Does he even have a work visa?

To deliver all of those packages to each home in the United States alone would require a supply chain comprised of every employee of Fedex, UPS, and whatever redeeming elements may remain of the USPS, plus an army of Amazon warehouse pickers and packers. Do those workers get paid at their holiday rate? How does the elf union feel about non-elves doing such work?

If Santa Claus alone does the delivery work himself (suspending our current understanding of space-time, or at least the laws of physics), how does he acquire the appropriate import/export permits in a timely fashion?

Does he even have a work visa?

You Can’t Suspend the Laws of Economics

Last year, the USDA satirically issued an APHIS permit to Mr. Claus to be able to freely move his reindeer in and out of the country as necessary, but this flippant gesture sheds light on the countless regulatory hurdles that are characteristic of centralized authority.

The real process, though perhaps less mystical, is no less enchanting.

Try as we may to suspend the laws of governments in order to enable Santa Claus to complete this impossible project, we simply cannot suspend the laws of economics (or physics, for that matter). Resources are scarce and have alternative uses. Preferences are subjective and not always easily understood or communicated. Knowledge is distributed, but prices established through trading in the market can help communicate relative preferences for more optimal resource allocation. Like other centralized economic schemes, we can only continue to believe in the myth of Santa Claus if we also believe in magic.

The real process, though perhaps less mystical, is no less enchanting. To the extent that each person around the globe is relatively free to pursue their interests, through specialized labor and voluntary exchange in the marketplace an order emerges. It matters not if we share a common mythology, language, culture, or even if we desire the same ends; order emerges. It certainly isn’t perfect, but it is just perfect enough that we are able to give the credit to a mythical figure and his multitude of magical makers, and wide-eyed children see plausibility in that story.

But just as children grow from believing in Santa Claus to playing an active role in being Santa Claus, so too do we grow to look beyond the myth of magical central planning and to play a part in the distributed system of the market, for that is where the magic of Christmas is repeated every single day.


  • Thomas Bogle is a freelance educator, specializing in economics and entrepreneurship education. He is also the director of the Free Market Educators Association and a curriculum adviser for the Association for Teaching Kids Economics. He and his wife homeschool their six children and participate in several educational co-operatives.