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Santa Claus: A multidimensional review

24 December 2015
by Patrick Love
Santa

Is he trying to choke her?

Here in France, Christmas preparations are in the final stages, but amidst all the shopping, cooking, and decorating, it’s easy to lose sight of the essential: how well does Santa Claus do on key problems challenges facing the business community, policymakers and civil society in our increasingly globalised economy? In the sections below, we set out the main strands of OECD analysis and advice in a number of domains (in alphabetical order), then assess how well Santa does. Since peer review wasn’t possible, we’ve adopted the so-called P-F approach, where P is “pass” and F is “fail”.

  1. BEPS
    Base erosion and profit shifting (BEPS) refers to tax planning strategies that exploit gaps and mismatches in tax rules to make profits “disappear” for tax purposes or to shift profits to locations where there is little or no real activity but the taxes are low resulting in little or no overall corporate tax being paid. Despite substantial activity across the globe and company headquarters in Lapland, the North Pole, and various large department stores, we could find no evidence that Santa Claus pays tax in any jurisdiction, and reports that he may be using a special purpose vehicle to avoid paying fair taxes appear justified. FAIL
  2. Big data
    Big data could significantly enhance productivity, resource efficiency, economic competitiveness, and social well-being. However, greater access to and use of data create a wide array of impacts and policy challenges, ranging from privacy and consumer protection to open access issues and measurement concerns. Santa collects a vast array of data on consumers’ location, preferences and behaviour, but has no structures in place to guarantee confidentiality, cross-platform compatibility, or third-party access, thereby reducing an invaluable resource to little more than a wish list. FAIL
  3. Climate change
    While there is high awareness among businesses of a wide range of climate change risks, only a small proportion of companies are implementing climate            risk management measures. Despite the possibly fatal damage global warming could cause to Santa’s ice, snow and cold-based business model, his technological choices and organisational processes not only do nothing to combat global warming, they contribute to it. Transport and distribution are particularly damaging due to the decision to concentrate production on one site, and rely for distribution on reindeer, a prime source of methane, which has a global warming potential 72 times higher than CO2. FAIL
  4. Gender equality
    “HAVING REGARD to the 1976 Recommendation of the Council on a General Employment and Manpower Policy, [The OECD Council recommends that Members] increase the representation of women in decision-making positions by: encouraging measures such as voluntary targets, disclosure requirements and private initiatives that enhance gender diversity on boards and in senior management”. Other than anecdotal references to “Mrs Claus” we could find no evidence that Santa has designed appropriate responses to gender gaps and market failures, including: policies to reduce barriers to women entrepreneurship, support for the development and implementation of awareness campaigns, training programmes, mentoring, coaching, and support networks. FAIL
  5. Global value chains
    International production, trade and investments are increasingly organised within so-called global value chains (GVCs). Globalisation motivates companies to restructure their operations internationally through outsourcing and offshoring of activities. While Santa pioneered just-in-time manufacturing and remains the benchmark for logistics and distribution, he has failed to locate different stages of the production process across different countries, according to the most optimal location factors. FAIL
  6. Governance
    The OECD has shown that pursuing inclusive growth outcomes requires a whole-of-government approach that aligns vision, incentives and delivery mechanisms across the policy-making cycle. A strong centre of government, medium-term budgetary considerations, and comprehensive ex ante and ex post assessment tools able to shed light on the distributional impact of policies are among the key requirements for policymaking for Inclusive Growth. Santa has implemented none of these. FAIL
  7. PISA
    The PISA results reveal what is possible in education by showing what students in the highest-performing and most rapidly-improving education systems can do. The findings allow policy makers to gauge the knowledge and skills of students in their own countries in comparison with those in other countries, set policy targets against measurable goals achieved by other education systems, and learn from policies and practices applied elsewhere. But we couldn’t find any 15 year-olds to take the test. Or any schools for that matter. FAIL
  8. Rural development
    According to the most recent data, in more than one out of three OECD countries, the region with the highest rate of employment creation was a rural region. Easier commuting across longer distances has expanded the sphere of influence of major urban areas enabling people to live in rural regions while working in cities, contributing to a reversal of the rural out-migration trend. As far as we can tell, there is has been no employment creation by Santa and none of his employees travel to or from the home region. FAIL
  9. Skills strategy
    In a context of high unemployment following the crisis and increased global competition, ensuring an adequate supply of skills, maximising their use and optimising further development of skills in the workforce is key to boosting employment and economic growth, and to promoting social inclusion. We could find no evidence of any of Santa’s employees moving beyond low-skill manual labour and none of them appear to be receiving training for the jobs of tomorrow. Career development is blocked at entry level, and social mobility is limited. FAIL
  10. Trust.
    Everyone benefits when levels of trust and trustworthiness are high. But given present climate of suspicion restoring trust will take time and coordinated efforts from all sections of society. While unemployed young people show a high degree of trust in Santa, at least for the under 7 1/2 age group, trust tends to be eroded for later cohorts, with many stakeholders declaring they do not believe in Santa anymore. FAIL

Conclusion and outlook
Despite failing to respect international best practices in any of the domains assessed, Santa has seen solid growth again this year, skilfully leveraging intangible assets such as brand recognition and magic, as well as taking advantage of lack of international cooperation across a number of challenges including tax policy, climate-related risks, supply-chain due diligence, and intellectual property protection. However, as BEPS, COP, and FIFA show, business as usual is not an option going forward, and without an ambitious and comprehensive pro-inclusive growth structural reform agenda, his business is unlikely to survive. Better policies for better lives are not just for Christmas.

Best wishes for the holidays from the Insights team and all our colleagues at the OECD!

Useful links

North American Aerospace Defense Command (NORAD) Santa Tracker

 

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