SalemNews.com, Salem, MA

August 21, 2013

Anderson: A lesson in capitalism, one cup at a time

Barbara Anderson
The Salem News

---- — 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”

On July 4, granddaughter had a lemonade stand in front of my house; lots of boaters walking to the dock from faraway parking stopped to drink. Grandson earned money stomping flat the boxes that had accumulated on my porch. Too bad they didn’t think to sell tickets to traditional political arguments between Gram and Daddy.

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 now suspect 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, something about the title of Rand’s book tells us that the dictionary definition hadn’t actually ever been practiced in its pure form. The capitalism that Zinn hates isn’t either a pure 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,” but his book is assigned to 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.

My 12-year-old granddaughter had a lemonade stand in front of my house. 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. 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, hire employees, if she’d wanted to make a career of lemonade.

And that, children, is how capitalism works, when it actually works.

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.

Barbara Anderson of Marblehead is executive director of Citizens for Limited Taxation and a Salem News columnist.