Financial Columnist Stands By Her Claim That Kids Giving Away Lemonade Are Destroying America

from the it-must-be-stopped dept

We recently wrote about the bizarre, and economically clueless, column by a so-called "financial expert," Terry Savage, who apparently accosted some young girls for giving away free lemonade, saying that they showed what was wrong with America, since they should be selling the lemonade. The irony over the fact that she was giving them "free" advice apparently did not occur to her. Not surprisingly, a lot of people contacted Savage to express their bewilderment at her column, and rather than admit that perhaps she got the story wrong, she's standing by it. Phillip alerts us to her most recent column, where she tries to explain, yet again, why these girls were destroying America. It's not that she's against charity. Or even that she thinks charity goes against capitalism. It's that she has decided what's best for these girls is to learn how to make an honest buck.

Basically, Savage seems to insist that, despite not knowing anything at all about these children, their situation, their upbringing or their parents, that it was an absolute mistake not to have them selling the lemonade.

It's important to start teaching those financial lessons at an early age. These little girls, around age 7 or 8, are already targets of consumer marketing -- for everything from toys to videos, from fashion to food. Certainly, it's also the right time to teach them the value of the money they spend, and how difficult it is to earn it.

It certainly is important to teach kids financial lessons. But that doesn't mean they can't give away lemonade as well.

The children weren't rescuing people from the heat, since it was a temperate day. They were just looking for something to do -- and there was no one around to teach them how a lemonade stand should really work.

And that's the crux of the issue. Savage has decided that she knows how a lemonade stand "should work." She's also decided that she knows how to best act as a parent for some young girls she knows nothing about. How does she know that they didn't earn the money used to set up the lemonade stand? How does she know that the lemonade stand wasn't a reward for something else they did? She's just decided to take it upon herself to tell children what they should do without knowing anything about the details of what's going on? That's not very convincing.

Filed Under: economics, free, lemonade, terry savage

Financial Columnist Lectures Little Kids Who Want To Give Away Lemonade That They're Destroying America

from the wow dept

Stuart sends over a column from a Chicago Sun-Times columnist, Terry Savage, that I could have sworn was satire until someone convinced me that it's not. Savage is apparently a "financial" columnist, who apparently is a bit confused about her basic economics. Over the long weekend, she decided to celebrate the American way by berating and lecturing some children who set up a lemonade stand because they wanted to give away the lemonade for free. According to Savage, these kids represent all that is wrong with America. I'm not joking.

"No!" I exclaimed from the back seat. "That's not the spirit of giving. You can only really give when you give something you own. They're giving away their parents' things -- the lemonade, cups, candy. It's not theirs to give."

I pushed the button to roll down the window and stuck my head out to set them straight.

"You must charge something for the lemonade," I explained. "That's the whole point of a lemonade stand. You figure out your costs -- how much the lemonade costs, and the cups -- and then you charge a little more than what it costs you, so you can make money. Then you can buy more stuff, and make more lemonade, and sell it and make more money."

I was confident I had explained it clearly. Until my brother, breaking the tension, ordered a raspberry lemonade. As they handed it to him, he again asked: "So how much is it?"

And the girls once again replied: "It's free!" And the nanny looked on contentedly.

No wonder America is getting it all wrong when it comes to government, and taxes, and policy. We all act as if the "lemonade" or benefits we're "giving away" is free.

Shockingly enough, you can read Savage's column -- for free -- online. I'm guessing she doesn't get the irony. Savage seems confused about a whole lot of things, from the concept of philanthropy and sharing to some very, very basic economics. For someone who presents themselves as a financial expert, this one column seems to undermine any credibility in the field.

Of course, the kids aren't expecting that they should get government handouts for free. They're getting marginal benefit from making (most) people happy in giving them free lemonade. Economics is not about cash, it's about benefits vs. costs. Yes, they're often calculated in cash terms, but if the marginal benefit to the children is greater in giving away the lemonade, there is nothing wrong with that at all, and it's certainly not against "basic economics" as she claims later in her column.

Again, I need to remind everyone, that you can read her column for free on the Chicago Sun-Times website. Why? Because the marginal benefit to the Sun Times and to Savage herself is higher in giving away the content for free. In the case of the Sun Times, it's from the ad revenue it receives, and in Savage's case whatever (probably too high) sum the Sun-Times pays -- and also for the "free promotion" it's supposed to give to help her sell her books. In other words, the marginal benefit to having her columns online for free is greater than the marginal cost. Just as the marginal benefit to the little girls from seeing happy people by giving them lemonade outweighs the "costs."

If we can't teach our kids the basics of running a lemonade stand, how can we ever teach Congress the basics of economics?

Why don't we start by teaching our "financial experts" the basics of economics?

If that's what America's children think -- that there's a free lunch waiting -- then our country has larger problems ahead. The Declaration of Independence promised "life, liberty, and the pursuit of happiness." It didn't promise anything free. Something to think about this July 4th holiday weekend.

Wait, what? You know what the Declaration of Independence also didn't include? Anything about how much "life, liberty and the pursuit of happiness" costs. You know why? Because it has nothing to do with whether or not something costs money or is free. So that's not "something to think about" because it makes no sense.

But, perhaps we shouldn't be surprised that someone who thinks it's a good idea to lecture little children against sharing lemonade isn't exactly the most logical of thinkers out there.

Filed Under: economics, free, lemonade, terry savage