By Andrew Ripemoff
For today’s economic lesson, we’ll use an analogy.
Little Bethany operates a successful lemonade stand on the sidewalk outside her parents’ home. On the other side of the street, but in a completely different subdivision, little Madison is equally adept at selling her lemonade. Both girls charge 75 cents a cup and donate portions of the profit to their respective subdivision’s efforts to build a neighborhood playground.
EvinDC/Flickr
Little Bethany is selling cups and collecting coin when one day a mean old man from the Home Owners Association approaches and demands that she give him some of her profits. We’ll make up a name for this man. Let’s call him, say... "Bill Ritter."
Bethany is scared, but she tells the man that she can’t give him any more money. After all, she already gives a lot of her profits to the HOA playground fund-drive. Besides that, sugar and lemons are getting more expensive. But Mr. Ritter is adamant and he gets a majority of the HOA board to pass a couple of tax hikes on her. Soon Bethany gets a letter informing her of a higher "severance tax" that is to be based on the amount of lemon juice extracted. The other tax bill contains lots of fancy words like "assessed value," "liens for non-compliance," "mill-levy" and "freeze" and Bethany wonders if that last one means she has to start selling lemonade that’s frozen.
Meanwhile, across the street, little Madison watches on with amusement. Her HOA is made up of nice people who let her be. We’ll call these people "Republicans." Madison sells just as much lemonade as her friend across the street, however she doesn’t have to pay extortion fees to mean men, thus she’s able to donate more money to her subdivision’s playground building fund.
The busy summer season begins and both girls find that business is brisk. So much so that each girl decides to pay her little brother a dollar an hour to help make the drinks, fetch cups, etc. But wait! Bethany looks worried. Here comes Mr. Ritter again. This can’t be good.
Mr. Ritter stops by and starts chatting with Bethany’s little brother Timmy about the benefits of union membership. He mentions something to Timmy about collective bargaining and Timmy asks him, "What’s collective bargaining?" Soon Timmy and Bethany are engaged in complex negotiations over mandatory health insurance and something about annual cost of living adjustments, or "C.O.L.A." And Bethany wonders if this means she has to start selling Pepsi.
Across the street, Madison and her brother are busy actually selling lemonade. They’re so busy in fact, that they’re hired another neighborhood kid to help out with the growing demand. The increasing profits and subsequent contributions means that her neighborhood playground fund has almost met its goal.
As the calender flips over to July, Bethany faces her biggest crisis yet. Timmy fails to show up for work because he’s still inside the house, playing Grand Theft Auto 4. Bethany can’t keep up with the customers by herself and begins to lose business to Madison. Timmy eventually shows up later that afternoon, bragging about how he scored a lot of points by killing a Miami drug dealer with a Molotov cocktail, but Bethany is unimpressed. She fires Timmy.
The next day, Timmy and other members of the United Food and Commercial Lemonade Stand Workers Local 7 carry signs as they picket next to Bethany’s stand. They shout into bullhorns about, "Unfair labor practices," and the greediness of what they call, "Big Lemonade."
If that weren’t enough, the following day, another mean man from the HOA, Mr. Udall, shows up and tells Bethany about his concern over the environmental impact of her business. Specifically, he worries about the stand’s impact on local wildlife. Bethany tells him the only wildlife around here is their dog, "Princess," but Mr. Udall is undaunted. He proposes a regulatory overhaul of the rule-making process imposed by the Colorado Oil and Lemonade Commission regarding neighborhood stands. When Bethany tells him that all these new rules will mean she has to raise her price over a dollar a cup, Mr. Udall mumbles something about "the importance of establishing the right balance between the environmental concerns and drilling." And Bethany wonders if that means instead of squeezing the lemons, she has to start drilling them.
By the time August rolls around, Bethany is in dire straits. Because she had to raise prices, she’s steadily losing business to her competition. Between filling out the tax paperwork for Mr. Ritter, completing environmental studies for Mr. Udall, and the ever present labor negotiations with Timmy, she barely has time and revenue to make ends meet.
Across the street, Madison and her employees have taken a day off. They are all going to play in the newly completed, brand new playground in their subdivision. This is a facility partially built by the contributions from Madison’s lemonade stand, and everyone from her HOA is grateful to Madison, as they celebrate her success.
Bethany? She’s not so lucky. The HOA has taken all of her profits. There is no playground in her subdivision. No employees. No revenue. In fact, instead of supporting her business, her HOA has been nothing but a pain. One of them, a trial lawyer, even sent her a nasty letter, threatening to sue her because of concerns she failed to provide "adequate employment opportunities to people of color."
Between the union picketers, the legal threats, the taxes, and the burdensome regulations, Bethany looks down the street for a glimmer of hope and sees....could it be? Yes! It’s a man! A potential customer! He’s walking her way. Surely he’s going to buy lemonade and make a positive contribution to the community, right? She’s going to be saved! Here he comes!
Oh wait. Never mind. He’s from the HOA.
It’s Mr. Romanoff.