Why Santa Claus Can’t Be Real, According to Economics

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To provide one toy to every child in the world, Santa Claus needs to spend seven times the revenue of a multinational toy company each year.

Whenever Christmas comes around, Singaporeans like to discuss the possibility of a certain bearded man, and his reindeer, giving out presents. Is there really someone giving out free presents to good children, and coal to bad children? How would this be sustainable in the real world?

Here’s what economics has to say about the existence and operations of Santa Claus, if you really like numbers like we do:

Cause of Doubt #1: Economic Disruption

Based on Gapminder, there are around 1.9 billion children in the world today (persons aged 15 or under). This constitutes 27 per cent of the world’s population. As this data is old (2011), we will assume it is now an even two billion (it would realistically be much higher).

As we lack a quantitative and effective scale on which to measure how many are good or bad, we will also assume an even distribution of good children versus bad children.

Based on the Toys ‘r’ Us “What’s Hot” section, the median price of a popular toy in 2016 appears to be S$59.99.

In order to supply one billion children with a “hot” toy, Santa would need to spend S$5,999,000,000 each Christmas. This is approximately seven times the revenue of the average multinational toy company, such as Hasbro, in 2015.

If Santa were purchasing toys to redistribute, and he spent close to S$6 billion per year, he would significantly destabilise the economy of a developed country.

Cause of Doubt #2: Copyright Issues

Granted, Santa Claus may be producing these toys rather than purchasing and redistributing them. If this is the case, Santa Claus would be producing toys that require a license (Star Wars, Nerf, The Avengers). We know he is giving out these types of toys because they are clearly seen amongst the presents received by our children.

As Santa Claus is not a registered business entity, this would mean he is producing unlicensed toys. Given the significant impact of around S$6 billion per annum in pirated products, and the fact that Santa Claus has reputedly operated his business for well in excess of two centuries, he would be responsible for the largest copyright violations in recorded business history. If Santa Claus did exist, he would be sued into bankruptcy many times over.

Cause of Doubt #3: Lack of Labour and Safety Standards in Santa’s Business Operations

Assuming Santa produces the pirated toys himself, in the North Pole, he would effectively be distributing toys that have not passed basic safety checks in any legal jurisdiction. Furthermore, it can be surmised that the elves operating in his factory are not subject to labour law requirements, such as paternity or maternity leave, or basic workman’s compensation insurance.

The transportation costs and work-life quality of employees forced to build toys in sub-zero temperatures (-40 degrees centigrade in winter), on a non-contractual basis with no Union representation, would likely be recognised as a civil rights violation in 193 countries (member states of the United Nations).

In short, anyone who accepts or endorses toys from Santa Claus would – if Santa existed – be condoning human rights abuse and the flagrant disregard of consumer safety laws.

santas-reindeer

Cause of Doubt #4: Cost of Distribution

We will assume an average of two children to one home. This would translate to around one billion homes, to which the toys must be distributed. We will assume the standard courier travels 500 metres between each home (admittedly the distances are much shorter in Singapore, but density in other countries is much lower).

This is a travel distance of 500 million kilometres. As a matter of reference, the distance from Earth to the moon is around 384,400 kilometres. Santa’s distribution network needs to cover a distance that would suffice to reach the moon and back several times over.

Weight is also a factor, and we can assume each toy weighs about one kilogram. As such, Santa would require a courier company (or companies) that can cover 500 million kilometres, whilst distributing two billion kilograms (approx. 2,205,071 tons, or around the weight of 22 and a half Nimitz class aircraft carriers).

All of this would have to be accomplished in exactly one hour, before midnight on Christmas day. There is a lack of sufficient currency in the world to pay sufficient couriers – and in fact, a lack of sufficient courier companies in existence – to manage this level of distribution.

We doubt the allegations that Santa’s personal resources (six reindeer and one sleigh) suffice for these purposes.

Conclusion

Out of the two billion children worldwide, UNICEF estimates that almost half (900 million children by their count) exist in a state of poverty. One in four of these children live in developed, first world countries. Some are probably next door to you. In poorer countries, such as states in Sub-Saharan Africa, 247 million children lack basic access to food, clean water, and education.

To conclude, if children everywhere are receiving a good Christmas gift, it probably won’t be coming from Santa Claus. As mentioned above, the cost of even one present a year to every child is staggering if left to a single entity (be it Santa Claus or a charity organisation).

So if you can, pitch in and help at the nearest charity centre in Singapore. You don’t even need to actually climb down a chimney and leave presents*.

* In fact, please don’t ever do this, because housebreaking incurs a penalty of up to one year’s imprisonment and a fine of up to $3,000 in Singapore. Santa would effectively be jailed for life upon landing on Singapore soil.

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Ryan
By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.