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How Capitalism Saved Christmas

 December 26, 2012 09:33 AM

(By Elisabeth Dellinger) When most folks remember the Cold War, they remember air raid siren tests and nuclear arms race. But me, when I think of the Cold War, I think of … nutcrackers.

Ever since I was a child, nutcrackers have been my favorite Christmas decoration. I remember visiting the Christmas section at the late great Northern California department store, Emporium Capwell, with my mother and brother and staring longingly at the shelves full of wooden soldiers, kings and drummers—and dreaming of those magical days when I got to take one home with me.

But not just any nutcracker would do. Those made in Taiwan were too cheap, with empty expressions in their flat, painted faces—three dimensional eyes, noses, mouths and eyebrows weren't part of the Taiwanese tradition. To enter the Dellinger household, a nutcracker had to be German—specifically, West German. I prided myself on my ability to tell a West German nutcracker from an East German one by sight—the Western ones had more character, more flair, more heft, better designs and (I swear!) kinder facial expressions. The Eastern ones, by contrast, seemed mass-produced, stern, boring and a bit ugly. West German nutcrackers were more expensive by far, but they were well-worth saving up for.

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So when the Berlin Wall fell, my first instinct wasn't to rejoice in freedom for the East or the West's victory. Rather, I was worried—worried the East might muck up a reunified nutcracker industry!

It didn't, of course—instead, reunification restored the industry to its former glory. You see, many of those West German nutcracker makers were East German refugees. Nutcrackers were born in the Erzebirge district of Saxony—primarily in the town of Seiffen—which fell under East Germany's domain. But some manufacturers, fearing state intervention in their proud industry, fled to the West and set up shop in Bavaria, where they could continue operating as they saw fit.

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It was a prescient move. As you'd expect, the East German state did meddle with the nutcracker industry. Manufacturers received generous subsidies, but all designs were subject to government veto. And the government, in its drive for global nutcracker dominance, forced the manufacturers to abandon hand craftsmanship for mass production. Hence, those shelves full of cheap, ugly nutcrackers stamped "Made in East Germany"—and those more expensive but vastly more beautiful nutcrackers made in the West.

Once the wall fell and capitalism took hold in the former East, East German nutcracker manufacturers seized on their newfound freedom. They unleashed their design creativity, shunned mass production for handicraft, and began making beautiful wooden art. Those that went West reopened old workshops in Seiffen and around Erzgebirge, and the nutcracker industry grew and thrived across Germany.

As a result, most nutcrackers stamped "Made in Germany" recall the West German creations of old. They're painstakingly handcrafted—no two look exactly alike. Two seemingly identical nutcrackers have subtle differences in facial expressions, as you'd expect when the eyes are hand painted and the hair and eyebrows are glued on. They're heavy and solid enough to, well, crack nuts. They're darned expensive—the average German nutcracker will set you back around $300—but there's plenty of demand to sustain the high price.

I'd love to end this here with a feel-good sentence about capitalism saving Christmas. But alas, the nutcracker industry's going through one of its biggest tests today. While there's demand aplenty for German nutcrackers, supply may soon dwindle. It seems nutcracker making isn't the desirable career it was decades ago—apprentices are few, and with more and more people forsaking village life for the city, the industry risks dying with its aging master craftsmen.

Once again though, I suspect capitalism can save the nutcrackers—namely, reforming Germany's craft trades system to make it easier for would-be nutcracker makers to get training and set up shop. Though Germany abolished the guild system long ago, vestiges of it remain, and wooden toy making remains a protected trade. This ensures quality, but the complicated, years-long apprentice/journeyman path is likely off-putting for aspiring craftsmen. By trusting master craftsmen to properly train younger folks without the bureaucracy of the trades system, Germany would likely gain a much bigger generation of young toymakers. And thanks to visa-free travel and labor migration within the EU's Schengen area, foreign artisans can immigrate, learn the trade and set up shop—this, too, will be far easier without administrative red tape.

And then, with a bit of marketing creativity, these young toymakers could take their craft to the city. Seiffener Nussnacker or "Made in Erzgebirge" has a certain cachet with nutcracker devotees, but there's no reason "Made in Berlin" can't eventually attract the same reverence if urban-born nutcrackers have the same craftsmanship and individuality as their mountain-bred brethren. If urban craftsmen deliver a quality product, they'll find a market. And then new would-be toymakers will see they won't have to move to the hinterlands to pursue their craft—they can be hip urban toymakers.

Time will tell whether supply-side economics can save the German nutcracker industry from its current troubles. But I have faith that as long as there's a market for those neat little wooden soldiers—and, these days, chefs, Scotsmen, Mouse Kings, GIs, cowboys and Harry Potters—innovative folks will find a way to keep delivering a beautiful product. That's the beauty of capitalism.

source: Market Minder
Disclaimer: This article reflects personal viewpoints of the author and is not a description of advisory services by Fisher Investments or performance of its clients. Such viewpoints may change at any time without notice. Nothin herein constitutes investment advice or a recommendation to buy or sell any security ot that any security, portfolio, transaction or strategy is suitable for any specific person. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
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