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The Economics of Thanksgiving

Written by Gary North on November 21, 2012

Gary North’s Reality Check (November 26, 2003)

O give thanks unto the LORD; for he
is good: for his mercy endureth for ever. O give
thanks unto the God of gods: for his mercy
endureth for ever. O give thanks to the Lord of
lords: for his mercy endureth for ever (Psalm

This phrase appears in many of the psalms, but when
you find the same phrase three times in a row, you can
safely conclude that the writer was trying to make a point,
and he thought the point was important. I know of no
passage in the Bible where any other phrase appears three
times in succession.

Thanksgiving Day is an old tradition in the United
States. It really did have its origins in Plymouth Colony,
in the fall of 1621, when the Pilgrims who had survived
their first year in New England invited Chief Massasoit to
a feast, and he showed up with 90 braves and five deer.
The feast lasted three days.


The first official Thanksgiving Day was celebrated on June 29, 1676, in Charlestown, Massachusetts, across the Charles River from Boston. Over a century later, George Washington proclaimed a day of thanksgiving on October 23, 1789, to be celebrated on Thursday, November 27. In 1863, Abraham Lincoln officially restored Thanksgiving as a wartime measure. He repeated this a year later. These original source documents are posted here:


The holiday then became an American tradition.


Lincoln was a strange contradiction religiously. He
was a religious skeptic, yet he invoked the rhetoric of the
King James Bible — accurately — on many occasions. His
political rhetoric, which had been deeply influenced by his
reading of the King James, was often masterful. For
example, when he spoke of the cemetery of the Gettysburg
battlefield as “this hallowed ground,” using the King James
word for holy, as in “hallowed be thy name,” he was seeking
to infuse the battle of Gettysburg with sacred meaning — a
use of religious terminology that was as morally abhorrent
as it was rhetorically successful. It is the sacraments
that are sacred, not monuments to man’s bloody

In that same year, 1863, he used biblical themes in
his October 3 Thanksgiving Day proclamation.

It is the duty of nations as well as
of men to own their dependence upon the
overruling power of God; to confess their sins
and transgressions in humble sorrow, yet with
assured hope that genuine repentance will lead to
mercy and pardon; and to recognize the sublime
truth, announced in the Holy Scriptures and
proven by all history, that those nations are
blessed whose God is the Lord.

He went on, in the tradition of a Puritan “Jeremiad”
(“blessed are we; woe are we”) sermon, to attribute the
calamity of the Civil War to the nation’s sins,
conveniently ignoring the biggest contributing sin of all
in the coming of that war: his own steadfast determination
to collect the national tariff in Southern ports.

In his proclamation, he made an important and accurate
theological point.

We have been the recipients of the
choisest bounties of heaven; we have been
preserved these many years in peace and
prosperity; we have grown in numbers, wealth and
power as no other nation has ever grown.

But we have forgotten God. We have forgotten the
gracious hand which preserved us in peace and
multiplied and enriched and strengthened us, and
we have vainly imagined, in the deceitfulness of
our hearts, that all these blessings were
produced by some superior wisdom and virtue of
our own. Intoxicated with unbroken success, we
have become too self-sufficient to feel the
necessity of redeeming and preserving grace, too
proud to pray to the God that made

This observation leads to the same question that Moses
raised long before Lincoln’s proclamation: Why is it that
men become less thankful when their blessings increase?

Less than a decade after Lincoln’s proclamation, three
economists came up with the theoretical insight that
provides an answer.


In the early 1870s, Karl Menger, William Stanley
Jevons, and Leon Walras simultaneously and independently
discovered the economic principle of marginal utility.
Their discovery transformed economic analysis.

They observed that value, like beauty, is subjectively
determined. Value is imputed by each individual to scarce
resources. Other things remaining equal, including tastes,
the individual imputes less value to each additional unit
of any good that he receives as income. This is the
principle of marginal utility.

This can be put another way. We can say that each
additional unit of any resource that a person receives as
income satisfies a value that is lower on that individual’s
subjective scale of value. He satisfied the next-higher
value with the previous unit of income.

This provides a preliminary solution to the original
question. I call this solution the marginal utility of
thankfulness. People look at the value of what they have
just received as income, and they are less impressed than
they were with the previous unit of income. They focus on
the immediate — “What have you done for me lately?” —
rather than the aggregate level of their existing capital.
They conclude, “What’s past is past; what matters most is
whatever comes next.”

Modern economic theory discounts the past to zero.
The past is gone; it is not a matter of human action.
Whatever you spent to achieve your present condition in
life is no longer a matter of human action. The economist
calls this lost world “sunk costs.”

There is a major problem in thinking this way. It is
the problem of saying “thank you.” The child is taught to
say “thank you.” He is not told to do this because, by
saying “thank you,” he is more likely to get another gift
in the future. He is taught to say “thank you” as a matter
of politeness.

I am sure that there is some University of Chicago-
trained economist out there who is ready to explain
etiquette as a matter of self-interest: “getting more in
the future for a minimal expenditure of scarce economic
resources.” And, I must admit, people who never say “thank
you” do tend to receive fewer gifts. Or, as Moses put it,
“And thou say in thine heart, My power and the might of
mine hand hath gotten me this wealth. But thou shalt
remember the LORD thy God: for it is he that giveth thee
power to get wealth, that he may establish his covenant
which he sware unto thy fathers, as it is this day”
(Deuteronomy 8:17-18).

However, Moses also added an “or else” clause: “And
it shall be, if thou do at all forget the LORD thy God, and
walk after other gods, and serve them, and worship them, I
testify against you this day that ye shall surely perish”
(verse 19). Professor Gary Becker, who is widely regarded
as an expert on the economic theory of crime, would no
doubt put it differently, but the point regarding reduced
future income is the same: lower. Maybe way, way lower.

The problem is, we look to the present, not to the
past. We look at the marginal unit — the unit of economic
decision-making — and not at the aggregate that we have
accumulated. We assume that whatever we already possess is
well-deserved — merited, we might say — and then we focus
our attention on that next, hoped-for “util” of income.

As economic actors, we should recognize that the
reason why we are allocating our latest unit of income to a
satisfaction that is lower on our value scale is because we
already possess so much. We are awash in wealth. We are
the beneficiaries of a social order based on private
ownership and free exchange, a social order that has made
middle-class people rich beyond the wildest dreams of kings
a century and a half ago. Or, as P. J. O’Rourke has
observed, “When you think of the good old days, think one
word: dentistry.”

About half of the Pilgrims who arrived in Plymouth in
1620 were dead a year later. The Indians really did save
the colony by showing the first winter’s survivors what to
plant and how to plant it in the spring of 1621. The
Pilgrims really did rejoice at that festival. They were
lucky — graced, they would have said — to be alive.

So are we. Ludwig von Mises wrote somewhere (I wish I
could remember where) that Charles Darwin was wrong. The
principle of the survival of the fittest does not apply to
the free market social order. The free market’s division
of labor has enabled millions of people to survive —
today, billions — who would otherwise have perished.


So, give thanks to God tomorrow, even if your only god
is the free market. You did not obtain all that you
possess all by yourself. The might of your hands did not
secure it for you. A little humility is in order on this
one day of the year. Yes, even if you earned a Ph.D. in
economics at the University of Chicago.

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2 thoughts on “The Economics of Thanksgiving

  1. Lincoln (like his most famous admirer, obama) was a strange contradiction and liar on MANY, MANY levels. Lincoln is quoted as saying; “Any people anywhere, being inclined and having the power, have the right to rise up, and shake off the existing government, and form a new one that suits them better. This is a most valuable – a most sacred right – a right, which we hope and believe, is to liberate the world.”… Yet he turned around and invaded the South for doing precisely what he proclaimed was "a most valuable – a most sacred right ". Over 600,000 people died as a result of doing what he suggested they do! Strange contradiction indeed!!

  2. Yep. Its toll is still being felt in the southeastern states. Being a Texas boy I was astounded the first time I ever went to the east coast in '73 when I started trucking full time. No wonder the KKK was still going strong. They were still under the thumb of the federal govt. Stark poverty combined with feudal(federal) oversight. Smooth on the top, roiling underneath. Bad roads, suspicious citizens, repressive laws. State run liquor stores, what a shock, no free enterprise. My new wife said "That was the creepiest thing I've ever seen(bought liquor), now I need a drink". Me too.