I Looked Back at 100 Years of Macy’s Parades, and It Disproved the Biggest Lie in Economics

Most people look at history as a sequence of wars, treaties, and elections. I look at it as a laboratory of human behavior.

Recently, I went down a rabbit hole investigating the origins of the Macy’s Thanksgiving Day Parade. I wasn’t looking for holiday trivia. I was looking for the answer to a question that has plagued economists for a century:

How does a society actually get richer?

We are taught a precise, mechanical definition of economic efficiency in school. It is called Pareto Efficiency.

In the sterile world of a textbook, an economy is “efficient” when you cannot make one person better off without taking something away from someone else. It implies that the “pie” is fixed. If I want more slices, you must have fewer.

But when I looked at the grainy black-and-white photos of the very first parade in 1924, I saw something that shattered this zero-sum logic.

I saw a group of immigrants, live tigers from the Central Park Zoo, and a department store taking a massive financial risk that defied all conventional logic.

The history of this parade is not just a story about balloons. It is the ultimate case study in how value is created out of thin air, and how the real world consistently outperforms the static models of academics.

Here is what the history of a holiday spectacle can teach us about investing, innovation, and the fallacy of the “fixed pie.”

1924: The Entrepreneurial Leap into the Unknown

To understand why the “Fixed Pie” theory is wrong, we have to go back to the morning of November 27, 1924.

At that time, Macy’s was just a store. The economy was booming, but competition was fierce.

The employees of Macy’s — many of whom were first-generation immigrants from Europe — wanted to celebrate their new American life with a festival similar to the ones they loved in the old country.

Here is the economic problem:

According to traditional accounting, a parade is a waste of capital.

• It costs money to organize.
• It distracts employees from selling goods.
• It blocks traffic (creating a negative externality for drivers).
• It generates zero direct revenue. You cannot buy a ticket at the street corner.

If a “Central Economic Planner” were running New York City in 1924, they would have likely banned the parade. They would have argued that the resources (labor, animals, costumes) should be used for “productive” activities, such as manufacturing steel or sewing coats.

But the planner would have been wrong.

Macy’s went ahead with the “Christmas Parade” (as it was called then). They borrowed elephants, tigers, and bears from the Central Park Zoo. They marched from Harlem to Herald Square.

The result? Ten thousand people showed up. Then tens of thousands more.

Macy’s didn’t take a slice of the existing economic pie. They baked a new pie.

They created a new value — communal joy and spectacle — that didn’t exist the day before.

The Lesson: True efficiency isn’t about hoarding resources. It’s about Entrepreneurial Discovery.

The “efficient” move on paper is often the path to stagnation. The “inefficient” move — trying something bold, weird, and unproven — is the only way to expand the frontier of value.

In your own portfolio, are you only investing in “safe,” efficient utilities, or are you allocating a portion of your capital to the messy, uncertain ventures that have the potential to rewrite the rules of the game?

1932: The Depression and the Subjectivity of Value

Fast forward to the Great Depression.

By 1932, the US economy had imploded. Banks were failing. Unemployment was approaching 25%. People were struggling to put food on the table.

Logic dictates that in such an environment, a frivolous parade featuring giant helium balloons (which replaced the zoo animals in 1927) should have been the first thing to go.

Surely, spending money on helium — a scarce resource — to entertain the masses was “inefficient” when people needed bread?

Yet, the parade continued. And it grew.

Why?

This highlights a core tenet of real-world economics: Value is Subjective.

We often make the mistake of thinking value is objective — that a loaf of bread is “worth” more than a balloon.

But to the father standing in a breadline in 1933, the ability to take his child to see a 60-foot “Felix the Cat” float offered a different kind of sustenance. It offered hope. It offered normalcy. It provided a free escape from the misery of daily life.

The “Psychic Income” was massive.

If Macy’s had cancelled the parade to “save money,” they would have destroyed this invisible value.

By continuing the tradition, Macy’s achieved a Pareto Improvement:

1. The Public: Received free entertainment (Value > 0).
2. Macy’s: solidified its brand as the heart of New York, ensuring its survival when other retailers collapsed (Value > 0).

No one lost.

The Lesson: When you analyze a market or a business, do not just count the tangible assets.

Look for the intangible value.

During hard times, the businesses that survive are not necessarily the ones selling the cheapest commodities. They are the ones that provide meaning and emotional utility to their customers.

If you are cutting costs in your own life or business, be careful not to cut the “balloons.” You might be cutting the very thing that makes the struggle endurable.

1942–1944: The Pivot and Resource Allocation

There is a period in the history of the parade that is blank.

From 1942 to 1944, the balloons did not fly.

This was not because Macy’s went broke. It was because of World War II. Specifically, there was a rubber shortage.

The government didn’t just seize the balloons. Macy’s voluntarily donated them to the war effort.

“The rubber from the balloons — roughly 650 pounds of scrap — was melted down to aid the military.”

This moment is a masterclass in Dynamic Efficiency.

In a rigid, centrally planned system, shifting resources takes months of bureaucracy. Committees must meet. Forms must be signed.

But in a market-based system, the price signal and the social signal work instantly.

The value of “rubber for tires” suddenly exceeded the value of “rubber for Snoopy.” Macy’s recognized this immediately.

They didn’t try to fight reality. They liquidated their asset (the balloons) to serve a higher priority (national defense).

But here is the genius part: They didn’t just cancel the parade and go home. They pivoted the format. They kept the spirit alive through other means, broadcasting the “memory” of the parade and preparing for the return.

They understood that resources (rubber) are scarce, but human ingenuity is infinite.

The Lesson: Standard Pareto efficiency assumes resources are fixed. You have X amount of rubber.

Real life requires Capital Reallocation.

The best investors are not the ones who hold onto an asset forever out of sentimentality. They are the ones who recognize when the wind has changed.

When the market conditions shift (like a war or a technological revolution), you must be willing to melt down your “balloons” — sell your losing positions, pivot your career path — to allocate your resources to where they are most needed now.

1948: The Technology Multiplier

In 1948, the parade was televised locally in New York for the first time.

This changed the math of the event forever.

Before TV, the parade was a “rivalrous” good, to an extent. If the street was too crowded, I couldn’t see. My consumption of the parade was limited by physical space.

TV turned the parade into a Non-Rivalrous Good.

Suddenly, a camera could capture the image of a float, and that image could be distributed to 1 million households simultaneously without costing Macy’s 1 million times more money.

This is the ultimate Pareto Improvement.

Millions of people in the Midwest, who could never afford a train ticket to NYC, were suddenly “wealthier” in terms of entertainment. They got to experience the show.

Did this hurt the people on the sidewalk in NYC? No.

In fact, it made the sidewalk spots more valuable because now those people were part of a nationally televised event. They were “famous” for a day.

Technology allowed the pie to expand exponentially.

This disproves the idea that wealth is a zero-sum conflict between the “haves” (New Yorkers) and the “have-nots” (everyone else).

Through innovation (television), the “haves” shared their wealth with the “have-nots” at near-zero marginal cost.

The Lesson: In the digital age, we must stop thinking in terms of physical scarcity.

If you create content, software, or systems, you are leveraging the “1948 Effect.” You are creating value that can be duplicated infinitely.

Wealth today is not about hoarding gold bars; it is about creating scalability.

When you invest, look for the companies that have broken the link between “cost of production” and “number of customers.” That is where the exponential growth lives.

The Modern Era: Spontaneous Order vs. The Planned Chaos

Today, the parade is a massive machine.

• 5,000 volunteers.
• 3.5 million live spectators.
• 34.3 million TV viewers.

If you look at the history of the parade, you will notice something remarkable: It was never “designed” to be this way.

In 1924, no one sat down and wrote a 100-year plan. No one predicted the internet, the television, or the licensing deals with Marvel and Disney.

The parade evolved.

It grew through a process of Trial and Error.

They tried releasing the balloons at the end of the parade in 1928 (bad idea, they burst or got lost).

• They tried different routes.
• They tried different celebrity hosts.
• The parade is a living organism. It survives because it adapts.

Standard economics loves “Equilibrium.” It wants the graph to stop moving so we can measure it.

But the Macy’s Parade proves that Equilibrium is death.

If the parade stayed the same as it was in 1924, it would be dead. It survives because it is in a state of constant Disequilibrium. It is always changing, always adding new balloons, always retiring old ones.

The Lesson: Stop trying to “balance” your life or your portfolio.

A balanced portfolio is a stagnant one. A balanced life is often a boring one.

You want Dynamic Growth. You want to be constantly testing new ideas, discarding what doesn’t work (like the 1928 balloon release), and doubling down on what does.

Don’t aim for a perfect, static state of efficiency. Aim for Adaptive Resilience.

Conclusion: The Pie is Never Fixed

When I finished reading the history of the parade, I realized that the “sidewalk view” isn’t the only thing that matters.

The true marvel is the timeline.

Over 100 years, Macy’s took a simple idea — a street walk with some zoo animals — and turned it into a cultural pillar that generates millions of dollars in economic activity and immeasurable amounts of joy.

They did this without stealing from anyone. They did this without a government mandate.

They did it through the simple, powerful act of mutually beneficial exchange over a long time horizon.

• The immigrants traded their time for tradition.
• The network traded airtime for viewers.
• The city traded streets for tourism.

Everyone won.

This is the antidote to the pessimism of the “Zero-Sum” worldview.

If you believe the world is a fight for a fixed pile of resources, you will live a life of fear, guarding your slice of the pie.

But if you look at the history of the parade, you will see the truth: We can always bake a bigger pie.

We can always invent a new balloon. We can always find a new way to trade value.

Your job is not to fight for the scraps on the sidewalk.

Your job is to join the parade.