Tuesday, December 20, 2011
To many rational economists, holiday gift-giving is "an orgy of wealth-destruction," writes Dan Ariely in The Wall Street Journal. A behavioral economist at Duke University, Ariely makes pro-gifting arguments while acknowledging the bah-humbug view, which goes as follows: Givers often spend money on things others don't necessarily want, and the recipients frequently think the present cost less than the price actually paid for it. 'Tis more rational to give cash.
For our unemployed friends and relatives, the rational case for giving presents, cash or otherwise, seems stronger. Those needing jobs may have cut spending to the bone. We can give them things they really want and need -- and that don't cost us much. Socks are the classic example. I like to offer my jobless friends the little luxuries that they have done without, such as a subscription to a cooking magazine or gift card for Starbucks. A gift card is almost the same as giving cash. Rational economists would applaud.
What Ariely calls "paternalistic gifts" might be especially suited for the unemployed. Paternalistic gifts, he explains, are "things you think somebody else should have," as opposed to what they crave. But I'd be careful with potential "message" gifts, such as books on resume writing or, for men, a tie for job interviews. It may suggest that the recipients are clueless or haven't been trying hard enough to find work. Recipients might bristle at the presumption if they had, or the implied criticism if they hadn't.
For the jobless who have been paying attention to recent political debates, I can think of a very thoughtful present that costs nothing: A vow to support policies that expand health coverage. Let me explain.
One of the groups with the highest unemployment is young soldiers returning from Iraq and Afghanistan. The unemployment rate among veterans ages 20 to 24 is an astounding 30 percent. This is double the already high jobless rate of their non-veteran contemporaries and well above that of older former soldiers.
Another suffering group is baby boomers ages 55 to 64. Over 17 percent of them are involuntarily unemployed, can only find part-time work or have given up looking, according to the Labor Department.
The young soldiers reportedly don't get hired because skills honed on the battlefield do not translate to what's needed in the office cubicle -- or so some employers believe. The boomers reportedly don't get chosen because they are deemed too expensive, and one of those expenses might be costlier medical needs.
Here's how expanded health coverage would benefit both groups: Many older workers could afford the daily expenses of retiring but hang in there for fear of losing company health benefits before they reach the Medicare safe harbor of age 65. (True, some older workers are holding onto their jobs with 11 fingers because of poor financial planning and the decline in middle-class compensation.)
Lower the Medicare age to 60, and millions would probably dance off into retirement or start their own businesses. That would open or create positions for young workers, including veterans. Guaranteeing health coverage for everyone -- let's see how "Obamacare" progresses -- would set off an explosion of entrepreneurial spirit among the entire working population. (Adults who don't mind risk-taking often draw the line at their children's health coverage.)
But our backward political system isn't talking about lowering the Medicare age, but raising it to 67. Some rational economists might see tightening eligibility as a way to shrink a government bent on wealth-destruction. I see it as dropping a boulder in the path of private wealth-construction. And since it's the holiday season, let's call it something else: "irrational gift-taking-away."
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