Capitalism for my 7-year-old

Shall I tell you a story?

“Let me play.”

It’s a very nice story.

“Let me play.”

I’ll do your homework, if you hear me.


Oh, demand-supply mismatch.

“What’s that?”

It’s in the story. Shall I tell you now?

“But you will do my homework?”

Promise! Long ago, in a faraway desert, there was a rocky hill. Below this hill was a large pond.

“It’s called an oasis, I know.”

You are a very clever child. And all around the pond grew grass and palm trees.

“Date palms.”

Correct. And all the rich folk had their huts on that grass strip, while the not so rich lived away from the water, on the slope of that rocky hill.

“So they had to go up and down for every pot of water?”

You know everything. But then, one smart chap offered to bring water to the others for a little money. ‘Think of all the time it will save you’, he said. ‘You will have time to play with your children and your women won’t become bent with carrying water all day.’

“Swell! Did they agree.”

Not all at once, which was just as well. So the smart man brought water in pots on his donkey.

“Donkey! They have camels in the desert.”

Not everyone. Donkeys work out cheaper and are better behaved. Don’t forget he was not a rich man. Soon, more people wanted water delivered at their doorstep, and other men who had donkeys got into the business too.

“Aw, not fair.”

Wrong. It’s called competition. It’s good for everyone.


Who’s doing your homework?

“Go on.”

But the smart man was not smart for nothing. He asked three others to work with him, promising to pay them as much money as each one earned alone.

“Then he too would earn no more than he did alone.”

Wait. He had four donkeys now, so he and his partners made two carts. And on those two carts they were able to carry as much water as all the other carriers combined.


But the smart man was not smart for nothing.

“You are repeating yourself.”

Sorry. Now, after paying his partners, he had a lot more money than he did when he worked alone. Better still, he didn’t have to fill the pots, drive the carts or graze the donkeys. Everyone wanted to buy water from him because he sold it cheaper, yet he made more money than the other carriers.

“So cool. I want to be smart like him.”

He only went from door to door to collect the money. When his partners complained he made more than them, he said he worked harder than them all. He knew no rest; his mind worked even when he was asleep. The risk was all his while they had a good time going up and down the hill. And if he went away, they wouldn’t know what to do.

“And was that true?”

I don’t know. But the others shut up after that and went quietly about their work.

“Now will you do my homework?”

Story’s not finished. Soon, the smart man was buying donkeys from the other carriers. This time, he did not make partners but just bought the donkeys and gave jobs to their previous owners.

“Did you sell your donkey too when you got your job?”

I must have. And then he stopped paying his three old partners. He said they would have to sell him their donkeys or go back to delivering water alone. The carts were his and he took them back.

“That sounds unfair.”

No, child, it’s business. The three partners gave in.


Wait. So he was master of the water supply. He started charging more for the water and paid his workers less. His carts took water to other towns and villages.

“And he became richer and richer and richer?”


“Did he buy a Ferrari? A red Ferrari? I want a red Ferrari when I grow up.”

He was after bigger things. He had always sent two men with each cart, but now he said he couldn’t afford two and would hire only one man per cart. He sacked half of them.

“Sacked! Like you say you are going to be sacked all the time?”

Yeah. Sacked. No work, no money.

“That’s so mean.”

No, that’s business. But he had a heart, and he said those who wanted to work for half their old pay could start making reed pipes for him. He was going to lay pipelines from the oasis to the hill and the villages and towns all around.


And when the pipelines were laid, he fired everyone again, but offered to take back those who would work for half of the half of their old pay. Half of half is a fourth. It’s like me promising you four toffees but giving only one.


Well, but he said it was easy work. They just had to stand in one place and work the pumps. The water travelled on its own through the pipes. The carts he converted into taxis, and now he was master of the water AND transport businesses.

“It’s a strange story. One moment I admire the smart man, and the next I hate him.”

The smart man became fabulously rich, richer than the king of the oasis, but he did not buy a Ferrari. One day, years later, he called the tribe together and offered to sell both his businesses to them. ‘I don’t care for money anymore and I want you all to get rich too. The water and transport businesses are running fabulously, and if you want, you can buy them from me with your land.’

“Now I like him again, Dad, please don’t make him do evil.”

It’s not in my power.

“Did they agree?”


“And did everyone become rich?”

The oasis went dry. It had been overused. The donkeys were old and died.

“No! No! No! This is not a good story. The smart man would never let this happen.”

You are right. He soon offered to hire them all at half pay — half of half of half is an eighth — to build a new city on the land he had bought. He was building a city of skyscrapers.

“Will you do my homework now?.”

Story’s finished.

“You promised!”

Story’s finished.

“Mama, boohoohoo.”

Now we are in arbitration.



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