The sounds of winter echo through the spiral hallways of genetic memory. It sounds like tn-tn-tn, the sound of a squirrel scurrying across the tree branch unmuffled by the rustling leaves. It sounds like ssuh—ssuh—ssuh, a pony pushing through knee-high snow. It sounds like tsee…tsee…tsee, the distant, solitary, fading bird.  And it sounds like the wail of a filly, hungry, and cold, but mostly hungry….

It has been a thousand years since a pony has felt the fear and pain of winter from outside their skin. Princess Celestia does her job pretty well. But the memories remain. Memories of Winter Wrap Up.

Memories…change, or, as the research suggests, are constantly reinvented. Maybe once a long time ago ponies scavenged what remnants of spring they could and took them inside their caves. Maybe they gathered around these tokens with their families because there is something about being around other ponies who are also alive that does something for a pony’s health. Maybe they even exchanged gifts, whatever paltry things they could muster, even though gift-giving is terribly inefficient. It was proof that no matter how cold things were on the outside, here in the cave among the embers and scraps of greenery, friendship lived.

Now the festival has become…merry. Ponyville lights up on Winter Wrap Up. There is even a song, sung by caroling fillies who travel door to door. Outside. In the snow.

Winter Wrap Up did not lose its meaning. But as the generations of ponies piled up like the layers of a Winter Wrap Up tree, so did new meanings blanket the old like sheets of snow covering the ground. But underneath the fun and games of the modern incarnation of the holiday, the old meanings and the ancient fears still found ways to push to the surface like the rotting hand of an animated corpse….

Hang a wreath on your door, or you might find yourself buried in one….

Now Twilight Sparkle looks out through the window of the top floor of the Golden Oak Tree as the first snow of winter falls. Her heart feels like it is a ship in the storm, tossed and beaten by the waves, or dough in Pinkie Pie’s hoofs, restlessly squeezed and stretched, and heavy. Twilight Sparkle misses her princess very much, and wonders if she will get a letter for Winter Wrap Up.

There is a knock at the door. Twilight Sparkle sighs, magics her hair into something slightly more presentable than what Rarity might optimistically call war-torn chic, and trots down the stairs before Pinkie Pie’s frenetic knocking can disturb the wreath hanging on the door. Spike is in the kitchen making hot chocolate with peppermint and little marshmallows. The ground floor smells of ginger and pumpkin, and a Winter Wrap Up tree, amateurishly decorated with ribbon and jangling colorful ornaments enchanted to sparkle, stands tall in the center of the room.

Twilight Sparkle opens the door. Pinkie Pie, Applejack, and Rarity are carrying squarish things wrapped in colorful paper. But there is nothing under Twilight’s Winter Wrap Up tree.

Twilight Sparkle has not gotten her friends any presents for Winter Wrap Up.

Rarity takes a drink of hot chocolate, carefully sipping around the marshmallows. Spike is sitting on the arm of her chair, holding his own mug with trembling claws. So far he has managed a “gnngh” and two “huh huhs” in response to Rarity’s chatter. A true lady, Rarity has only kind words for the hot chocolate he made and the smell of the ginger cookies fresh out of the oven.

Pinkie Pie is still giggling as she jostles the sparkling tree, the ornaments clinking gently. Applejack is wondering if anypony will mind if she polishes off the last couple of cookies.

Twilight Sparkle is girding her loins for battle, rehearsing a lecture in her head. Finally it happens.

“I’m bored,” Pinkie Pie announces. “Hey, let’s open presents!”

Twilight sits still while her friends begin parceling out their gifts. Rarity hoofs something to Applejack, Applejack hoofs something to Pinkie Pie, and Pinkie Pie hoofs something to Twilight, who takes it awkwardly and sets it down.

When all the gifts are distributed, Pinkie Pie suggests that everypony open a gift at the same time. Twilight Sparkle realizes that this is her only chance, and she plays her best card at once.

“Giving gifts is inefficient,” she says. “Winter Wrap Up is the source of so much deadweight loss every year.”

Her friends stare at her.

“Twilight,” Applejack says in a voice she normally reserves for Apple Bloom when she e.g. has just tried to do her chores faster by treating a plow as a broom with a wider spread, “what in tarnation are you talking about?”

Twilight Sparkle explains. “Suppose you get robbed and lose five bits. That’s bad for you, but it’s not a net loss for the economy as a whole because your thief is now five bits richer. So why is theft bad? Because there are other losses caused by theft that don’t necessarily make anypony else equally better off. Theft makes some ponies afraid without making others braver. It forces ponies to spend bits on fences, locks, and police rather than the things they would rather buy if they didn’t have to worry about theft. That loss from being forced to spend on security rather than other things isn’t made up for elsewhere.”

“The police and, uh, fence makers and so on make more money,” Applejack objects.

“But the money would have been spent on other things,” Twilight says quickly. “All the money spent on security is money not spent on other things, so those ponies lose by the same amount the police and fence makers gain. And since the theft victim herself isn’t as satisfied by her purchases, there is a loss to one pony that isn’t made up by a corresponding benefit to anypony else. That loss that comes with no corresponding benefit is called deadweight loss. Stealing benefits at least one pony—it does, it really does—“

“I know,” Applejack says. “I don’t think all those thieving fillies are out to make me miserable. They just like the refreshing crunch of a juicy Sweet Apple Acres apple.”

“Uh, right. So the real problem of stealing isn’t a transfer of bits from one pony to another per se—although I’m sure the victim would object to that—but the other harms imposed by stealing like fear and the shift of resources to producing security instead of things ponies would rather have if they didn’t have to spend on security. Those harms, those losses that aren’t made up for by a corresponding benefit to other ponies are called deadweight losses.”

“So stealing is bad, you say.” Pinkie Pie rubs her chin skeptically. “What’s that got to do with Winter Wrap Up?”

Twilight answers. “Well, most of the time ponies are better at making decisions for themselves than other ponies are. Basically, if you have to spend money on yourself versus if Rainbow Dash does, you’d probably prefer to spend the money yourself. There are exceptions, like an adult buying for a filly who might not be sufficiently persuaded by long-term concerns, but most of the time, especially when it comes to, well, frivolities like you usually get on Winter Wrap Up, ponies would be better off buying things for themselves rather than having others guess as to what they would want.”

“But it’s nice to be treated,” Rarity says.

“It’s inefficient,” Twilight says. “The best gift is money. At best you can buy your friends what they would have bought themselves with the cash. More likely, you’ll buy something they wouldn’t have bought themselves. This creates deadweight loss because the same amount of money could have been used to create more value—that is, if ponies would just give each other money instead of presents.”

“But it’s boring always buying the same old things you already know you like,” Pinkie Pie says. “One of the best parts about Winter Wrap Up is being introduced to new things.”

“If you really wanted that you could just buy yourself something different!”

“It’s not like going shopping is free,” Applejack says. “I send Apple Bloom because it takes so long.”

“Have you ever seen a gift exchange go quickly?” Twilight counters.

Rarity sits back, seeming rather put out. “This all sounds absurd. Giving presents on Winter Wrap Up is a tradition, and it’s fun. I don’t see what efficiency has to do with it.”

“Efficiency is what powers your Elements of Equilibrium,” Twilight says. “If we’re being inefficient, then that means we’re just destroying value. Value is the stuff ponies care about. If we’re destroying value, we’re destroying the things we care about. That’s why efficiency matters.”

“So did you get us money?”

“What?”

“Did you get us money?” Pinkie Pie repeats. “I mean, it’s only logical. We all get each other presents on Winter Wrap Up. Since you said money is the best gift, that means you all got us money, right?”

Twilight recovers quickly. “But if we all did the right thing, we’d all just end up giving each other money. You’d give away as much money as you got and it would all be a big waste of time.”

“So out of concern for the welfare of all of ponydom you didn’t get us any presents is what you’re saying,” Applejack says.

“Um, yes, well. Yes.”

“Hm.” Rarity takes a sip of hot chocolate. The room seems about twenty degrees colder.

“It’s only rational,” Twilight explains.

Applejack finishes off the last of the cookies. There is an edge to the way she chews.

“You can still all share your presents with each other,” Twilight adds.

Pinkie Pie gives the tree another shake, a troubled look on her face.

“I mean, it’s not my fault you all celebrate this holiday with an irrational and economically harmful tradition,” Twilight clarifies.

“You’re a jerk,” Applejack says.

“It’s a stupid holiday, and presents are for fillies! I—“

Spike burps; green flame roars out of his mouth, not nearly loud enough to muffle Rarity’s scream. Setting his hot chocolate down, he grabs the letter that came out with the flame and looks at it.

“It’s from Princess—“

Twilight magically yanks the letter out of his grip. She levitates it to herself, opens the envelope, unfolds the letter…her eyes flit left to right and then down and left and right. Only Spike, who has spent a fair amount of his life watching Twilight read, recognizes when she goes back to the top and starts rereading the letter.

“Did she wish you a happy Winter Wrap Up?” he says.

Twilight’s horn glows again. She and the letter vanish in a flash of lavender light.

“Quite rude, really,” Rarity says.

Spike slides off the chair onto the floor. “I’ll just go check on her.”

Twilight is in her room, pacing back and forth. She jumps when Spike opens the door. He walks in, holding his tail still to express uncertainty, a lizard display often lost on ponies, including Twilight. Even Spike doesn’t know why he holds his tail still like that, only that it is frightening not to.

“Are you okay?” he asks.

“I should have got them presents, Spike,” Twilight says in a worried voice. “I don’t know what I was thinking.”

Spike notices Twilight is still holding the letter from Princess Celestia. “Maybe too much thinking was your problem to begin with.”

“I can fix this, right? I can still get them presents. Didn’t I used to do that for Shining Armor on his birthdays before I learned economics and he betrayed me utterly?”

“Don’t ask me. I wasn’t there.”

“I did. I can do this. What stores are open now?”

“On Winter Wrap Up? Only your library, I think.”

“We never close.”

“Nope. Even though no pony has checked out a book in three months.”

There is a knock at the door. Twilight jumps again, startled and afraid.

The door opens. Pinkie Pie sticks her head in. “Hey, Twilight. Did Princess Celestia get you something awesome for Winter Wrap Up? We’re going to start sharing presents now, so come down to the tree with us.”

“I—I’m not feeling well.”

“Come down. There’s something I want you to see.”

There is something about Pinkie Pie’s tone that makes Twilight hesitate. Twilight realizes it would be utterly ridiculous to be more afraid of her friends than a murderous pony-eating forest. Still, it takes a gentle smile and a beckoning hoof from Pinkie Pie to break Twilight free of her paralysis. She follows Pinkie Pie out the door, Spike behind them.

As they walk down the hall, Twilight finds the courage to speak. “You’re not mad?”

“Furious,” Pinkie Pie says. Twilight does not flinch and is surprised by this. “You must have had the most boring Winter Wrap Up parties in Canterlot.”

“I should have gotten you all presents.”

“Yeah, well, for the best student of the science of friendship in Equestria you’re pretty bad at putting your theories into practice. But don’t worry; I’m the best at friendship in Ponyville, the friendliest town there is. I’ll guide you through the darkness.”

“I trust you.”

“I know.” They start down the stairs. “Have you ever heard the idea that when two ponies become friends, when they part they leave a piece of themselves with the other pony?”

“It sounds like the sort of thing ponies say about friendship,” Twilight says carefully.

“Well, since I’ve got so many friends, it’s only logical that I have all these pony pieces inside me. Pretty soon I’ll grow too big for Ponyville and morph into some kind of friendship singularity. All the friendship won’t be able to fit inside my Earth Pony body. It’ll squeeze out however it can: wings, a horn, whatever.”

Twilight frowns. “Pinkie, you don’t really think you’ll become an—“

Twilight stops. They are at the hoof of the stairs. Twilight sees Rarity and Applejack by the tree exchanging gifts. Pinkie Pie leads her over while the two ponies tear apart the wrapping paper.

“What the—what is this?” Applejack holds up a purple box with writing on it. “Rarity, what in tarnation is a Glitter Dream Starter Set, and what am I supposed to do with it?”

Rarity is levitating at leg’s length a quadruple of garish yellow boots. “Applejack,” she says in a scandalized voice, “did you mix up the gift boots with the ones you meant to incinerate?”

“Those are perfectly good boots,” Applejack says. “They’ll keep your hoofs dry and clean of mud no matter how hard it rains.”

“What on earth would I be doing out in the rain, and what would I be doing ever in the mud?”

“Finding a place to bury this glitter doodad, I reckon.”

“I thought you might want to decorate your, ah, wheelbarrows, and, uh, what do you call those things, with the little metal claws—“

“Plows, Rarity. They’re called plows.”

“Yes, well, they’d stand out a lot more if they had some sparkle and shine to them. I won’t talk with you about paint and colors yet—“

“Paint? Colors? They’re tools, Rarity!”

“Yes, well, clearly you have no appreciation for the aesthetic side of things.” Rarity eyes the boots distastefully and sets them down away from her.

“The boots’ll be too covered with mud for anypony too see how they look.” Rarity’s head jerks up sharply at that, and Applejack bursts out laughing.

“Oh, very funny,” Rarity says, crossing her forelegs and looking away. Twilight catches a glimpse of a smile on her face.

“I reckon I’ll give the glitter to Apple Bloom,” Applejack says. “I know she’ll find some use for it. Thanks for the present, Rare.”

“Oh, you’re welcome. And thank you, Applejack, for the…boots.”

Both ponies smile at each other while Twilight tries to understand what just happened.

“Why are you two happy?” she says. “Neither of you got what you wanted. The deadweight loss is practically the whole value of the presents!”

“We’ve been getting each other terrible presents for years,” Applejack says. “It’s like a tradition.”

Rarity beams. “Only a true friend could get me something as awful as these boots.”

“But…the deadweight loss….”

“If I really wanted something I would just ask for it,” Rarity says. “You can always be honest with a friend like Applejack.”

“Sharing gifts with Rarity ain’t about what we get,” Applejack says. “It’s about what it says about the special bond between us. You know, information.”

Pinkie Pie lays a hoof on Twilight’s shoulder. “Anypony can give another pony ten bits for Winter Wrap Up. But there is a real decency, even a sort of kindness, in getting another pony a present from the heart.” Pinkie Pie giggles. “Even those ugly boots!”

“Hey now,” Applejack grumbles. “I’ve got a quadruple just like those.”

Twilight Sparkle realizes something, and blurts it before she can bury it. “That’s why I didn’t buy you girls presents. I didn’t know what to get you all. I was afraid, and I rationalized my inaction by telling myself gift-giving is an economic crime. I’m sorry. I didn’t even get you anything, Spike.”

“That’s okay. You gave me two birthday presents last year.”

“I did? Why?”

“You thought it was my birthday twice. And you were wrong both times.”

“I’m sorry.”

“It’s okay. Two birthdays! You even got me ice cream.”

“I’m a bad friend.”

“Yup,” Applejack says. Rarity swats her on the flank.

“It’s okay,” Twilight says. “Applejack’s honesty is a gift of its own and one I’d willingly pay for.”

Pinkie Pie wears a big smile. Her teeth are as white as the snow and gleam like the ornaments on the Winter Wrap Up tree. “But you did get us a gift, Twilight, one straight from the heart. I’m always happy to get an economics lecture from you, and this one was extra special. Until today I hadn’t really thought about the true meaning of Winter Wrap Up. Now I know. I can’t wait to learn more economics from you next year!”

Twilight smiles gratefully. Pinkie Pie is grinning now. “Besides, two birthdays every year?” She gives Spike a significant look, who nods back.

“Ha ha,” Twilight says. “Very funny, you two. I’ll definitely keep track of your birthdays on my calendar now.”

“We know we can depend on you when it comes to economics, Twilight,” Applejack says. “You give us the gift of a healthy macroeconomy up at the Daughter everyday. And if the other stuff comes slower, well, that’s the pace of life in Ponyville. We ain’t going nowhere.”

“Bright minds, bright hearts,” Rarity says. “That’s, ah, specialization, I think you call it, dear. And that’s why you have friends, so they can support you where you are weakest.”

“We love you, is what we’re trying to say,” Pinkie Pie says. “We got you presents so that you’ll believe us.”

Twilight tries to answer and cannot. Tears run down her cheeks like melted frost.

Gifts are given. Twilight keeps her head down as she opens each one—a makeup set from Rarity, a can of varnish from Applejack, a gift card to the Sugarcube Corner and a T-shirt that reads “Funky” in colorful letters from Pinkie Pie, and a new pen from Spike—and her friends wisely say nothing. At one point Twilight levitates the shirt in front of her face and draws Spike to her. What, if anything, is said or done from behind the new T-shirt cannot be said. Then Twilight releases him, and it is time to light the Memorah.

The Memorah is a symbol of the phoenix, whose light and fire outlasted the winter. It is a testament to the ponies who did not outlast the winter. And it is bright and unique, and Spike has a great deal of fun in sucking in a belly full of air and expelling a line of flame over the row of nine candles, lighting them all with a merry blaze. He also finds it a pretty good way to disgorge any backed-up letters from his stomach.

“It’s beautiful,” Rarity says. Spike tries to say, “Aw, shucks,” and “Not as beautiful as you,” at the same time and ends up with “Naw shucks as you.” Rarity seems, however, to have suddenly gone deaf, so momentarily entranced is she by the Memorah’s flame.

“It’s great!” Pinkie Pie says. “Good job, Spikey.”

Spike rubs the back of his head. “Why do they call it Winter Wrap Up, anyway?”

“It’s because you wrap everything up when winter begins,” Applejack says. “Granny Smith always said you work to last through the winter. If it’s winter and you still have things to do then you’re in a heap of trouble.”

“I thought it was because we wrap the tree in decorations,” Rarity says. “By the way, Twilight, I could make a suggestion or two for next year. Not that it wasn’t a courageous attempt….”

“I just assumed it was because we wrap up presents to share with each other,” Pinkie Pie says.

“It’s better than calling it ‘We’re All Going to Die,'” Twilight says. “I love you all, by the way.”

“Awww!” Pinkie Pie nudges her. “Twilight, you’re so sappy!”

There are hugs then, and Spike making faces, and there are songs and light and fire, and finally it is time to part. One by one the ponies leave, all of them, even Pinkie Pie, careful not to disturb the wreath hanging on Twilight Sparkle’s door.