Thursday, July 8, 2010

There Is No Such Thing as Free Lemonade

This post is about a lemonade stand but it has three levels to it, so you are going to have to pay close attention.

Somewhere in the heart of Chicago (or perhaps a suburb), three girls set up a lemonade stand. They weren't selling lemonade, though. They were giving it away. This had to be the nutty idea of one of the parents, who I would bet has more college education  than sales experience and probably thinks sales wasn't made a sin because God simply wanted to keep the Commandments simple at 10.

This "give away lemonade" thinking, by the way, falls directly opposite with my earlier advice to to college students that they should learn how to sell. It should really start as soon as possible, even at the lemonade stand level where kids can learn the cost involved in producing a product and what profit is.

A Chicago newspaper columnist, Terry Savage, came upon this "free" lemonade stand and correctly proceeded to lecture the kids on the idea behind learning, a bit about sales, a bit about costs and a bit about profit. Being a financial columnist, she also wrote about the encounter.

Now comes the third layer. Mike Masnick at Techdirt attacks Savage for her column and for her lecturing the kids. You see to them:

the marginal benefit to the little girls from seeing happy people by giving them lemonade outweighs the "costs."
The first problem from all this is, as we all know, the kids did not cough up the dough for the lemons, sugar or cups. So all the kids really learned by not charging is that by taking money from one group (their parents) and giving it to a second group (passersby) they make the second group happy. It's creating Big Government thinkers, who will just assuredly ignore the taking from taxpayers as they have from their parents.

Savage has this one nailed. Teaching kids about costs and profits will make them much savvier and self-sufficient grown ups, then letting them think stuff just can just be taken from others. It's clearly a lesson that was never taught to Masnick either.

1 comment:

  1. This blog had another interpretation:

    "Get that, kids? The correct thing to do with the stuff you appropriate from others is sell it, not give it away! Sounds about right -- companies take over our public aquifers and sell us the water they pump out of them; telcos get our rights of way for their infrastructure, then insist that they be able to tier their pricing without regard to the public interest. Corporatism in a nutshell, really."