i was down at my mom's in woodville, va for t-giving, when we came across this column by george will, pitting rational economics against the practice of gift-giving, my daughter jane (9) was moved to write her first letter to the editor, or in this case email to [email protected].

the basic argument, which will is getting from joel waldfogel (really? waldfogel?) goes like this: the value as measured in $$ of the gifts people receive is less, overall, than the price paid for them by the giver. this shows that gift-giving is an extremely inefficient use of resources, with the possible exception, will kindly tells us, of gift cards.

it would be rash to assume that will isn't giving any presents this year; he is drawing our atention to an interesting argument. and i'd like to address it in a bizarrely general way, a way that attacks what we might call the rational basis of economics. some day i'd like to take rational decision theory and game theory and just rip them to shreds; they are, i assert, delusory, or rather fundamentally non-empirical; they rest on a set of idealizing assumptions that entail that they have no purchase (so to speak) on the actual world. [the one stab i did have was on the decision-theoretic "proof" of the legitimacy of state power, by james buchanan (see the youtube version here), which if i do say so, i eviscerated in a couple of paragraphs.]

the idea that value can be measured in terms of what people would pay is wrong, of course, and one obvious way to understand this is the use of money or objects to enhance social cohesion, or to express love, to manifest or express qualities of character that are of immense value: generosity, for example, or the overcoming of greed etc. there are entire economies based on the gift. this is why the economics of capitalism or smithian rationality is just wrong, wrong, wrong. one way to state this is that economic activity is not a distinct sphere of activity; it is joined to every other: emotional, political, psychological, moral, aesthetic etc etc. there is no distinct sphere of economic value. but this is only one angle which shows the falsity at the heart.