Bloody Lemonade: A Radical Moderate Looks at Economics

I don’t use this space to discuss politics much, and for good reason: by my assessment I’m a Radical Moderate, the most hated of all by each side of any conflict. My political views are hard to categorize, often contradictory and tied up with my views of life itself. Let me try to explain with the example of economics.

Economically, I think capitalism makes social sense. Competition is a good thing, supporting innovation and keeping prices lower. While Adam Smith may talk of an invisible hand, my guiding principle comes from a lemonade-stand commercial I saw regularly while watching Davey and Goliath as a kid. The opening shot is of a kid behind his stand, a sign reading “Lemonade—10 Cents.” Another kid opens an adjoining stand, sign saying “Cold Lemonade—5 cents.” This begins a word-war between the stands:

“Ice Cold Lemonade—5 cents. Free Refills.”

“Ice Cold Lemonade—5 cents. Free Refills. Takeout Available.”

“Ice Cold Lemonade—5 cents. Free Refills. Takeout Available. We Deliver.”

When one kid saw the ad’s final sign, he scratched his head, then got a smile and started work improving his own sign. The unstated message was their competition would continue forever, leading to better product and improved customer experience. As I remember, the ad was sponsored by the Chamber of Commerce, and, like a baby duck, I imprinted on it. Capitalism=Good.

Davey and Goliath was on early Sunday mornings, a day we occasionally visited my paternal grandparents, who lived in Lebanon, NH, where my dad and his twin brother had been high school athletic phenoms. While my dad was growing up, my grandfather and his brother, Winky, had owned and operated Howard Brothers’ Groceries, the largest grocery store in New Hampshire’s Upper Valley. They’d had five or six stores and a fleet of trucks. Although my dad turned seven in 1930, so his formative years were during the Depression, his family was well-off and money was never a real concern. Howard Brothers did well, and extended credit to families throughout the 1930’s, believing folks would pay them back once the economy improved. While they may not have been seen as philanthropists, for they did expect repayment, they provided a public service to folks who needed food.

My dad and his twin enlisted in the Army during World War II, each serving honorably if not heroically, then used their GI Bill benefits to finish up college after the war. While neither wanted to follow my grandfather into the grocery game, they knew the family business would continue to thrive, and with the economy having turned around, those credit ledgers would be paid back. And they would have been. Except for capitalism.

The Atlantic and Pacific Tea Company (A&P) had expanded from its initial hot caffeine sales into retail grocery stores, “supermarkets” as they were called, larger than local groceries and, because of the economies of scale, able to sell their products slightly cheaper. An A&P store opened in Lebanon in the early 1950’s. Here we’re driven back to the lemonade stand above. Howard Brothers’ Groceries could have competed on factors other than price: they were local, they’d extended credit, they knew their customers and had longstanding relationships with them. They could have kept their prices slightly higher than the A&P and still made a go of it. Except. The Atlantic and Pacific Tea Company had very deep pockets and a long-term strategy to drive local competition out of the market. While, because of their size. their prices could naturally be slightly lower, the A&P opened with significantly lower prices, making it appear the Howard Brothers had been gouging locals for years. After all, if a pound of potatoes cost 15 cents at Howard Brothers and only 11 cent at the A&P, if a tube of Colgate cost 35 cents at Howard brothers and only a quarter at the A&P, if a six pack of Schlitz cost 89 cents at Howard Brothers and only 75 cents at the A&P, wasn’t that all the evidence you needed the Howards had been taking advantage of the community? Add to that the fact that when you went to the A&P you weren’t looking into the face of a man you owed money to for the groceries your family had already eaten during the Depression. The choice was simple.

Shoppers in the Upper Valley thronged to the A&P. The Howard Brothers were driven out of business, my grandfather becoming a butcher at Dartmouth College for the last 15 years of his working life. A funny thing about the A&P, though. As soon as they’d destroyed the competition, driving my grandfather from the business he and his brother had built, the A&P’s prices were raised. First, the prices went up to what people had been paying at Howard Brothers. Then, they got a little bit more expensive. After all there wasn’t competition.

I don’t honestly know what capitalism is. Is it the competitive back and forth of the lemonade stand, with innovation leading to an ever-improving experience for everyone? At times. Is it the use of predatory pricing to empty the marketplace of competition, then take advantage of the empty playing field? At times.

I’m not a socialist—I don’t have faith that people will work hard and use their creativity if “to each according to his needs” is the highest good. I’m not a complete free-market capitalist either. Capitalism at its core has a death wish for competition, tooth and claw bloody in any fight.

I’m a radical moderate, despised by both sides. That’s why I don’t use this space to discuss politics.

2 thoughts on “Bloody Lemonade: A Radical Moderate Looks at Economics

  • Christian Socialism has welcomed many outside of America while Christian Democrats navigate with a slightly different moral and economic compass. What are your thoughts on these two approaches?

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