The economics of Christmas

A holiday satire, one that does a good job personifying some of our more prominent online economic commentators:

Open Borders: Why should they stop at Christmas?

By Tyler Cowen, Marginal Revolution

Every year the American government briefly relaxes its stranglehold on our borders to permit the entrance of Santa Claus and his team of reindeer. If this is a good thing on Christmas, imagine how much better it would be if we made this our year round policy? Have you ever eaten in an Elven restaurant? The candy canes are sublime.

While there are some who think that competition with elf workers would impoverish American workers, there is not a lot of evidence to support this. In fact, the toy making of the elves would likely be complimentary to native production. What's more, the wealth generated by elven labor would add to economic growth.

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Is Christmas Deflationary or not?

By Izabella Kaminska, FT Alphaville

As we pointed out quite some time ago, there are serious questions to be raised about the deflationary possibilities of Christmas. 

[The rest of this article is free but you must register with the Financial Times. And later, if you want to read this again, you will have to register again. And again.]

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I rode on Santa's sleigh and it was surprisingly comfortable

By Henry Blodget, Business Insider

I have very long legs. The seats are made for jolly old elves. Take a look at all these pictures I took.

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Here's what you need to know about this year's big Christmas econ-war

By Joe Weisenthal, Business Insider

[Click to view this 28 page slide show on one page]

Makes a great companion to this list of the 10 least successful holiday specials of all time.

Bob & Carol & Ted & Santa (1973)

This ABC Christmas special featured Santa as a happy-go-lucky swinger who comically wades into the marital bed of two neurotic 70s couples, and also the music of the Carpenters. It was screened for television critics but shelved by the network when the critics, assembled at ABC’s New York offices, rose as one to strangle the producers at the post-viewing interview. Joel Siegel would later write, “When Santa did his striptease for Carol while Karen Carpenter sang ‘Top of the World’ and peered through an open window, we all looked at each other and knew that we television critics, of all people, had been called upon to defend Western Civilization. We dared not fail.”

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Noam Chomsky: Deconstructing Christmas (1998)

This PBS/WGBH special featured linguist and social commentator Chomsky sitting at a desk, explaining how the development of the commercial Christmas season directly relates to the loss of individual freedoms in the United States and the subjugation of indigenous people in southeast Asia. Despite a rave review by Z magazine, musical guest Zach de la Rocha and the concession by Chomsky to wear a seasonal hat for a younger demographic appeal, this is known to be the least requested Christmas special ever made.

I'm likely the exception, but I'd watch some of these if they were made.

A holiday tech support masterpiece

Every holiday season, many techies complain vociferously about going home and having to play tech support for all their relatives, especially their parents. Whenever I read the exasperated tweets, I think of this comic masterpiece in McSweeneys: In which I fix my girlfriend's grandparents' wifi and am hailed as a conquering hero by Mike Lacher.

Lo, in the twilight days of the second year of the second decade of the third millennium did a great darkness descend over the wireless internet connectivity of the people of 276 Ferndale Street in the North-Central lands of Iowa. For many years, the gentlefolk of these lands basked in a wireless network overflowing with speed and ample internet, flowing like a river into their Compaq Presario. Many happy days did the people spend checking Hotmail and reading USAToday.com.

But then one gray morning did Internet Explorer 6 no longer load The Google. Refresh was clicked, again and again, but still did Internet Explorer 6 not load The Google. Perhaps The Google was broken, the people thought, but then The Yahoo too did not load. Nor did Hotmail. Nor USAToday.com. The land was thrown into panic. Internet Explorer 6 was minimized then maximized. The Compaq Presario was unplugged then plugged back in. The old mouse was brought out and plugged in beside the new mouse. Still, The Google did not load.

Some in the kingdom thought the cause of the darkness must be the Router. Little was known of the Router, legend told it had been installed behind the recliner long ago by a shadowy organization known as Comcast. Others in the kingdom believed it was brought by a distant cousin many feasts ago. Concluding the trouble must lie deep within the microchips, the people of 276 Ferndale Street did despair and resign themselves to defeat.

So rather than grumble, remember this: your relatives will regard your ability to fix their gadgets and doodads as some sort of fucking sorcery. Rejoice in your power.

David Walsh

A key feature of the markets Walsh and his partners invest in is that they are characterised by randomly “independent events”. Specifically, the occurrence of one event does not influence the chance of the other and they therefore have “finite variance”, or limited downside risk.

“Gambling has the huge benefit of having independent events – I cannot get blown up by the black swans that plague financial markets.”

He says deploying mathematics in “equities markets that may have infinite variance outcomes makes working out probabilities much harder”.

“You don’t know whether you are summing a sequence of fractions that add to one or if they add to infinity, because financial markets have non-independent [or potentially related] events,” he says.

The bankable independence of results in gambling markets is the “component of our strategy that gives me the most security”, Walsh says.

“It is even better in games like black jack, where the events are not only independent but also negatively correlated – your chance of winning goes up if you lost the previous hand because there are an excess of cards remaining that are advantageous to you.”

He is critical of the billionaires printed in financial markets who “often make money in the low-probability, high-opportunity outcomes that are essentially exhibiting ‘correlated parlays’ [where one event significantly influences the probability of another].

“Correlated parlays make people look smart and can create a whole bunch of rich folks, but there was probably nothing but pathologies in the financial data.”

From a profile of David Walsh, a guy who made a fortune using quantitative models to gamble professionally. Walsh seems to have a healthy appreciation for the role luck has played in his success and is redeploying much of his fortune to build an eccentric art museum in Tasmania.

It's his explanation of his success that is worth studying.

Asked about exactly what his team’s “edge” has been over the years, Walsh distils [sic] it down to embracing the wisdom of crowds.

“You can work out some complex algorithm to predict horse racing odds using multinominal logistic regression,” Walsh says. “But the result would significantly underperform the public odds.

“The key is that the public odds must be included in your model. The best models are not predictive models per se, but ‘perturbation’ models that start with the assumption that the public is right and then work out what small errors they might make.

“The public odds are not just an important signal – they are a remarkably efficient signal.”

He cites the example of the former Russian chess grandmaster Boris Spassky, who played and lost to the Russian public in a game of chess.

He describes the public’s ability to make accurate collective decisions as an “emergent strategy”, like birds flocking or democracies (which form not in the mind of one individual, but through the interactions of many).

“I am saying there is wisdom in crowds beyond the point you can model without explicitly incorporating it.”

How does this system work in practice? “Let’s talk about Sydney race night on Saturday,” Walsh explains.

“We might have a model of what we think the probabilities should be that includes the public odds.

“We essentially wager on those events that have better chances than the public thinks, which gives us a positive return expectation.”

Actually, Love Actually...

I’m sure many of these takedowns of Love, Actually have been around since the movie first came out, but this is the first season I’ve really noticed them all. The movie had already evolved from surprise hit to unabashed guilty pleasure, a sort of annual holiday ritual up there with A Christmas Story or Miracle on 34th Street. Who among us has not read, on social media, someone declaring their unembarrassed delight at discovering Love, Actually playing on TV, even though the movie has become so popular that it really wasn’t a guilty pleasure.

And now, the backlash.

A romcom in which two characters find love because they are both interesting, clever, funny, accomplished, kind, confident, attractive—insert your favorite adjective here—and play equal parts in winning of the affection of the other would not only fail to scratch this itch, it would be depressing. We don’t go to movies to watch people more interesting, clever, funny etc etc than ourselves achieve love and happiness in a context very much like that of our real lives—that’s what we are watching in our real lives. We go to movies to be reassured that we can have those things without being transformed ourselves. The viewer-identification characters here, then, need to seem basically good and genial—we’re not going to project ourselves onto someone actively unlikable—but also bland and passive enough that they don’t leave us feeling like true love is for people with desirable characteristics we conspicuously lack.

If there’s something to this hypothesis, then, the women in movies like Love, Actually are just as underdeveloped and lacking in agency as women in (say) macho action movies, but for completely different reasons. In the male-targeted fantasy, women are essentially prizes to be won by the hero the male viewer identifies with. In the female-targeted fantasy, they’re equally ciphers because these are fundamentally not fantasies of self-transformation, which means the viewer-identification figure needs to be a vacuum anyone can step into as they already are. In movies about external goals, we can accept needing to become better in some way (through our onscreen surrogates) over the course of the film in order to achieve them. But people want to be loved for who they already are—to find the person who wants just what we already have, rather than becoming what the other person needs. That, in a way, is the most fantastical element: It is the external trappings of love without (at least for the character the viewer identifies with) the selflessness or transformative process that real love and real relationships—even more than Jedi training or a semester at Hogwarts—always entail.

Here’s one in a different voice, the voice of Jezebel, goddess of female wrath.

In keeping with that theme, Alan Rickman's secretary is just constantly pointing at her vagina and licking her own face, like she's a porn actress who forgot she was doing a mainstream movie. Or, more accurately, like the character is a porn actress who forgot she was working in a real office. I don't mean that there's anything wrong with porn actresses, or that the actress who plays Alan Rickman's secretary is anything but lovely here, I mean that LOVE ACTUALLY SEES NO PROBLEM WITH TREATING ITS FEMALE CHARACTERS LIKE GIANT BIPEDAL VAGINAS IN SWEATER VESTS.

(Also, she's still looking for a venue for the holiday party and it's only three weeks before Christmas!?!?! This is why you shouldn't hire any non-sentient organ to do clerical work. No matter how sexy it is.)

Anyway, the flirtation is a problem because Alan Rickman is married to Emma Thompson, but don't worry—she wears foundation garments and talks too much (see above) and therefore deserves to die alone with nothing but Joni Mitchell for comfort.

Laura Linney, the only other female character with some semblance of an inner life, meets a similar fate.

This is a movie made for women by a man.

But it’s not just women who have issues with the movie. In The Atlantic, Christopher Orr declares Love, Actually Is the Least Romantic Film of All Time:

Of the movie’s seven romantic plotlines, too, I think one is rather endearing. Having Martin Freeman and Joanna Page discover they're attracted to one another in the midst of pretty much the least romantic activity possible—being ordered into a variety of rushed, pseudo-erotic poses on a movie set—is a clever conceit, and tidily executed.

As for the rest of the film—which is to say, the bulk of the film—I think it offers up at least three disturbing lessons about love. First, that love is overwhelmingly a product of physical attraction and requires virtually no verbal communication or intellectual/emotional affinity of any kind. Second, that the principal barrier to consummating a relationship is mustering the nerve to say “I love you”—preferably with some grand gesture—and that once you manage that, you’re basically on the fast track to nuptial bliss. And third, that any actual obstacle to romantic fulfillment, however surmountable, is not worth the effort it would require to overcome.