Lemonade stand offers lesson in basics of capitalism
© by Barbara Anderson

The Eagle-Tribune
Sunday, August 25, 2013


“Capitalism, that economic system based on the private ownership of the means of production and distribution, as land, factories, mines, railroads etc., and their operation for profit, under more or less competitive conditions.”

My childhood dictionary

“Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.”

Ayn Rand, “Capitalism: the Unknown Ideal”

“Capitalism has always been a failure for the lower class. It is now beginning to fail for the middle classes.”

Howard Zinn, “A People’s History of the United States”

I didn’t study economics in school. It was required in college but I didn’t get to it before I ran out of money in my sophomore year. Some formal training in this science would have come in handy when I became a taxpayer activist, since I had to learn a lot on the run.

The first time I recall hearing the word “capitalism” was when I lived in Mexico as an exchange student. One of the family cousins was a communist student; he tried to tell me that the U.S. system is wrong, that Marxism is right.

I sensed a flaw in his theories but at age 18 I didn’t know enough to argue; went home with the resolution to learn more about the subject. Fortunately, I found Ayn Rand before I found Howard Zinn. I think that one of the problems in our country today is that many college students over the years weren’t so lucky.

I’d argue with Rand’s overly broad definition, but where to start with Zinn’s critique, which was written long before things really did start to fall apart, mostly because of the socialism he advocates.

Follow the above quotes. The first is a fairly standard definition that I found in my dictionary. Then, the title of Rand’s book tells us that the dictionary definition hadn’t actually ever been practiced. The capitalism that Zinn hates isn’t either a narrowly defined capitalism, or the broad version advocated by Rand, though he’d hate that even more: so when we talk about capitalism in today’s economic systems, it’s not what it’s either supposed to be or accused of being.

My son, who occasionally quotes Zinn, says he discovered him in the movie “Good Will Hunting”, not in his college courses, but “A People’s History of the United States” is assigned to many American high school and college students, and this could be the reason they don’t seem to understand the concept of American exceptionalism — which they certainly didn’t learn about in 700 pages citing every mistake our country has ever made, without noting its relative goodness.

I knew something about Zinn’s Marxist philosophy and his battle with John Silber at Boston University, but hadn’t read the book. After my son mentioned that my granddaughter was reading his copy, I bought it myself to write rebuttals in the margins for her. Fortunately, it doesn’t have any wizards, vampires or zombies, so Maya quickly lost interest.

Nevertheless, I felt I’d missed a teaching opportunity this summer when the family was visiting. So here it is: Feel free to use it with your own descendants.


The busy lemonade stand


On July 4, my 12-year-old granddaughter had a lemonade stand in front of my house; lots of boaters walking to the nearby Salem Harbor dock from faraway parking stopped to buy. In fewer than three hours, she took in almost $40!

Her dad and I bought the lemonade mix. She borrowed a pitcher and plastic cups from Chip next door, and an umbrella for the table and chair that I let her use and the men set up. I lent her a cash box with change in it. When the enterprise was more successful than expected, her mother quickly made more lemonade while Maya kept selling.

The meals tax didn’t apply because her customers kept walking. No government so far has asked for income or property taxes. So, all she had to do was pay the help – her mom – and pay back the capitalists – Chip, her father and I – who provided the up-front money and infrastructure for the business. The rest was profit, earned by her entrepreneurship and hard work.

She gave her twin brother a few dollars for running errands. She had around $35 left because none of the adults demanded repayment or dividends on their investment. If we had, she’d have taken home only $20. She could have re-invested some of it to grow the business, to hire employees, if she’d wanted to make a career of lemonade.

And that, children, is how capitalism works, when it actually works. In the United States – the real U.S, not Zinn’s hated version – the economic system has been mixed, with capitalism partly hijacked by Big Business, Big Government, and Big Labor. This is from whence cometh the phrase “crony capitalism”, which is far from the ideal original concept.

Anyhow, my grandson Aidan had no interest in running a business. He earned $5 cash from me for stomping all the cardboard boxes I’d been collecting for recycling; pure muscle enterprise, no risk, no overhead, no tax reporting. He got to keep it all.It’s an exciting time, once again, to be a political activist in Massachusetts and nationally, looking forward to a Barry Goldwater revival.

The comments made and opinions expressed in her columns are those of Barbara Anderson
and do not necessarily reflect those of Citizens for Limited Taxation.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her column appears weekly in the Salem News and other Eagle-Tribune newspapers.

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