Episode Reprise — Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays

[Editor’s Note: Some things are just too good not to share again. While our most ardent listeners are familiar with Episode #22, Scroogenomics, many may not be familiar with this specific show. This past Friday was Black Friday in the United States which means it’s time - once again - to talk about why you shouldn’t buy presents. Bah, humbug!!!]

[Additional Editor’s Note: Coincidentally, this year the replay of the Scroogenomics episode pairs quite well with last week’s episode featuring Professor Tony Gill in which we discussed the benefits of gift giving in the broader economy. Two shows, two different perspectives.]

On Black Friday, and right before Cyber Monday—the biggest shopping days of the year—Ed and Ron thought it would be fun to discuss the interesting, funny, and thought-provoking book by Joel Waldfogel: Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays.

The author makes the case that the deadweight loss to the economy from gift giving, in 2007, totaled $12 billion, out of approximately $66.5 Billion spent (about 12%). Citizens Against Government Waste would classify Christmas as a wasteful government program.

Gift giving severs link between buying decision and item’s value to its user—the transaction actually destroys value. To add insult to injury, we are obliged to pretend to be grateful!

His complaint is not the level of spending or the consumption, but the waste.

We discussed the four ways you can spend money in the economy:

Former Congressman Dick Armey pointed out how difficult spending is in Category II (Gift), let alone Category IV (Government):

Every year, I worry and fret select the right birthday gift for my wife, Susan. Every year, try as I might, I manage to choose the wrong thing. If I can’t figure the needs and desires of the one person who is closest to me in the world and who I deeply love and care for, how can we expect the government to do a better job?

Three groups spend other people’s money: children, thieves, politicians. All three need parental supervision.

Hierarchy of value of gift giving

• Aunts & uncles & grandparents = 75%

• Parents = 97%

• Friends =91%

• Siblings =99%

• Significant others = 102%

Further, we spend approximately 2.8 billion hours shopping in December. To put that number in context, the old USSR—before it imploded—spent 35 billion hours annually standing in line for everyday products and services.

Infographic from Deloitte’s 2018 annual holiday survey

Economist Ian Ayres said this about Waldfogel’s book:

Joel Waldfogel is one of the smartest and funniest economists on the planet. I think of him every time I start to unwrap a present. Buy Scroogenomics for your friends and family. It makes the perfect Christmas gift.

Episode #417: Interview with Tony Gill

Waaay back in Episode 22, Ron and Ed detailed the ideas behind Joel Waldfogel's book, Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays. Waldfogel makes the case that the deadweight loss to the economy from gift giving, in 2007, totaled $12 billion, out of approximately $66.5 Billion spent (about 12%) and that we should all give cash rather than presents. In this episode, we spoke with Professor Tony Gill about his ideas around Rethinking Scroogenomics and some of his other writings.

Use these show notes to follow along with the audio…(scroll a bit further to see what a bot came up with)

Segment one:

• Political science, sociology, and economics? Tony wanted to be a lawyer for about 1 week, was interested in politics, and was interested in economics. That doesn’t sound TOO far fetched now that Tony Gill has shared his background with us.

• Adam Smith called himself a moral philosopher. This makes sense for Tony given his interest in both economics and religion.

• What was the trigger for Tony’s interest in the Austrian school of economics? Paraphrasing his response: Being interested in both religion and economics already makes you a bit of an outcast so the Austrian approach made some sense.

• Tony is a proud member of the Mount Pelerin society. It’s founders include Friedrich Hayek, Frank Knight, Karl Popper, Ludwig von Mises, George Stigler and Milton Friedman. More info here: https://en.wikipedia.org/wiki/Mont_Pelerin_Society

• Related to Scroogenomics, Tony Gill wrote an article called “Gift Giving Is Better for Society than Economists Think” and you can read it here https://www.aier.org/article/gift-giving-is-better-for-society-than-economists-think/

• Gift giving creates deadweight loss. Yes. But if the economy is so efficient why is gift giving persistent for so long? This is the root of Tony Gill’s argument discussed on the show today.

Segment two:

• You have to overcome a burden of trust in order to successfully trade. One of the ways we do this is by giving up a resource up front. Some would call this gifting which is really important for building trust in society.

• Why do stores decorate for Christmas? They want to be a part of the community and are willing to invest resources to show their commitment. This could even be true of business owners who do not celebrate.

• Sumptuary laws (taxes) are seen a lot throughout history. They are taxes on consumption above and beyond what is considered necessary such as fancy clothes or expensive food. Tony asks, “Is Wokeness the New Sumptuary Laws?” at this link: https://www.aier.org/article/is-wokeness-the-new-sumptuary-laws/

• At a certain level of Patreon membership - Patreon.com/TSOE - you can get a shout out like Blake Oliver did! Check out Blake’s podcast and earn CPE credits for listening. https://earmarkcpe.com/

Segment three:

• Inequality has been ubiquitous throughout society and is usually examined at a national level. Where you tend to see it at a much more salient level is locally…in your neighborhood and at your job, for example.

• Paraphrasing from Tony today: While studying inequality at the national level can be helpful, rarely do we stop and look at people in their local neighborhoods and determine what they are doing to solve common problems.

• “No, the Business Roundtable Did Not Repudiate Capitalism” from Tony Gill was discussed today during segment three. Tony mentioned that he is rethinking it a little bit but you’ll need to listen to the show for the details. https://www.aier.org/article/no-the-business-roundtable-did-not-repudiate-capitalism/

Segment four:

• The most popular gift based on percentage increase this year? Gift cards. (See image at tweet, https://twitter.com/asktsoe/status/1593708280173723648)

• Our guest, Tony Gill, was able to provide his work “The dynamic efficiency of gifting” as an open article. I can’t guarantee how long it will be open so check it out soon! https://www.cambridge.org/core/journals/journal-of-institutional-economics/article/dynamic-efficiency-of-gifting/FDC663C9C0AC7498C8AD2811CDA77936

• Please believe me on this. Tony read a poem today at the end of the show and….it…..was…..amazing!!! Based on T’was the Night Before Christmas, it’s all about gift giving. So please skip the entire show (wait….not really!) and listen to the poem.

• An enormous THANK YOU to Professor Tony Gill for joining us today. Check out his paper, “The dynamic efficiency of gifting” at this link before access is closed :)

The bots are coming for us!

For a few weeks now, we have been experimenting with a new feature from Otter.ai. Many of you will know that some of the current AI solutions have caught Ron and Ed’s attention during the bonus episodes. We let Otter.ai loose on the audio version of this show and here is what it (he? she? they?) came up with:

• Copyright claim on every episode. 2:33

• Welcome to the show. 7:02

• Anthony Gill’s bio. 8:43

• What is the Mont Pelerin Society and how did it start? 14:36

• Why do we give a diamond engagement ring? 21:00

• Gift-giving as a way to generate discussion. 23:54

• What are the sumptuary laws and how does Wokeness fit into that? 30:30

• Anthony Gill’s thoughts on inequality in the US. 37:32

• Where do you see inequality at the local level? 40:02

• Trade is about human interaction and relations. 46:11

• The role that religion is playing in the war in Ukraine. 51:54

• We need to engage with people before transactions. 58:28

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention. 

This past week was bonus episode 417 - Another nail in the coffin of the audit. Here are some links discussed:

• What you need to know about FTX

• FTX puts auditors in spotlight

• You’re one in 8 billion

• Ending Pandemic Unemployment Benefits Linked to Job Growth

• When Mckinsey Comes to Town

• Buffett's Berkshire Hathaway discloses $4.1 billion TSMC stake

• Doctors sue Gov Newsom over Medical Misinformation Law

• Biden’s ’Made in America’ plan is bullying homeowners off their land to build a taxpayer-subsidized chip plant

• Beer sommeliers?

• Farm Bureau Survey Shows Thanksgiving Dinner Cost Up 20%

• On the curious and enduring appeal of the Waffle House

• Meat grown from cells without killing animals is coming soon : Shots - Health News : NPR

• Man who inspired “The Terminal” movie dies at Paris airport

• Why have Americans given so much money to restore Notre-Dame?

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #416: Interview with James Geraghty

Ron and Ed welcomed to the show James Geraghty. As a biotechnology executive, Jim has been a passionate participant in the orphan drug revolution since its inception. We talked about his book, Inside the Orphan Drug Revolution, The Promise of Patient-Centered Biotechnology, which is in part a history, with eye-witness accounts of advances as they occurred and portraits of the pioneering scientists and physicians, tireless activists, and visionary business leaders who made the revolution happen. And it tells deeply personal stories of patients and parents willing to risk new, untried therapies.

Use these show notes to follow along with the audio…(scroll a bit further to see what a bot came up with)

Segment one:

• Jim’s book is a labor of love. He wrote it because there is a mission that people should know about. It has transformed society and needs to be understood. It is the orphan drug revolution. https://www.amazon.com/Inside-Orphan-Drug-Revolution-Patient-Centered/dp/1621824683

• Austrian economics has nothing to do with Austria much like an orphan drug has nothing to do with orphans. The drugs treat orphan diseases. They were “orphaned” by pharmaceutical drug companies in favor of quick wins as opposed to the much more difficult.

• Today there are over 7,000 monogenic disorders and over 6,000 with no therapy available to them. More information is here: https://www.uptodate.com/contents/inheritance-patterns-of-monogenic-disorders-mendelian-and-non-mendelian

• The Orphan Drug Act of 1983 addressed the need for treatments and research for diseases such as ALS and muscular dystrophy that are considered rare in the United States. https://www.fda.gov/industry/designating-orphan-product-drugs-and-biological-products/orphan-drug-act-relevant-excerpts

• There are misguided campaigns to cap or reduce drug prices. Whenever there is a movement in this direction, innovation in the segment of the market being targeted dries up.

• The explanation of benefits is one of the most confusing things you can receive as an American healthcare consumer. Ed wrote about this recently here: https://www.edkless.com/blog/2022/10/on-medical-billing-and-payments

Segment two:

• Abbey Meyers is considered the mother of the orphan drug revolution. She is referenced in Jim’s book and also on the FDA website at this link: https://www.fda.gov/industry/fdas-rare-disease-day/story-behind-orphan-drug-act

• The 1983 Orphan Drug Act completely changed the face of therapeutics for rare disorders. By 1990 FDA had designated 370 products for orphan status, and of these 49 were approved for orphan indications.

• Initially, President Reagan was going to veto the Orphan Drug Act of 1983. He was not in favor of government intervention. Mothers who knew Nancy Reagan worked in the background to help President Regan see the benefits. Ultimately, he signed.

• Every year there are hundreds of drugs passed for orphan diseases. Patients today who benefit are in the millions. This has been a global revolution with patients who benefit all around the world.

Segment three:

• Ceradase was the initial orphan drug developed by Genzyme. In the initial trial of 7 patients, 6 showed no improvement. “That’s an anecdotal case and you can’t build a company on it.” Well, they did. And it worked.

• Our understanding of genetics continues to explode in large part due to the human genome project. Science has come to understand DNA and RNA and much of our understanding about mRNA was developed in the pursuit of treating rare diseases.

• In the context of orphan drug development, “N of 1” is an important concept. An N of 1 trial is a clinical trial in which a single patient is the entire trial. They are a single case study.

• Can we get to a point where the FDA can approve a broad platform and then patients can be treated as individuals who have ultra-orphan diseases? Jim certainly hopes so although we are not there yet.

Segment four:

• International rare disease day is on February 28th. This is closely tied to Jim’s book, “Inside the Orphan Drug Revolution”. Learn more at this link: https://www.rarediseaseday.org/ @rarediseaseday

• Even in countries with universal health insurance, they have other ways to block orphan drug treatments and make it difficult to obtain for those in need.

• A big THANK YOU to Jim Geraghty for joining us today to discuss his book! “Inside the Orphan Drug Revolution” is available at this link: https://www.amazon.com/Inside-Orphan-Drug-Revolution-Patient-Centered/dp/1621824683

The bots are coming for us!

For a few weeks now, we have been experimenting with a new feature from Otter.ai. Many of you will know that some of the current AI solutions have caught Ron and Ed’s attention during the bonus episodes. We let Otter.ai loose on the audio version of this show and here is what it (he? she? they?) came up with:

• Casa Bonita updates. 0:00

• Why didn’t Trey Parker invest in that? 2:21

• Cannibal the Musical –. 3:20

• Introduction to James Garrity and his book. 8:19

• What is an “orphan drug”? 13:00

• Drug pricing as a problem for patients. 18:30

• Jim’s favorite story from the book. 21:40

• The Orphan Drug Act of 83. 27:03

• What is the term “n=1”? 31:44

• How the FDA is understaffed and underfunded. 36:33

• N equals one technology and pandemic preparedness. 41:25

• What is an ultra-orphan disease? 45:51

• How do we make these things affordable for all of these patients? 49:09

• Jim talks about the challenges of orphan drug access in the developing world. 52:53

• What is the full-loaded cost of gene therapy? 57:04

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention. 

This past week was bonus episode 416 - It's all about payments. Here are some links discussed:

• Ed's Blog Post - On medical billing and payments

• Elon’s Twitter payments system

• Tyson Foods CFO Arrested After Authorities Say He Fell Asleep in Wrong House - The Wall Street Journal

• Federal Judge Strikes Down Biden Student-Loan Forgiveness

• Peter Thiel posits California suffers from a tech curse

• The message of the midterms

• Kevin Hassett on economic prescription for next recession

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #415: Stack of Stuff

It’s a stack of stuff. Despite the weekly bonus episodes in which Ron and Ed go through their stack, things can build up over time. What better way to talk through the Twitter ownership change and how morticians are putting the fun in funerals?

Use these show notes to follow along with the audio…(scroll a bit further to see what a bot came up with)

Segment one:

• Today’s episode is a stack of stuff! We started with Elon because….of course we did.

• As a part of the Twitter ownership shift, there have been some who claim to be leaving Twitter. Of course, if you left Twitter then you won’t see this tweet about us not leaving Twitter.

• Why is Musk so intent on having people in the office at Twitter? He’s a big fan of MBWA (management by walking around).

• Speaking of Tesla (well, sort of), check out this breakdown of US electric vehicle sales through Q3 2022 https://electrek.co/2022/10/18/us-electric-vehicle-sales-by-maker-and-ev-model-through-q3-2022/

• According to legend, Jonah Goldberg’s (@JonahDispatch) mom was fired from the Johnson White House’s press office when she joked with the wrong person. He tells the story here: https://thedispatch.com/newsletter/gfile/thats-no-icon-thats-my-mom/

Segment two:

• Headline of the year? “A blood test that screens for multiple cancers at once promises to boost early detection” https://theconversation.com/a-blood-test-that-screens-for-multiple-cancers-at-once-promises-to-boost-early-detection-191728

• From Harvard Business Review: “Monitoring Individual Employees Isn’t the Way to Boost Productivity” https://hbr.org/2022/10/monitoring-individual-employees-isnt-the-way-to-boost-productivity

• How does one inside of an organization “successfully crash” an initiative when you know it needs to end? Ed and Ron would very much like your thoughts.

Segment three:

• Ed shared a great article from the WSJ today. It’s called, “How Morticians are Putting the Fun in Funerals” and it very much feels like the start of a subscription funeral. https://www.wsj.com/articles/the-funeral-industry-plots-a-rebrand-were-fun-11667486178

• 1/2 We did a show called “Generational Astrology”. It’s episode number 142 and is linked here: https://www.thesoulofenterprise.com/142

• 2/2 As a follow up to that show, Ron has been thinking a lot about Ronald Reagan’s book, “The Creative Society”. It is a series of speeches Reagan gave starting in the late 50s until the time he was elected Governor of California.

• “Some people describe the early days of my administration as a honeymoon. If it was a honeymoon, I was sleeping alone.” —President Ronald Reagan

• Permacrisis: The Collins Dictionary word of the year (with a full list of the others at the link) https://www.collinsdictionary.com/us/woty

Segment four:

• Are hurricanes in the Atlantic becoming more common or is science getting better at detecting them? https://www.forbes.com/sites/bjornlomborg/2022/10/04/facts-on-hurricanes-and-climate-are-blowing-in-the-wind/

• From one of our favorite data sources, ChartR.co, “The NY Times has gone all in on digital subscriptions” https://read.chartr.co/newsletters/2022/11/4/layoffs-20-again

• What are pride, greed, wrath, envy, lust, gluttony and sloth known as? The bill of rights! Here’s a FEE article called “The Deadly Sins of Politics” https://fee.org/articles/the-deadly-sins-of-politics/

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention. 

Click the “FANATIC” image to learn more about pricing and member benefits.