During a long conversation with a friend while driving from shutting up a house in Italy for the winter and heading back to Germany, he asked what I thought about the economics of Christmas.
One thing I always try to do is think of things people much smarter than I have said. To do that, I have to figure out the best way of approaching the topic.
More to profit or reward than just financial gain
Most people, when they talk about economics, talk about finances, dollars or rands, profits or losses, and similar things. But then I remember a conversation I had with Dr. Milton Friedman, the Nobel Laureate in economics.
He and his wife Rose had joined me at a function I organised for a few hundred people where he was the after-dinner speaker. He had just finished his main speech. Before he took questions, an announcement was made about reduced price parking vouchers being available. Friedman leant over and said, 'Make sure I get one of those.'
I told him not to worry, we'd be paying his parking. After all, he had spoken to us as a favour and wasn't receiving his usual substantial honorarium. He continued to insist I shouldn't worry about that and said, 'I'm happy to pay for my parking, I just don't want to pay full price'. A rather typical response for a world-respected economist.
I handed him a voucher and said, 'Dr. Friedman, this has to be one of the smallest honorariums you have ever received.'
He then said something I’ve never forgotten: 'A good economist will tell you there is more to profit or reward than just financial gain.' He meant the emotional profit he gained made it worthwhile for him to put aside his honorarium in order to spend an evening with a group of people who shared many of his values.
In many people's minds, the philosopher/novelist Ayn Rand wrote only about profits and 'greed'. Yet, one of her main characters, Howard Roark, who often spoke for Rand herself, said of his architectural work, 'I don't build in order to have clients, I have clients in order to build!'
His point was it's his work that mattered – something exemplified when we saw him still doing the work even when his financial gain was minimal at best.
Rand did the same thing, though many people never knew it. She would speak every year at the Ford Hall Forum in Boston. The moderator for the Forum told the audience that the 'greedy' Rand was one speaker who never used her fame to demand huge sums and told her an audience member wanted to know if this was a contradiction to her own values.
She replied: 'You assume that the only possible values one can derive from any activity are financial, therefore anyone who wants to be a speaker does so only for a very high fee. Well, you know, that is placing your self-interest terribly low and terribly cheap.'
Making our existence better than it has been
When Friedman's 'good economist' speaks of profit, like Rand, he means more than financial gains.
The whole purpose of human action is to make our existence better than it has been. We don't act to intentionally make ourselves worse off. Improvement is the goal and it means more than just financial reward. When we give gifts, we do it out of appreciation to people.
I once put these words in the mouth of a character in a fictional story I wrote: 'Love is totally and rightfully selfish. I love the joy on their faces when they receive a gift from me. Because I love them, seeing them happy makes me happy'.
Giving, when properly done, is very selfish. It ought to make you as happy, if not more so, than the person you give to.
Rand once wrote of her joy at Christmas: 'The charming aspect of Christmas is the fact that it expresses goodwill in a cheerful, happy, benevolent, non-sacrificial way'.
One says: 'Merry Christmas' - not 'Weep and Repent'. And the goodwill is expressed in a material, earthly form - by giving presents to one's friends, or by sending them cards in token of remembrance.
On the one hand, the large manufacturers and shops that produce the many items we give as gifts have to cover costs and pay their workers. On the other, it is a very different kind of profit involved for the gift-giver. It is the pleasure and joy of bringing a smile to the face of people for whom we care.
We all profit in a world where kindness, caring and benevolence exist, and any 'good economist' would agree.
This article was first published on BBrief on 24 December 2020