The Social Value of the Gift Card

            My friend Eric recently proposed an argument for the claim that gift cards ought to be illegal.  By “gift card” I mean any certificate purchased from a vendor for $N which may then be offered as tender for $N worth of merchandise from that very vendor.  The vendor could be a retail store (say, a $50 gift card at best buy) or a credit card company (say, a $50 Visa gift card).  The latter sort could be used at any store that accepts credit cards of the relevant sort.   I want to outline and consider the argument. First, a caveat: Eric thinks that the extension of social ills and the extension of “things that should be illegal” are nearly the same, if not the exact same.  You might choose to argue with him on this point (and I have), but it should be noted that this antecedent position of Eric’s weakens the former claim about gift cards considerably.  In saying that gift cards should be illegal, Eric is really only claiming that gift cards are a social ill.  The inference from that to prescribing their  prohibition depends on Eric’s conception of just law.  I disagree with that conception, but it’s not what I want to take issue with here.  So I will be considering the conclusion that gift cards are a social ill.  In fact, I will only be considering half of the claim that gift cards are an all-things-considered social ill: the claim that gift cards have no social value whatsoever.    Why think that gift cards are a social ill?   Well, presumably something is a social ill when its existence does more harm to society than it does good.  Eric believes that gift cards do a harm to society, and that they do no good whatsoever.  It is the latter claim that I will consider, but I want to now briefly address the former.         

In normal circumstances, if Jim gives Jane a gift card worth $50, Jane will use the gift card to get $50 worth of merchandise.  Say that Jim and Jane together are the JJ-unit, and say that the value that inheres in the JJ-unit is the aggregate utility instantiated in the lives of Jim and Jane.  In this case, the value that inheres in the JJ-unit seems to have not changed at all by virtue of the gift card’s existence.  If it has increased, it was because Jane spent the $50 well, and if it decreased it is because Jane spent the $50 poorly, but the same would have been true if Jim had given Jane $50 in cash.  The gift card itself has had no effect on the value that inheres in the JJ-unit.  Likewise, the value that inheres in the company has remained unchanged by virtue of the gift card.  If the value that inheres in the company increases (as it probably has) it is because of the profit margin that makes up part of the price of the merchandise that Jane bought, but this would have been the same if Jane spent cash.  So, in those normal circumstances where Jim gives Jane a gift card and Jane uses all of the money, the gift card has contributed no monetary value in and of itself.  The game is, at best, zero sum.      

However, sometimes Jane doesn’t use all of the money.  Sometimes she spends some of it, or none of it, before losing the card or forgetting about it.  Sometimes, in exchange for the $50 that Jim spent, Jane only acquires $30 worth of merchandise, or $0  worth of merchandise.  Eric thinks this actually happens very often (and I think he’s probably right) but even if it’s relatively rare, it’s still the case that the companies issuing gift cards will pay out <$1 in merchandise per $1 that they receive and reimburse in the form of gift cards.  The gift card game, on average, results in a shift of uncompensated monetary value from the consumer to the vendor.       

Now…is this enough to constitute an ill?  Eric thinks so.   And whatever is driving him to say so is something that, I admit, I share.  But I suspect that neither Eric nor I has a particularly good reason for asserting this. We’re both good little socialists, and so we are generally uncomfortable with any transfer of uncompensated value from consumer to corporation.  The fact is, it is not obviously a social ill for an amount of monetary value to inhere in a company (which is, ultimately, a source of income for individuals) rather than an individual.  But this is also not what I want to argue.  So let us make the very dubious admission, just so that the argument may proceed, that if gift cards, on average, transfer uncompensated monetary value from consumer to corporation, that they are inasmuch a social ill, and if no increase in value can be identified to counteract this ill, than gift cards are an all-things-considered social ill (and, by Eric’s account of just laws, ought to be illegal).      

An important claim remains to be argued for: the claim that gift cards, and the transactions in which they figure, are not productive of any value.  If this claim is true, and if the transfer of uncompensated value from consumer to company is a decrease in overall value, than gift cards are a social ill.  So what sort of value might gift cards produce?        

Well, presumably Jim has an answer to this question, and one we will all find familiar.  ”Well, I don’t see Jane very often…I don’t have too good idea what she likes…or even what she has.  If I give her something she doesn’t want, or something she already has, that’d be an annoyance…she’d have to return it…or worse, she’d keep something she didn’t want for fear of offending me.  Better to just give her a gift card…then she can get what she wants!”  Unless, we might add, she wants something not at best buy. “You’re right! I’ll get her a Visa gift card instead.  That way she can spend it wherever she wants” Unless, that is, she wants something at shop that only takes cash, or unless what she really wants is to pay down credit card debt, or increase her savings. “So I should just give her cash?” That’d make the most sense, wouldn’t it? You want her to get what she wants…the only way to ensure that she gets exactly what she wants (so long as what she really wants can be bought at all) is to give her cash. “But…giving her cash feels so…” So what? “So…impersonal, and cold, as if its a business transaction rather than a gift…”           

And here we come to the heart of it…On the one hand, the one thing that gift cards concretely confer upon the person receiving them (that is, purchasing power) they are, in fact, inferior to cash. So why keep them around (since we’ve already stipulated that they are to some extent a social ill)?  What value are they uniquely capable of producing?  Any at all?          

Well, yes. They do produce some value…some social value.  So Eric is wrong to think that they contribute nothing whatsoever.  However…when we see what sort of value they create, we may doubt whether that value is so valuable.         

Consider gift giving.  What is it at bottom?  It’s an economic exchange.  It’s an exchange of value.  Among friends, there is an expectation (even if it goes unenforced) that the value of two mutual gift givers respective gifts be relatively equal.  This is not always the case…gift giving may be an opportunity for a parent to confer a disproportionately large amount of value to their children, in exchange for a comparably meager value from them.  It is an intentional shifting of value towards the children.  But among peers, gift giving is usually a ceremony of people exchanging goods of like value.  It’s not only that…it can also be an opportunity to give someone something that they’ve been wanting but, for whatever reason, wouldn’t buy on their own.  Or (in the best gifts) something they didn’t even realize they wanted.  But where these occur, they are icing on a cake.  They are inessential to the gift-giving process; even if such romanticism is left wanting, gift giving still occurs.     

Essential to the gift-giving process, however, is the aspect of value exchange.  And the ideal (in most cases) is for the exchange to be zero-sum.  It’s a rather remarkable institution; we all get together, and give each other things in order to affirm our solidarity, but when all is said and done it ought to be the case that we have expended roughly as much capital as we have received.  But, though the romanticism alluded to earlier is inessential to gift giving, its *pursuit* is essential.  And, in order to pursue this romanticized gift giving, we must mask what is really going on: zero-sum value exchange.  Now, when I’m close enough to the recipient that I can give them something special, something unique, something tailor selected to their particular needs or desires, or something particularly thoughtful, it’s relatively easy to mask the economic component of gift giving.  But when Jim, who doesn’t know Jane very well, still needs to buy Jane a present, Jim can will have a hard time giving Jane something that both (a) is something Jane would value, and (b) successfully masks the economic exchange.  Indeed, given Jim’s ignorance of Jane’s desires, the perfect gift for him to give Jane is money.  But this flagrantly violates the  ”hide-the-economic-exchange” desideratum.         

Thus enters the gift card.  The gift card is a way to satisfy the “give the person something they want” condition while stopping short of the explicitness of giving someone cash. The gift card still forces you to have a particular economic exchange with a vendor, in which you acquire merchandise that is “from me”.  Unlike cash, what I give you isn’t allowed to disappear into a credit card bill or a bank account (even if that’s what you’d prefer).  You are instead forced to go and get something, and that thing is from me.  This serves to provide a mask, even if a remarkably sheer and ostensibly symbolic one, over the economic nature of the operative exchange.  Perhaps you don’t know the recipient well enough even to know what kind of store they would prefer?  The Visa gift card allows you to be even more sure that the recipient will get something they want, but it makes the mask even more sheer.  ”You like music! Go spend this at Best Buy!” is impersonal, but even more impersonal is “You like things! Go spend this at a place that accepts credit cards!”  But, still, this enforces the “go buy something, and it will be from me” mandate upon the recipient.          

If a gift giver knows what a recipient will value, the gift giver gives an object-gift.  But as it becomes harder and harder to ensure satisfaction of (a) by the giving of the object, it becomes more necessary for one’s gift to become more and more moneyish (first the store-specific card, then the visa gift card, then finally, money) in order to ensure (a).  However, one must nonetheless do what one can to ensure (b), and this requires resisting the movement towards the moneyish as much as is compatible with the satisfaction of (a).  It is this difficulty, this tension between the two desiderata of gift-giving, that the gift card serves.  Insofar as gift-giving, as an institution, has the character it has, it produces paradoxes of desiderata that may be insoluble without the gift card.       

So, there is some value produced by the gift card. It produces practical and social value by providing a solution to an otherwise insoluble paradox produced by the dueling desiderata of gift giving.  But, of course, this value is only derivative of the value produced by the institution itself, and if there is something so absurd about the institution in its current character that it could not confer value upon the tools for maintaining that character, than so much the worse for gift giving. 

Does this, then, exonerate gift giving? I’m not sure.  The axiological status of the institution that gift cards serve, especially that institution in its current character, is unclear.  So it’s not obvious whether and to what extent we can credit gift cards with being productive of, we might say, valueable value.  

Likewise, however, recall that our grounds for accusing gift cards of creating disvalue was very dubious.  Though the commie on my shoulder ensures me that it’s correct to say “any transfer of uncompensated value from consumer to company is bad, and any transfer of such value from company to consumer is good” I don’t think that I have a good argument for such a platitude (nor, in my most honest moments, do I even suspect that it is true).   

So the arguments on both sides are inconclusive, and we are left with the provisional conclusion that we expected from the start. Gift cards are probably, all things considered, value neutral.

 

This entry was posted on 16. January 2010 at 02:08 and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.