Today is May Day. Supposedly, the Occupy Wall Street mob planned to storm the city and shut down commerce for the day. (Sidebar: I live in Jersey now; do I need to specify that "the city" is New York City? Around here, we all know what we mean when we say "the city." But I digress.) Anyway, I think the OWS crowd was sending out its own May Day distress call by the end of the day, as the whole thing was a bit of a a huge bust (which, quite honestly, gave me a serious case of the glees).
Coincidentally, my 14-year-old son and I started an economics unit this week, and part of today's reading included this article: a letter written in 1942 (!!) from a grandfather to his grandson. Apparently, the grandson (who was just a schoolboy at the time) heard many people disparaging the profit system, and wrote about it to his grandfather. This was the grandfather's reply. That we read this today, on this big OWS "We are the 99%! Down with the 1%" day of (failed) protest, could not have been more perfectly timed if I had tried. Believe me, I'm not that on top of things.
The book we are using as our primary text is Whatever Happened to Penny Candy? by Richard J. Maybury. (Excellent book, by the way.) This article came from the study guide to that book, A Bluestocking Guide: Economics by Jane A. Williams.
In the letter, the grandfather tells his grandson to imagine a primitive community of 100 people, who do nothing but work hard all day just to obtain the mere necessities of living. They live in a village at the base of a mountain; their water source is at the top. Every day, each person must climb the mountain for water, which takes them one hour.
One day, one of the hundred notices that the water trickles down the same direction he walks. He decides to build a trench down the mountain, leading to a basin he digs out by his house. None of the other 99 people pay any attention to what he is doing. When his trench and basin are finally complete, he turns some of the water from the spring into it. Soon he has fresh water at his house. He tells the other 99 that he will let them get water from his basin if they will give him the daily production of 10 minutes of their time. They agree. So he now has 990 minutes (16.5 hours) worth of production from the others every day, and the 99 have each saved themselves 50 minutes of time every day, because they no longer have to go up and down the mountain for water.
Now that the one man has 16+ hours of production from others, he is free to spend part of his time observing things around him. He notices the water has power; it carries sticks and pushes small stones along as it travels. He contemplates this for some time, and eventually devises a water wheel to harness that power, which he uses to run a mill to grind his corn. There is enough water power to grind the corn for the other 99, also. So, again, the one offers the 99 a deal: If they will give him one-tenth of the production from their time saved, he will let them use his mill to grind their corn. Again, a win-win for both the one and the 99.
With all this production coming to him, the one is now completely free to spend all his time observing others. He realizes one of the 99 is the best shoe maker in the group; he encourages that one to spend his time making shoes for the others in exchange for a portion of their production. He sees that another one is more skilled than all the others at making clothes; again, he helps that one devise a plan to make all the clothes in exchange for portion of the others' production. Bit by bit, people begin to specialize their labors, doing what best fits them, and the whole community benefits.
But what would have happened if, at the very beginning, the 99 had turned on the one, and said, "We are ninety-nine, and you are only one. We will take what water we want and you can't stop us. We will give you nothing." What then? There would have been no incentive for this enterprising one to continue to solve problems.
And so the story continues... I encourage you to take a few minutes to read it in its entirety. The best parts are boxed in red. My favorite part? This:
And so the story continues... I encourage you to take a few minutes to read it in its entirety. The best parts are boxed in red. My favorite part? This:
"Unless envy and jealousy and unfair laws intervened to restrict honest enterprisers who benefited all, progress promised to be constant. Need we say more to prove that there can be profit from enterprise without taking anything from others, that such enterprise adds to the ease of living for everyone?"
Indeed, nothing more needs to be said.
