How Economics Saved Christmas

This originally appeared in Forbes a couple years ago. I’ll repost it here for your Christmas enjoyment.

Every Who down in Whoville liked Christmas a lot.
But the Grinch, who lived just north of Whoville, DID NOT.

He stood and he hated the Whos and their noise
He hated the shrieks of the Who girls and boys
For fifty-three years he’d put up with it now—
He had to stop Christmas from coming, somehow.

He asked and he questioned the whole thing’s legality
Then his eyes brightened: he screamed “externality!”

He reached for his textbooks; he knew what to do
He’d fight them with ideas from A.C. Pigou

This idea has merit, he thought in the frost
A tax that was equal to external cost
At the margin, would give all the Who girls and boys
An incentive to stop all their screaming and noise

Failing that, an injunction to make them all cease
And they’d have to pay him to have their Roast Beast.

Low costs of transacting meant that if the Whos
Were the high-value users and wanted to use
All the rights to have feasts and the rights to sing songs
Then they’d have to buy them, to right their Who wrongs

They’d buy a noise easement, if they wished to sing
Until then, the Grinch could stop the whole thing.

On Christmas Eve Night, the Grinch went to town
He stole all the presents, he took their wreaths down
He stole their Who Hash, everything for their feast!
He swiped their Who Pudding! He swiped their Roast Beast!

He looked at his sled loaded up with Who snacks
‘Twas quite an efficient Pigovian tax!

Then late in the night, when he got to Mount Crumpit
For he’d taken the load, and he threatened to dump it

The Whos, with one voice crying out in the night
Screamed “bring back our stuff! You haven’t the right!
“We know that we’re noisy all through Christmas Day,
But if you don’t like it, it’s you who should pay!

“For we were here first, and homesteaded the rights
To sing, to make noise, and to hang Christmas lights
“The costs of our Christmas joy helped you to save!
They were fully reflected in the price of your cave!”

“We’ll all be good neighbors, and we’ll be polite
“But you’ve done us wrong on this Christmas Eve Night!”

The Grinch was crestfallen, he knew he had lost
For he was the source of the “external” cost
He’d come to the nuisance, and yes, he was wrong
He’d now have to live with their noise and their songs

He realized that day, though, that they could be friends
His heart grew three sizes (you know how this ends)

The Whos asked the Grinch to join them in their feast
And he—he, the Grinch—carved the Roast Beast.

The holiday season brings specials galore
They teach us that Christmas can’t come from a store

Reflect, as you watch them, as day turns to night
On good economics, and property rights.

This take on a Christmas classic was inspired in part by a sermon at Enon Baptist Church in Morris, Alabama on December 20, 2009 and Murray Rothbard’s essay “Law, Property Rights, and Air Pollution.

By Art Carden

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