Monday, July 27, 2009


The L4K Lemonade Stand Chronicles: LemonAID

Ever since it had turned hot, the boy’s lemonade stand had been very busy; so much so they had to hire some of their friends to work the stand. As the demand for the lemonade went up, the boys raised their price to cover the additional cost of hiring workers. The increase in the price of a cup of lemonade had not deterred too many people from buying their cold refreshing lemonade since the heat had made it more popular.

In response, some parents decided to buy pre-paid cards to give to their children as part of their allowances. These parents were able to get a good deal from the lemonade stands since they were buying so many cups in advance. Unfortunately, by having lemonade pre-paid, these children rarely tried to find the best deal among the town’s four lemonade stands.

There were, however, two groups who were especially sensitive to the increase in the price of lemonade: the elderly who were living on a fixed income and the children from the poor part of town.

The elderly thought it would be a good idea if they didn’t have to pay the full cost of a cup of lemonade so they showed up at the next town hall meeting to ask that other lemonade drinkers help to pay for their lemonade purchases. And since the elderly typically vote in large numbers, the town’s mayor and council members were more than eager to help their elderly voters, uh, I mean citizens.

The town council decided it would require all operators of lemonade stands to collect a fee on each cup sold. The lemonade stand operators would send the money collected to the town council who would in turn send a check to the elderly to help cover the cost of their lemonade purchases. Since the elderly tend to drink more lemonade than younger people, the fee wasn’t enough to pay for all the cups of lemonade they consumed. So the town council decided to set a lower price that it would pay for a cup of lemonade sold to the elderly and require lemonade stand operators to serve all elderly persons.

The elderly’s access to lemonade was fixed, but what about the kids from the poor part of town? The town council decided to buy these voters, uh, I mean help the poor by passing a law requiring all persons who shows up at a lemonade stand thirsty be given a cup of lemonade even if they can’t pay.

The only kids who had to pay more for lemonade were the ones who were not given an allowance but had to work for their lemonade money. Some mowed lawns, some baby sat, and some delivered newspapers. They did not have access to pre-paid cards and didn’t live in the poor part of town so they cold not get free lemonade. The lemonade stands simply increased the price to these kids to cover their costs which were not being paid for by the elderly and the poor kids.

When word got out that the town’s lemonade stands had to serve cups of lemonade even if you didn’t have money to pay for it, boys from surrounding towns would ride their bikes to this town just to get free lemonade. Even after a few of the town’s citizens complained about that, the town council passed an ordinance prohibiting the lemonade stand operators from even asking about where a kid lives.

The once thriving lemonade stands in this town were no longer healthy. Needless to say the system was broke. The free enterprise system had failed. Something had to be done.

And Barry had an idea.

To be continued (but not right away as the summer is for family not blogging).

Thursday, July 23, 2009

Frugal McDougall, A Rhyme for Our Times

by D. Jones

Frugal McDougall worked very hard,

Bought things with cash and not credit cards,
And when it came to the things that he bought,
Things that he needed were all that he sought.

Once he was sure that his bills were all paid,
The money left over was carefully saved.
You see in the future he hoped to retire
And knew very well what that would require.

His neighbors were foolish and laden with greed.
They focused on wants instead of on needs.
They went out to dinner about every night.
When you’re middle class that’s one of your rights.

When they got their paychecks they spent every dime.
Having money left over would have been a crime.
Their credit was pushed to its uppermost limit,
When it came to debt they were very deep in it.

When Frugal McDougall would try to explain
The value of saving they all called him names,
So he wouldn’t bother most of the time.
He said it was something like ‘pearls before swine’

Meanwhile the neighbors got credit card offers,
Promising money to fill up their coffers.
Consumed by their greed they filled out every one,
With barely a thought as to what they had done.

And when the cards came they all ran about
Foolishly spending till they were maxed out.
A pool for the yard, perhaps some new skis.
They spent money like it was growing on trees.

Some even went on a cruise to the Med,
Where they all laid around looking tanned and well fed.
No thought was given to how they would pay,
For surely a bill would be coming their way.

In complete disbelief McDougall looked on.
He knew very well that they had it all wrong.
And the foolish idea that was shared by them all
Was that happiness was now on sale at the mall.

He’d been chastened so often he now bit his lip,
For fear if he didn’t he’d let something slip.
His neighbors would learn of his total disdain
For the way that their money was thrown down the drain.

Instead he would focus on his quiet life,
With his quiet children and his quiet wife.
In their simple way their needs were all met,
And their simple life was quite free of debt.

Then one day his neighbor came home joyously
In a gigantic brand new SUV
Frugal McDougall just stood there and gawked,
Confused and bewildered and totally shocked.

He knew that his neighbor made twelve bucks an hour
And shouldn’t have this kind of purchasing power.
And when asked how he paid for this monstrosity
The neighbor replied, “with my home equity.”

The debt didn’t matter, the man was a dunce,
Whose only concern had been "how much a month."
The neighborhood pondered what he had just said
And one by one light bulbs came on in their heads.

Then sure enough the very next day,
New cars appeared in every driveway.
McDougall now cautioned that they should take heed,
All this debt served no legitimate need,

Instead they were putting their futures at risk.
The response they delivered was angry and brisk.
Frugal McDougall was called a big fool,
And other mean names that were equally cruel.

"We are all rich," they boldly declared
As Frugal McDougall stood there and stared.
"Our homes are all worth more than twice what we paid!
The good life is ours and should not be delayed!"

But Frugal McDougall refused to be goaded
And as he expected the debt bomb exploded.
The neighborhood values were starting to fall,
Faster and faster effecting them all.

Then as his neighbor stood looking distressed,
The new SUV was being repossessed.
Soon all around, the neighborhood toys,
The ones that had recently brought so much joy,

Were all repossessed or put up for sale.
The pleasures they brought had grown a bit stale.
Purse strings were tightened as jobs were now lost.
It seems the free money came at a steep cost.

Banks were collapsing as everyone bailed
From upside down houses and lifestyles that failed.
All of the debt that could not be repaid,
Was now wreaking havoc that would not be stayed.

Government bailouts now came on the scene
As political leaders were all very keen
To keep credit flowing and money being spent,
So trillions of dollars were foolishly lent,

In a desperate attempt to keep prices high,
A fact that they won’t even try to deny.
These actions were more than a little perverse,
For adding more debt only made the mess worse.

This of course left them with one thing to do.
They needed more sources of tax revenue,
So small businesses that were already hurting
Were saddled with costly additional burdens.

Many scaled back hoping they could prevail
But quite a few more of them now simply failed.
So many neighbors were now out of work,
They turned on McDougall and called him a jerk!

The papers had all said that he was to blame,
Though none had specifically called him by name.
In a foolish attempt to curry some favor
It seems that they now blamed the problem on savers.

They said "greedy savers are hording their cash
And collectively made the economy crash."
His penchant for saving was very well known.
Poor McDougall’s cover was thoroughly blown.

“Tax him,” folks cried as they all shook their fists
“And tax him some more if he tries to resist!
He has more money than he’ll ever need,”
They cried in a horrid expression of greed.

Poor Frugal McDougall was truly confused,
Saddened, frustrated and now feeling used.
He’d tried to warn people of what lay ahead,
But they didn’t listen and blamed him instead.

The country can never be restored to health,
As long as we’re exporting all of our wealth.
Closing our factories, exporting our jobs
Turning the people into angry mobs

And all of this spending with no end in sight
Is the most direct cause of our national plight!
How did this happen, where did it begin?
This foolish game’s left us no way to win.

Now the brave politicians all deny fault
As the nations economy grinds to a halt
Is this the end of the U.S. of A?
Will McDougall’s country now fade away?

He doesn’t know and he really can’t tell,
But from where he’s standing it doesn’t look well.

Originally posted on Mish's blog.

Wednesday, July 22, 2009

Two Fundamental Questions for Obamacare Advocates

Beven Sabo at Free Market Mojo on the two fundamental questions to ask in the nationalized health care debate:
Assuming, for the sake of argument, that Obamacare is better and cheaper than the current system (which it is not), I believe it would still be detrimental to our long-term interests. The threat to liberty posed by Obamacare is grievous. For both practical and philosophical reasons, every American should be horrified by the very thought of President Obama’s proposed health care plan. As Ayn Rand wrote about such programs, two questions must be asked: “By what right?” and “At whose expense?”

Friday, July 17, 2009

Slide Show: Cap and Trade Explained

Cranky at Six Meat Buffet put this slide show together to help explain cap and trade. Look closely on page 8 to answer the question. I am not sure I understand slide 9.