Econ 101: How Dare You Give Away Lemonade, You Fiscally Irresponsible Small Children?!?

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If you’ve ever read her column, you know that Terry Savage was just DYING to tell  this anecdote about needlessly browbeating some young girls about their lemonade stand.

The three young girls — under the watchful eye of a nanny, sitting on the grass with them — explained that they had regular lemonade, raspberry lemonade, and small chocolate candy bars.

Then my brother asked how much each item cost.

“Oh, no,” they replied in unison, “they’re all free!”

[***]”No!” I exclaimed from the back seat. “That’s not the spirit of giving. You can only really give when you give something you own. They’re giving away their parents’ things — the lemonade, cups, candy. It’s not theirs to give.”

I pushed the button to roll down the window and stuck my head out to set them straight.

“You must charge something for the lemonade,” I explained. “That’s the whole point of a lemonade stand. You figure out your costs — how much the lemonade costs, and the cups — and then you charge a little more than what it costs you, so you can make money. Then you can buy more stuff, and make more lemonade, and sell it and make more money.”

Of course, being that her columns theoretically have a point, Savage needed some way to tie that ribald tale into a rant about economics.  Her solution? Suggest that the little girls’ approach was a microcosm of America’s downward spiral!

No wonder America is getting it all wrong when it comes to government, and taxes, and policy. We all act as if the “lemonade” or benefits we’re “giving away” is free.

[***]

If we can’t teach our kids the basics of running a lemonade stand, how can we ever teach Congress the basics of economics?

Speaking only for myself, I don’t operate under the pretense that stimulus money, unemployment benefits, and the like are “free” in the conventional sense of the word. They certainly are not, and I don’t imagine that too many people think they are, but maybe I am in the minority and I just don’t know it. No, the assumption I am operating under is that they are necessary if our goal is the quickest possible turn-around of the economy. Do I wish we had a smaller deficit? Sure. But I also am not so short-sighted that I ignore the necessity of fixing existing economic problems before I worry about the long-term, big-picture issues.

In that way, maybe the little girls in the story got it right. Their decision to spend a little of their parents’ money — the cost of lemonade and cups — to quench the collective thirst of people who stopped by may not have been profitable in the short term, but it alleviated a nagging problem for the people who received the lemonade and allowed them to get back to work and contribute to the economic recovery.

Or, maybe, the little girls’ lemonade stand has no broader implications beyond the obvious — they were trying to do something nice for people and this jerk was somehow offended by it.