The problem with Christmas gift giving is that it can be terribly uneconomic, with significant deadweight losses involved.
 
Apart from the strained smiles and “thank you, this is exactly what I wanted!” exclamations upon receiving one’s 10th pair of socks, deadweight loss occurs when the recipient does not value their gift as much as the giver pays for it. There is also the cost of time lost elbowing your way through the how-did-Christmas-creep-up-so-fast shoppers, and other traumas unique to the holiday season.
 
So how do you avoid the efficiency losses of gift giving?
 
It certainly helps to know the recipient intimately and to recognise their wants and needs. Having a prior relationship with the person also inspires generosity. That is why most people spend more on their spouse than they do on their workplace Secret Santa.
 
But if many of us struggle to avoid deadweight loss when considering the needs and wants of those closest to us, how could the government possibly get it right in social policy?
 
I have written previously on why the government is not Santa, explaining that public policies are paid for by fellow taxpayers, not gifted from some benevolent, faceless entity. However, it also holds that it would be very undesirable for the government to be Santa.
 
The government may be best placed to deliver some things, such as core services (for instance, law enforcement, defence and infrastructure), but there are other areas of our lives, such as social ills, that it struggles to serve well.
 
New Zealanders evidently feel strongly about a number of social causes. However, deadweight loss occurs when the value of social policy does not meet or exceed the resources poured into addressing the cause.
 
And how could it? The government does not know us intimately, does not know what we truly value, and does not have a relationship with us that would promote altruism. Even if the government does come up with the “perfect gift”, resources are lost in the process of taxation and bureaucracy.
 
Instead of waiting for the government to ‘do something’, it would be more meaningful, effective and efficient to donate time or money to that social cause directly.
 
After all, the want or need has already been recognised, and there are a multitude of charitable organisations with the intimate knowledge to meet these demands. Finally, by giving directly to a cause, social ties are strengthened in ways that impersonal interactions with government cannot achieve.