Libertarianism and Consumerism

Happy Black Friday, everyone. Today is the day when we celebrated the way in which consumerism saves us from all economic woes.

Or not.

Did you know that FDR once changed the day we celebrated Thanksgiving? Since Abraham Lincoln's declaration in 1863, Thanksgiving had always been celebrated on the fourth Thursday in November. So why did FDR change it? You guessed it--to save businesses!

For 75 years after Lincoln issued his Thanksgiving Proclamation, succeeding presidents honored the tradition and annually issued their own Thanksgiving Proclamation, declaring the last Thursday in November as the day of Thanksgiving. However, in 1939, President Franklin D. Roosevelt did not. In 1939, the last Thursday of November was going to be November 30. Retailers complained to FDR that this only left 24 shopping days to Christmas and begged him to push Thanksgiving just one week earlier. It was determined that most people do their Christmas shopping after Thanksgiving and retailers hoped that with an extra week of shopping, people would buy more.

So when FDR announced his Thanksgiving Proclamation in 1939, he declared the date of Thanksgiving to be Thursday, November 23, the second-to-last Thursday of the month.

(Unfortunately, none of FDR's policies ever did quite have the economic impact so many people claim: the Great Depression didn't end until after World War II was over. See also here.)

As a Christian with libertarian leanings, I'm often faced with the question about free markets and consumerism. Is the greatest society we can come up with really one in which people are simply free to pursue their material well-being, without regard for higher values? Obviously not. So why wouldn't I be in favor of a structure of government which keeps the profit motive in check, and which doesn't favor the greedy?

I have spent many words answering these questions in a philosophical way, but one should also notice the historical irony behind these questions. America has never embraced socialism, which according to its strict definition means government-run production. Rather, thanks to the influence of Keynesian economic theory, we have instead embraced corporatism, in which the government takes the role of business partner with the capitalists who produce goods.

Keynesian economics is important here. The vulgar form of this theory (that is, the most common form) is that during an economic recession, the government needs to increase consumption in order to spur producers on to further growth. This consumption-oriented mentality is now pervasive in our culture. The media endlessly parrots the idea that our major economic problem is not enough consumption. Every year reporters constantly fret about how well retailers are doing during the Christmas season. We are made to believe that it is our patriotic duty to spend more and thereby revitalize our economy.

But this idea is no libertarian idea. You will not find it in the writings of Ludwig von Mises, Friedrich Hayek, or Milton Friedman. You will not hear ReasonTV telling you to go out and shop more. Can you imagine Ron Paul saying we need to spend more?

No, the defenders of liberty are always the ones asking just the opposite: we must save so that we can invest; we must invest so that we can grow; only a fool would spend more to buy himself out of debt. (There are exceptions, of course; many worthwhile ventures require a great deal of risk. But it is the general idea that I'm attacking here.) Is there any doubt which philosophical movement is more responsible for the all-pervasive debt we see in our society, both in government and among private citizens? Inflation, easy credit, and increased government spending are all based on the assumption that the short term is everything--and this assumption seems to be the cultural by-product of a philosophy which is skeptical of both freedom and personal responsibility.

Libertarians want all people to free from violence and coercion. We have never promised that we can ever be free from the realities of life. Undoubtedly, people who are free to make their own choices with their excess wealth will often choose to spend it frivolously. This is not an inherently bad thing; would we really want to live in a society in which no one ever used anything without precisely weighing its value? What a dreadfully dull society that would be! But a society which feels compelled to spend beyond its means, which feels it is a God-given right that they should spend excessively year after year, which feels that consumption drives economic growth--that is a society doomed to fall apart.

So while I believe strongly that the government has no right to tell you what to buy or not to buy this holiday season, I am equally convinced that a truly free people would not be so foolish with money as we now see people are. True freedom also means real responsibility, and real responsibility teaches us through the discipline of economic realities. If consumerism was originally the product of economic freedom, its only cure is more freedom--not government sponsored capitalism.

A warning for Black Friday

I just a read a classic George Will column on why Christmas spending is so outrageously inefficient. Commenting on the book Scroogenomics: Why You Shouldn't Buy Presents for the Holidays, he points out:

Gifts that people buy for other people are usually poorly matched to the recipients' preferences. What the recipients would willingly pay for gifts is usually less than what the givers paid. The measure of the inefficiency of allocating value by gift-giving is the difference between the yield of satisfaction per dollar spent on gifts and the yield per dollar spent on recipients' own purchases.

Oh, George, you're all about efficiency. But seriously, the author of this book, Joel Waldfogel, has estimated that about $85 billion are wasted each year because of gift-shopping. And it hurts our economy, rather than helping it.

As Will writes,

If all spending justified itself, we would pay people to dig holes and then refill them -- or build bridges to unpopulated Alaskan islands. Spending is good if the purchaser, or the recipient of a gift, values the commodity more than he does the money it costs. Otherwise, there is a subtraction from society's store of value.

(Without saying so, Will is giving a subtle lecture on politics. One can easily see how the same principle would apply to the idea of government "stimulating" the economy. The question is not how much money goes through the system, but whether net value has actually been added.)

But don't people get net value from presents? It's the thought that counts, as they say. Maybe it's not all about efficiency, as stodgy conservatives think it is.

And yet, let's be honest--the thought that supposedly counts isn't usually very deep. My own family tradition has often involved excruciatingly excessive gift-giving, and the fact is you just have no idea what to get people. It's not just inefficient in terms of cost, it's inefficient in terms of people's feelings. You have no idea whether that person is going to like it.

As Will so cleverly puts it, "Were it not for sentimentality about sentiments, which are highly overrated, we would behave rationally..." (He goes on to suggest giving cash, which I admit is a little crass... but there's always gift cards!)

I think conservative religious types probably deserve to feel vindicated about this. In constantly harping on the excessive commercialization of Christmas, they're actually condemning something that legitimately hurts our economy.

So what can we do instead of gift-giving? Well, there's nothing wrong with gift-giving--as long as it's limited (the average American currently gives 23 gifts a year!!), and as long as it's meaningful. You don't add net value to an economy unless you provide something that will actually matter to people.

(Could it be that better relationships with one another would actually help our economy? Maybe a fundamental problem with this insane gift-giving is that we don't know each other well enough to see what would actually be meaningful.)

So this year, tell your friends and relatives you're going to help the economy by making your gift-giving more efficient. Limit the number of gifts you give, and make them meaningful.

Maybe you could buy them Waldfogel's book...

Happy Thanksgiving, everyone.