Home / A Fable: Oscar the Orange Grower, or Why Wealth Redistribution Doesn’t Work

A Fable: Oscar the Orange Grower, or Why Wealth Redistribution Doesn’t Work

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This story was inspired by the last presidential debate, starring Joe the Plumber, and by the many comments from small business owners who responded to this Pajamas Media piece.

Oscar had an orange tree in his backyard. One day, he put the oranges in the basket on his bike to sell them at the fruit market. He paid the ten cents to cross the toll bridge, and sold all his oranges that day. He counted his money and started making plans. Selling oranges became a regular thing, and Oscar set aside the money for the fares. The rest was pure profit.

Oscar kept thinking. He looked at the orange tree and saw its roots were in dry and dusty earth. He spent some money and did the work to water and fertilize his tree. Now he had so many oranges he had to make two trips a day on his bike to sell them all. So he bought a trailer to hold all the oranges. The time and toll money he saved soon paid off the investment in the trailer.

He bought another orange tree, and when it bore fruit he invested more money into his oranges. He needed more people to drive the oranges to the market, so he bought another bike and another trailer. When he had enough money, he hired someone to take the oranges to the market and now he had some real money.

He slowly added more bikes and more workers for his orange selling business. After time, he had paid ten people to sell his oranges and help tend his trees. He spent all his time overseeing the work.

But a new road commissioner took charge of the toll bridge. He wanted to change things. Currently, everyone paid ten cents to cross the bridge. But the commissioner thought that was unfair. He felt that ordinary people should not have to pay to cross the bridge. Only bikes with trailers—obvious commercial enterprises—should have to pay for the privilege. As he said, they are the only ones making money by crossing the bridge so they should be the only ones to pay. He wanted to take the extra money that he gathered and help poor people.

He decided that bikes with trailers would pay a dollar for every crossing. Now Oscar had to start making plans. When he started out, he only had to pay the bridge toll to sell his oranges. But as the business grew, he spent money on water, fertilizer, and a trailer. Now he had to pay his workers, collecting the money from the orange sales to cover all the expenses incurred by production and sales of oranges.

Oscar added up all the expenses with the new bridge toll. He thought about how hard he worked to keep everything flowing. He liked selling oranges, but it had been a long time since he himself had sold an orange. Now that the tolls were so much higher, he couldn’t make as much money with all his employees. Too much of his money would pay for tolls now; it didn’t make sense to work so hard for someone else.

He thought some more, and decided to live off the oranges from just one tree. He could go back to making two trips a day on his bike. If he didn’t use a trailer, he wouldn’t’ have to pay a toll at all. He would be quite comfortable.

He fired all his workers and went back to a peaceful life. His workers had no more money, so they went to the road commissioner. He had promised that he would distribute the new toll money to the poor, and they were poor now.

But without the bike trailer traffic there was no extra toll money, and the road commissioner turned them away.

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About Murphy

  • Clyde T

    OK, in the name of everything that is good with Capitalism, please hire an artist and make this into a childrens book. I would def buy one for my nephews. But of course….kids need pictures.

  • bliffle

    Xpressions, under whatever handle, reveals their naivete, since, of course, the biggest redistribution of wealth in the USA has been under the last 8 years of republican efforts to distribute wealth upwards. This has been documented and described so many times that one must conclude that “xpressions” (or whatever) simply is ignorant of the facts, and thus not worth reading.

  • Xpressions

    Bottom line is small businesses that create jobs and keep the economy going will have to shut down or cut jobs because of what the socialist illuminati want to do. I don’t know why the liberal politicians aren’t saying it outright, but the GOP is. They’re spreading the wealth to keep giving out government giveaways.

  • bliffle

    The “Oscar the Orange grower” parable, as it matures and degenerates, illustrates the failures of microeconomics.

    Yet, people draw important conclusions and make important decisions based on such fantasies.

  • troll

    Murphy – When he had enough money, he hired someone to take the oranges to the market and now he had some real money.

    notice that only the movement into exploitation produces ‘real‘ money – and introduces the contradictions inherent in capitalism all in one ‘fell swoop’

    government becomes necessary to regulate the exploitation

    we need a new economic motive –

  • Cindy D


    You starting a new fairy tale there, or can you give me something to read about it?

  • Cindy, the reason for most of our layoffs is that certain of our industries are not competitive at the wages and under the conditions which unions demand. Then we have a body of workers who are unwilling to retrain or relocate when the jobs they had go away, even when there are great opportunities in other industries or other areas. It’s a crazy situation where people seem unwilling to take responsibility for their situation, expecting unions or government to fix everything for them. They need to wake up.


  • Cindy D

    I am wondering if I just made the assumption that offshoring is a problem because everyone seems to think it is. I have been finding articles that suggest it’s a very small reason for all those lay offs we had.

    Some day I’ll have to look closer.

  • Clavos

    I agree, Cindy. I didn’t mean to imply that high taxes were the ONLY reason why companies move all or part of their ops overseas. The Irish, however have ably demonstrated the other side of that lower tax coin; if you lower your corporate tax rate enough, not only will you retain your home companies better, but you’ll also attract a lot of foreigners to your shores. The Irish are becoming a major player in the computer industry in large part because of their tax rates, and much less due to their labor rates, which are not nearly as low as say, China or India’s, both also major players in the computer biz.

    There are a lot of ingredients in the stew, but lowering corporate tax rates is a good one to consider.

    BTW, the tax revenue figures you cite above are not a good proof that we don’t have high tax rates; in fact, lowering tax rates generally will generate more, not less, tax revenue, while raising them will usually lower revenues. And yes, I would consider near zero corporate tax rates under the right circumstances.

  • Lumpy

    so. wealve got the customers. let’s get those wages and corporate taxes down.

  • Cindy D

    By the way, in the factcheck article I cited above:

    The part I am pointing out is in this quote:

    Multinational businesses build plants in other countries to take advantage of lower wages and to be near their global customers, too, not just for tax reasons.

  • Cindy D


    Our corporations are going overseas because they can pay fucking pennies on the dollar for labor and still keep their incentives.

    Here, you’ll like this one at factcheck.org, it trashes Kerry and holds Bush not responsible for installing the tax incentive for businesses to move their headquarters overseas. It also explains that tax incentives are only a small part of the reasons businesses go overseas.

    Fastlane to China

    Despite this rising prosperity, China still has a vast pool of cheap labor from rural areas, where nine out of ten in the workforce are either unemployed or underemployed.

    If they are smart they can navigate the maze of tax dangers and land in a tax-free zone and pay ZERO taxes as well!

    So, what do you propose? Lower corporate taxes to zero? Pay everyone $1 an hour?

    The whole system is fucked up. Companies are going to go wherever they can make the most money. They can always make more money in places like China. And cutting their taxes to zero won’t change that!

    Besides those “highest corporate tax rate” claims don’t hold water! Perhaps, due to loopholes. Because the facts are: Corporate revenues represented only 7.4 percent of all federal tax receipts in 2003. With the exception of 1983, this represents the lowest level on record (these data go back to 1934).

    Read that report from the Center of Budget and Policy Priorities. Corporations have been paying less and less taxes.

    This reminds me of when Dave was telling everyone the reasons companies were going overseas was because there weren’t enough people who needed jobs. Companies didn’t have enough people available to meet all their needs for telemarketing positions, and the like. They would happily pay people good money, if they could find any who wanted jobs. Or some crap like that.

  • Cindy D

    That’s not quite fair though. As I agree with you Clav, which is why I chose the quote.

    The comment does not take a lot of things into consideration. That is why I included it for Dave–to, ironically, sensationalize the comment in much the same way the comment about 41% of individuals not paying taxes has been sensationalized.

    Neither of these statements actually says anything about fairness or individual circumstance. Some of those companies, large and small aren’t making a profit. Some are using loopholes. Some individuals are using loopholes. But, many of those 41% aren’t making enough money to pay taxes. Also, of those who aren’t required to file, which is a small portion of the 41%, some may have little or no income, some may be wealthy enough not to work.

    My point in presenting the information in numbers 18 and 25 was to demonstrate that most small businesses are not going to be affected by Obama’s tax policy and are not having their income redistributed to the poor as is apparently claimed by so many.

    The quote in #29 also seems to support that idea.

    My own company, while having had the luxury in the past, of accounting to break even, no longer needs any clever means to achieve that goal.

    Was it a fair system that allowed me to avoid corporate tax? As I said, I benefited from the system to a much greater extent than the wage slaves who work for me.

  • Clavos

    25% of 66% is 16.5% of total US corps. Big difference from the implications of the headline “Two thirds of US Corps…”

    Do some more research. You’ll find that there are good and sufficient reasons even for most of the 16.5%. e.g. because they’re such miserably shitty companies building miserably shitty products, I’ll bet the US car companies haven’t paid tax in a long time. Others pay no taxes because they pay all profits as dividends to shareholders; but the shareholders pay dividend taxes on those funds. Still others are not-for-profits. As I said, if you dig deep enough, you’ll find the NYT’s yellow headline isn’t anywhere near the truth.

    Fact is, our corporate tax rates are too high already; they’re a major reason why corps keep shifting ops overseas.

  • Cindy D


    It’s the other 25% that I’m concerned about.

  • Clavos

    Cindy #29:

    Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.

    We’ve seen that citation before, in other threads.

    That two thirds of corporations paying no taxes is quite true, Cindy, but neglects to point out the size of those two thirds until way down in the article, where you find that 75% of those not paying taxes are small businesses, not large corps. These small businesses avoid paying taxes by showing no profits on their books.According to your own statements upthread, in #s 18 $ 25, that’s exactly what you do.

    Hoist by your own petard…

  • moon

    bliffle is, of course, right. Except for the “last 8 years” part.

    His statement would have been true–and much more chilling to anyone who is not on the Forbes list–without that part.

  • bliffle

    Wealth has been persistently re-distributed from the poor and middle-class to the rich for the last 8 years. It’s neo-republican policy.

  • Cindy D


    Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.

    Facts (as opposed to speculations) on wealth redistribution:

    The Concise Encyclopedia of Economics

    Almost without exception, academic studies and journalistic accounts of government’s effect on the well-being of the poor focus exclusively on the effectiveness of programs that actually transfer income to the poor. What does this leave out? It leaves out all the programs that transfer income away from the poor. To know the net amount the poor receive after considering transfers to and transfers from them, we need to consider all government transfer programs.

    Such an examination yields a striking fact: most government transfers are not from the rich to the poor. Instead, government takes from the relatively unorganized (e.g., consumers and general taxpayers) and gives to the relatively organized (groups politically organized around common interests, such as the elderly, sugar farmers, and steel producers). The most important factor in determining the pattern of redistribution appears to be political influence, not poverty. Of the $1.07 trillion in federal transfers in 2000, only about 29 percent, or $312 billion, was means tested (earmarked for the poor) (Rector 2001, p. 2). The other 71 percent—about $758 billion in 2000—was distributed with little attention to need.

    By the way, that Tax Foundation figure of about 40% does not include payroll taxes. “…payroll tax is to some degree a surtax on the poor and middle-class worker…” This is because there is a ceiling depending on your income. So, people who earn less pay a greater percentage of their income toward payroll taxes than those who earn more.

    By the way Dave, why do 41% of the population pay no federal income tax? Did they just decide they didn’t feel like it?

  • Which seems strange since the system distributes the wealth TO the poor and middle class and away from the wealthy despite all the lies the left promulgates. When you pay no taxes at all as almost 40% of the population currently does, you’re a recipient of the benefits of the taxes of others while bearing none of the burdens.


  • Cindy D

    There’s you’re redistribution! It’s in place! It is being used! It doesn’t need to be created! And everybody knows there is a certain amount of abuse and fraud associated with it.

    Yes, it’s been going on for years. And it’s unfortunate. I agree with you 100%. Wealth redistribution is what is making the middle class poor and the poor wretched.

    I hope something is done about it soon.

  • Condor

    I would like to see and org chart on the agency that will NEED to be created, or the agency that will NEED to be expanded to make this redistribution work. It sound to me that under Obama, one would be safer to just get on a government payroll somewhere and invent stuff to keep the paychecks fat and forthcoming.

    Unnecessary government is enough redistribution for me. I’m sick of this crap.

    Leave the small businesses alone!

    One part of the story that Murphy left out was the people who didn’t feel the need to work, because it was easier to just fake it and get on the dole.

    I used to rent to a couple of houses to qualified section 8 recepients. I was real close to the people running the housing office and let me tell you, if those “renters” could get away with something against either the housing office policy or the lease, they would. They all smoked, one even prided herself on the fact that after a long association with tobacco and alcohol she could now start receiving the COVETED disability check…. geeesh…. I can see where this is going.

    Instead of helping those who really need it and cleaning out the welfare recipients who can and should be out getting training (paid for), and into the workforce we’re now going to further fund laziness.

    Granted there are those who truely require the help. And we have a system in place which can accomplish that mission. But there are people in the system who are milking it, and are fine with that, they don’t feel guilty about the government checks… and they probably don’t even think about the taxpayers who are really supporting them and supporting the agency and infrastructure needed to provide that support. They just know it’s eagleshit day, and live for that check, those stamps, the health care… and all the other benefits that the taxpayers are providing them. There’s you’re redistribution! It’s in place! It is being used! It doesn’t need to be created! And everybody knows there is a certain amount of abuse and fraud associated with it.

    Fix IT (the current system) Mr. President. And quite taxing my ass off!

  • Cindy D


    I did once have to pay $750 in corporate taxes (how embarrassing) when my accountant fell ill and I didn’t notice a mistake made by the new one.

    I am sure Joanne’s business does the same thing. It’s standard practice for any business that isn’t trying to go public.


    P.S. I loved your addition to the story. I never laughed so hard at such a truthful metaphor. I had daydreams of an alliance to warp the minds of right-wing children? MUAAAHAHAHA!

    Heeee! Okay, I am off to bed.

  • Cindy D


    It’s hard to say if you are asking real questions or you just want to argue with my ideas merely for the sake of arguing (in which case I am not interested in defending them.) But, I will happily supply information about them if you have a real interest.

    If you’re actually interested in learning some of the things you’ve asked you can see this link and view this 10 minute video for starters.

    Having done that, I will be happy to answer any questions you might have.

    I don’t wish to waste any time on the work it takes to explain and educate someone in subjects they aren’t actually interested in, but are merely posing questions about as a vehicle for attack. (See Baronius’s reply to me above.)

    I’d rather spend time with my husband or watch House or probably anything else.

  • bliffle

    Cindy B demonstrates real business experience:

    Many small business owners account to be at break even. That is, you don’t want to have a profit at the end of your accounting cycle.

    Exactly. In fact, even Big Businessmen do this. As an acquaintance told me many years ago: “the trick is to break even at ever higher levels.”

    Many many businesses are operated on this principle. In fact, it is often considered a failure of management to turn a profit. The question is asked: “why didn’t you better reinvest the surplus? What is your growth plan?”

  • A Democrat Fable:

    Oscar is middle class. He votes Republican. He also happens to be a homosexual/adulterer/chronic masturbater. Or, he has a four-figure lien against him. Whatever. (The important thing is, he’s a Republican.)

    The MSM outs Oscar as a disgusting amoral right-wing hypocrite and/or tax cheat. He has dozens of reporters squatting on his front lawn 24/7. Senators and late-night talk show hosts denounce Oscar as subhuman scum.

    Oscar commits suicide. Leftist blogs cheer.

    His company is taken over by Henry Paulson, using taxpayer dollars. Franklin Raines is appointed CEO and runs Oscar’s company into the ground. Shareholders are left bankrupt. Some of them complain about this mismanagement, but they are denounced as racists and sent to a re-education camp. Barney Frank spits in their general direction. Critics on talk radio are silenced with the “Fairness Doctrine.”

    Hugo Chavez becomes President-For-Life of the entire Western Hemisphere. All your base are belong to ACORN. Michelle Malkin is beheaded. Ann Coulter and Sarah Palin are fed to a specially trained herd of human-eating pigs. Michelle Obama replaces the Virgin Mary in all Catholic churches that don’t want to get raided by the IRS.

    And then I woke up … on January 20, 2009 …

  • Cindy D

    What makes you think I don’t pay my fair share?

  • Franco

    #9 — October 17, 2008 @ 12:04PM — Cindy D

    Oscar hates to “work for someone else”. But then so do the wage slaves he hires (and resents for having to contribute some pittance toward their basic security).

    Wage slaves? Excuse me, what are you talking about? You mean those who have found work.

    And your assumption that Oscar hates to work for someone else is just that, an unfounded assumption. First, Oscar likes to grow and sell oranges. Liking the work you do is the secret to running a business at a success so as not to be discouraged by all of the risk and challenges of starring it and running that each and ever business owner faces each and ever day.

    Second, it is an indisputable fact that most people do not want the risk or the responsibility of owning and running a business and would rather be employees. So your assertion is false that wage slaves employees hate to work for someone else.

    Without them his business never would have been more than him humping along on his bike.

    Without Oscar they would not have those jobs. Tell us how Oscar taking on all the risks and responsibilities of business ownership and creating opportunity for jobs and employment is a bad thing Cindy? Keep in mind the fact that if his business failed he and he alone would lose everything he had, including all that he had pledged as collateral to start and operate his business, (like his house) and the employees would not have to pay a nickel of his losses should his business fail. They would be free from all obligations of those losses and would be free to go to work somewhere else. So kindly elaborate on the advantage Oscar is taking of your so called wage slaves?

    But, Oscar has grown up with the notion that his ownership somehow makes him special.

    Ownership is ownership period. That is called freedom. People have a right to own things and the law exists to protect people and their property. Any attribute to it being special or unlawful is based on the law. So what exactly “specifically” do you mean with your statement when you say…….“Oscar has grown up with the notion that his ownership somehow makes him special.”

    “While the lifeblood and years contributed by his wage slaves doesn’t really count.

    You mean all those employees who were paid for their work that they willing took on and no one made them do it and they did not leave because their was not a better opportunity for them, or they did not like change, or they worked close to home, or school for the kids, or etc, etec. The same employees that do not share any of the risks Oscar faces as the company owner. What more do you think the employees are owed, and why?

  • Baronius

    Cindy, I’m stunned. I thought you were all about Obama and making everyone pay their “fair” share. You realize that Biden would call you unpatriotic, right?

  • Cindy D

    That’s right Baronius.

    Many small business owners account to be at break even. That is, you don’t want to have a profit at the end of your accounting cycle.

    There are a variety of creative ways to do this if you are flush with cash. You’d take it as salary, put it in a retirement vehicle, hire a family member in a lower income bracket (your son, daughter, etc).

    Basically, a good accountant will help you avoid the higher corporate tax.

    Think about it for a moment. If you own your own business, why would you keep your money in there as profit and pay the higher corporate tax, when you could take it out and pay a lower personal rate.

    When/if you sell your business it is adjusted based on Owner’s Cash Flow (start at that heading). Basically, one adds back in any expenses like salaries etc. that were not required to operate the business.

  • I agree with Deano. Shame on all of you for beating up on a poor orange. Next it’ll be Joe the Orange Picker who wanted to buy his own tree but couldn’t because…well, just because.

    Murphy, clever & fun story, but, puleeze.

    Income redistribution is at the heart of our income tax…sort of, since there are so many ways for the wealthy to avoid paying their “fair” share. Even a flat tax, if imposed without gimmicks & geegaws, is a way to collect more from rich to be able to distribute it to society as a whole.

    And we’ve seen how successful Reagan’s voodoo economics (trickle down) have been.

    But let’s be honest, there is a point where you tax the rich & small businesses to the point where you’re killing the golden goose, which is a bad idea unless it’s a very fat goose & you’re after its liver. Then it’s a toss up: get the liver and lose the golden egg or go without your fois gros and have the egg. I know, I know, keep the goose & use the golden eggs to buy all the fois gros you want. But I digress.

    How about finding a middle ground between the loonies on the right and left? A simpler, honest, transparent tax system that takes an appropriate amount from people who can afford it to fund what government ought to be doing.

    Nah…forget it. Impossible. Sorry, I need to go take my meds and red meat and write something nasty about Republicans.

    In Jameson Veritas

  • I think I’m off fruit now. Thank you so much for politicizing breakfast….

  • Baronius

    Cindy, your business doesn’t have to pay taxes? That’s what we’re talking about here.

  • Cindy D

    Now for the middle of the story…for all this took quite a bit of time, to unravel unfold…

    At some point, despite everything Oscar tried, he just couldn’t sell enough oranges to pay for his fertilizer, his bicycle insurance, orange picking license, orange packing license, his orange transporting license, rotten orange disposal license, and all his many other expenses–which seemed to be increasing exponentially.

    The Vice Commissioner and Omar both assured him that this was because there were some irresponsible people in Omarville were sneaking over the bridge without paying their dime and stealing a few oranges to tide themselves over until things, which were really actually just fine, got even more fantastic, and even if they weren’t they would get better. Therefore, these freeloaders were making it more expensive for everyone else, including Oscar.

    So, one day while Oscar was thinking of ways to keep his business afloat…floating really on hope itself…

    –since the Vice Commissioner and Omar seemed to be so certain that things were really actually pretty good (more fundamentally so than they appeared to be) and even if they weren’t they would certainly get better–

    …Oscar decided to take out a loan from Omar’s Savings and Loan, you know to tide him over, until things, which were actually really quite fundamentally just fine, got really great.

    Oscar regularly made all his payments on time to Omar’s Savings and Loan, because Oscar was a proud, hardworking, responsible fellow.

    Things went along for awhile until one day when the Vice Commissioner showed up at Oscar’s door. It seemed something had happened to Omar’s Savings and Loan and it had to close (because of something that somebody else did wrong). The Vice Commissioner explained that Oscar shouldn’t worry about it though, as everything would be sorted out soon because the Free Market would require it as certainly as gravity requires an orange to fall to the ground. In the meantime, Oscar and the orange packers would just have to pay a little to help the Vice Commissioner, Omar, and the Free Market along.

    Between the money that Omar collected from the citizenry of Omarville and the retirement funds of ex-workers of Omar’s Savings and Loan, Omar was able to start up another bank.

    This time he decided to locate his bank in LetThemEatCakeVille, where they understood the Free Market better. The National Bank of Omar, Necessarius Avarus bought out Oscar’s loan and everything looked like it might be okay. But, Oscar kept finding that while all his expenses still kept going up, his income kept going down. He sure couldn’t wait until the Free Market started to take care of everything.

    One day Oscar was late making a payment to The NBO, N.A. Soon, he got a visit from the Vice Commissioner and Omar, who shook their heads at his obviously irresponsible behavior. We’re going to have to raise your interest rate to 35.2%*. Of course, Oscar, was soon forced into bankruptcy and shame, which were his just desserts, as all the good peasants of LetThemEatCakeVille and OmarVille knew.

    Meantime the NBO, N.A. having made a series of lucrative high rate loans, performed some magical maneuvers which ended up turning all the money they made into lead. But, that was no problem. Since they ruled the world, they could make the rules. They just got some more money from the peasants and threw a big party to celebrate their good fortune and tsk tsk over how all of those irresponsible borrowers had nearly wrecked the Free Market.

    *This is the latest of the highest actual interest rates I have seen charged by Chase Bank. I saw the statement, so it’s not an exaggeration.

  • Cindy D


    Sorry, I may not have been clear. I meant by the government. The government never added to my burden on behalf of the poor. Although they were happy to on behalf of the bureaucracy.

  • Cindy, I don’t know how you could run a business without ever having been asked to donate something to someone. I am CONSTANTLY given hard luck stories and asked to donate services to the less fortunate. In some cases, I didn’t mind, but we’re not government subsidized. The point of being in business is to make money.

    That being said, I think it’s important to give back to the community. In fact, my donations far exceed Joe Biden’s and he makes a ton more money than I do. I guess I’m more patriotic than him, huh??

  • Well, Bliffle. Nice job trying to draw a variety of BC writes, primarily myself, into the scenario, but I defy you to point out where I’ve ever supported or defended agricultural monopolies at the expense of small farmers.

    Murphy’s story here is really too abstract to fit your scenario, because it’s not really about farming or oranges in America at all. For it to actually be about those crops in the real world there would be far more government pressures than just a simple toll. There would be ridiculous subsidies, unnecessary agricultural regulations, environmentalists suing the orange grower, an inefficient distribution system plus giant monopolisitc domestic corporations.

    But the good news is that in the real world scenario, Oscar takes his oranges to the local farmers market, sells them at a higher price and at a much higher profit margin than they would sell through the normal distribution channels and lives pretty decently as a result.


  • bliffle

    Then along comes Omar the Orange Oligopolist from Over the Ocean with cheap imported oranges! Selling his cheap oranges he drives Oscar out of business. His oranges are so cheap that even Oscars few employees buy them. Even Oscars own family buy them. Oscars wife buys them. Oscar drinks Omars Own Orange juice at breakfast!

    Omar offers to buy Oscars orange tree at less than what Oscar paid for it, but Oscar must accept because there’s no market for orange trees except with Omar. And now Oscar needs the cash: so he can buy a few oranges for his breakfast.

    There’s a scandal in the newspapers! Rumors swirl around that the Vice Road Commissioner gave favorable toll terms to Omar. But Dave Nalle bravely points out at BC that the favorable terms by the Vice-commissioner reduced prices for all orange consumers by more than enough to make up the lost toll money.

    Then the price of oranges starts to double and triple! There’s no competition for Omar. Oscar sold his trees to Omar and he also signed a non-compete agreement. Nobody else can afford to plant an orange tree – Omar charges too much for a seedling, and he has a patent on orange seed DNA that prohibits anyone from growing a tree from a seed. The Road Commissioner has just extended his patent for another 70 years “so as to encourage innovation”, as he says.

    Omar kindly explains that the price of water and fertilizer has gone up so much that he must charge more (Omar owns the water company and the fertilizer company so he explains that all these prices are justified and long overdue, but thanks to Free Markets in some distant future prices should fall. “It’s just basic Economics 101” he explains).

    Prices continue upward, with whiners and complainers at BC constatntly writing irrational articles about the evil Omar Oligopoly, but Dave Nalle refutes them easily with statistics from Statistics Mill, Inc. (a wholly owned subsidiary of Omar Orange Oligipoly from Over the Ocean) which repeatedly prove that prices are actually lower and that we all mis-remember what prices were originally.

    Omar Own research lab comes up with a solution: reduce water and fertilizer prices! Then, prices will fall. It’s simple Econ 101!

    So the Road Commission gives Omar a billion dinero to do Alternative Water Research to find an alternative to water.

    Also, a billion for Alternative Fertilizer reasearch.

    Another billion for Sunshine research.

    Prices keep going up.

    Some families try to quit oranges and eat grapefruits, but the Road Commissioner declares grapefruit unfit for consumption. Dave Nalle points out that it’s necessary to protect the Commissioners investment in oranges.

    Excited grapefruit eaters push over an orange stand at the market and Omar somberly declares war on the Radical-Grapefruit-Fascist-Commie conspiracy. Well, actually the Road Commissioner does, after getting marching orders from Omar, who is, after all, the CEO of the OOOOO upon whose board the Road Commisioner now sits.

    There are collateral deaths, but that’s OK because Pope Baronius III declares it a just war against the undeniable evil of grapefruitism.

    Oscar has lost his money, his orange tree, even his family, as disgraced by Oscars failures they have left him (to get jobs in the orange-packing factories in Omarville, it is rumored).

    Oscar now lives in a muddy rundown slum at the bottom of the hill, picking rags to try to make his daily bread. Along with most of his fellow impoverished villagers, whose savings and properties have all gone to support the Commissioners subsidies to Omars endeavors.

    All the villagers now live in a cesspool of toxic waste and debris from Omars Orange processing system, their health endangered by the germs and diseases drawn to the mess, unable to afford going to a doctor because they have no jobs, and their sicknesses are all Pre-existing Conditions Of The Human race anyhow.

    Reading BC they learn from Clavos The Clever that it’s all their own fault for not being more industrious. Dan(Miller) points out that if they had studied orange processing in highschool instead of wasting time on math and science they would have a better chance at the modern jobs that exist in the new Global Free Market. It’s their own fault that they made poor choices and so they must be punished for it with poverty and destitution. Anything less would represent Moral Hazard and undermine the Beloved System and it’s Maximum Leaders.

    But there’s some joy in the lives of these miserable (and undeserving!) peasants. Standing in the muck and mire of their slums they can look up the hill at the Great Shining House On The Hill that Omar lives in and wonder at the magnificence of Omars achievements.

  • Cindy D

    The problem with the Oscar fable is that it is overly simple.

    The analogy just doesn’t exist in the real world. The only excess that “the road commissioner” has taken from me has been used to fund his bureaucracy.

    What toll for the poor? Payroll taxes? A token for medicare and unemployment? Having a small business we have always found it beneficial to account for break even. Therefore, no real corporate taxes.

    Oscar hates to “work for someone else”. But then so do the wage slaves he hires (and resents for having to contribute some pittance toward their basic security). Without them his business never would have been more than him humping along on his bike. But, Oscar has grown up with the notion that his ownership somehow makes him special. While the lifeblood and years contributed by his wage slaves doesn’t really count.

    Oscar didn’t close his business because he had to pay a pittance in payroll taxes for his underpaid wage slaves. No, the “road commissioner” didn’t actually raise Oscar’s toll.

    What happened was:

    MegaGiant Orange Conglomerate convinced the road commissioner that giving it free use of the bridge for it’s 300 trips a day would be smart. It would bring in all kinds of business for the bridge–with all the extra dimes collected from MegaGiant’s 10,000 employees. MegaGiant would also remember the commissioner at election time.

    Of course, MegaGiant, once entrenched in OrangeVille, could now call all the shots by holding the road commissioner and everyone else hostage with threats of closing and outsourcing all its labor needs to PoorVille where the wage slaves didn’t whine and were happy with whatever they were given.

    The end.

    I have been in small business ownership and management since I was 18 years old (30 years). I have NEVER, EVER been asked to give anything to the poor. Not once. And owning a business has been exceedingly more beneficial to me than it ever has been for the businesses wage slaves. That is no fairy tale.

  • Cindy D

    I meant that fairy tale comment with all due respect to you Joanne. I recognize that small businesses are hurting. My own very small business has laid off 3 full time employees over the last 3 years. I am planning my own early retirement and will either sell my business or outsource my manufacturing. This will eliminate the last 2 full time employees.

    I can’t say though that “the road commissioner” is responsible.

  • Cannonshop, I think you are right about people who live in depressed communities not understanding these ripple relationships. After watching the debate and seeing a smart guy (Obama) not ‘getting’ it, I realized that somebody needed to make it very, very simple.

    So I thought of Oscar and his oranges.

    Albtraum uses the words “cruel” and “evil” which are certainly problems, but in the business world don’t have much use. Generally speaking, cruelty and evil are not profitable.

    Taxes, job creation, and societal structures are interlocking systems. Just like the fruit tree that needs water and fertilizer to make more oranges, these other systems have inputs and outputs.

    It’s much more like a machine than a moral judgement. Sure, be fair and compassionate. But within the contraints of the system. Otherwise, you are pushing a string instead of pulling it.

  • Cindy D

    Nice urm, fairy tale.

    Murphy is a woman, by the way.

  • Are you kidding? This could happen to ME.

    Here’s the deal: we employ 75 people, but we’re not rich. Our net would put us right around mid to upper middle class. Of course, we’re in a struggling economy (Michigan) where we’re already taxed to death and our property is worth diddley squat and our customer base is dwindling.

    We’ve discussed this shaky position for a couple of years. At what point do we decide that it’s not worth it anymore? I can tell you that we are perilously close to that point right now. If we decide to pack it in, 75 people lose their jobs, and will probably not find another one in this state.

    I don’t know if our candidates realize how close to the tipping point many small businesses are. And when we are gone, then what? The days of large corporations taking care of the working masses is long gone.

  • Cannonshop

    Actually, Clav, he’s largely described what’s happened in a huge number of communities nationally already.

    Of course, none of the people who live in those communities (or the state of Michigan) seem to understand this.

  • Clavos

    Excellent article, Murphy; on ALL levels.

    You really point out the stupidity of raising taxes on the most innovative and productive (as well as the the source of most employment) among us.

    I’m in the midst of reading The End of Prosperity, which makes the identical point, though not as succinctly.

    Mr. Obama’s proposals for taxation will ensure we get the depression everyone is worried about.

  • Cannonshop

    you really don’t get it, do you? This isn’t a billionaire he’s talking about, this is a small business. Oscar cuts back to be barely within compliance, (no trailer, right? right) and cuts his operation because the cost was changed from what everyone paid, to making him pay for everyone, while the Commissioner hoped to reap the rewards of Oscar’s work.

    Oscar liked working, but didn’t want to be working for the Commissioner-he wants to work for himself. He figured out that he can work for himself, if he cuts his operation down.

    Oscar of course becomes the bad-guy, because the Commissioner offered everyone rewards for punishing Oscar. (reward 1: no toll because Oscar’s going to pay it all, reward 2: money from Oscar’s tolls going to the poor).

    Oscar, by laying people off, is now the ‘bad guy’ because he laid everyone off, to comply with the letter of the new regulation (that is, no trailer of oranges, hence no toll). Oscar still makes money in the new situation, but now the bridge collects LESS toll, because Oscar isn’t pulling a trailer anymore and therefore can cross for free.

    Because the Commissioner hoped to be a “hero” by using the funds taken from Oscar’s business to give to the poor and needy, his reward for Oscar’s action is that now, he has additional promised costs to either fulfill, or repudiate. (that is, there’s more poor people now that Oscar’s fired everyone that worked for him) The costs are also higher-because the Toll bridge is not collecting the tolls it was before it was re-organized to target Oscar’s business.

    Now, the example in the article stops where it does, but in the real world, it would continue, because the Commissioner wants to look like a good guy and keep his job.

    His next step, is to add a toll for bicycles carrying fruit, and to go to Lenny the Banker for a loan to pay out to the poor, maintain the bridge, etc. etc. with the promise of additional revenue gleaned from taxing fruit being transported across the bridge by bicycle.

    At which point, if Oscar is smart, he’s going to be looking for another market where he doesn’t have to cross that bridge, or another way to get his oranges to market besides the bridge.

    It isn’t that Oscar doesn’t like poor people, nor that he doesn’t like to use the bridge-it’s that he doesn’t want to do a damned thing to help the bastard that targeted him for a screwing in order to get into office.

    Meanwhile, the Commissioner in question now has his operation in debt, paying out to the poor people and trying to maintain the bridge on reduced income, and he still has to maintain the bridge.

    let’s say, Oscar discovers the technology of the Raft, or goes slightly up or down-stream to a private Ferry that charges, say, one-and-a-half times as much as the fare he used to pay going across the bridge prior to the new Roads commissioner. Let’s also pretend that Oscar can, if he wants, expand his operation again using this new method.

    The Road Commissioner has a problem-he needs money to maintain the bridge, and money to give to the poor. He’s going to blame Oscar for the Problems of the Poor, and maybe go to the Mayor to get something done about Jerry the Ferryman’s business moving Oscar’s oranges across the river.

    Oscar’s going to be VERY careful about expansion at this point- He’s very unlikely to hire as many people as he laid off, and he’s probably not going to have as many trees as he did before the new Commissioner was put in office.

    Jerry’s Ferry is going to be the next target for the Commissioner and his friend the Mayor. Why? because there’s money moving across the river, and it’s not going to making the Commissioner and his friend the Mayor look good. The Mayor, therefore, applies a tax on the dock to raise money for the road Commissioner. Now Jerry the Ferry has to raise his prices for moving Oscar’s Oranges across the river. Oscar has two choices:

    1. raise the price of oranges so that he can continue eating, and remain in business.

    2. Quit. Retire, shut the business down and go fishing. If Oscar was saving money from selling oranges, it was probably at the bank of Lenny. The Commissioner’s Loan, if you recall, came from the bank of Lenny, and Lenny got the money from deposits, including Oscar’s deposits, and Jerry’s deposits, along with the deposits of all those poor folks that the Commissioner wanted to help.
    If Oscar quits, Jerry’s income goes down FURTHER, and Lenny’s account books have to be adjusted because Oscar’s taking Oscar’s money out of Lenny’s bank…the same bank that is making loans to keep the bridge that used to be self-supporting in business.

    Let’s follow the ripples here:

    Oscar withdraws his money from Lenny’s Bank-after all, he’s going to live off of it, or move, or whatever. Lenny has to increase the interest on loans he makes to support the bridge, because he’s got to have money to loan from something. Jerry, no longer having Oscar’s income, but still having to charge more thanks to the Mayor who wanted to help keep the Bridge open, loses his primary customer, probably ends up having to fire his part-time helper, which increases the load on the Road Commissioner and the Mayor. Because Lenny was loaning money to the Commissioner, and the Commissioner isn’t keeping up on his payments, has to offer Jerry’s Ferry a lower interest on what savings he has on deposit. Because Oscar withdrew his savings from Lenny’s bank, the Banker has to increase the interest rate on the loans made to maintain the bridge, which loans were partially used to pay poor people.

    Notice something here? The Producer (Oscar) of Wealth (oranges) has left the scene, leaving a service economy with nothing to service but debts backed by promises. Without healthy traffic across either the Bridge, or the Ferry, there’s only what was saved in Lenny’s bank to pay for the bridge and the dock. If Jerry is smart, he docks the ferry on the far side of the river, and goes somewhere he can make money (or he takes his ferry down-the-river to another community) either way, he withdraws his money from the Bank of Lenny to pay for the move.

    This is called secondary flight. It’s similar to what happens when a saw mill near a forest is suddenly deprived of trees-move your operation or shut it down, either way more people out of work in the area.

    Now, the Mayor, and the Commissioner have a problem. Oscar isn’t producing and selling oranges, Jerry isn’t shipping oranges, the people in town who were coming to the market to buy oranges aren’t coming anymore-maybe Oscar set up to grow and sell oranges somewhere else, maybe someone else who lives in the opposite direction is producing oranges just outside the Mayor/Commissioner’s jurisdiction, whatever, the point being nobody is coming to buy oranges. Lenny the Banker has a finite supply of money to give to the Commissioner for the Bridge. That’s going to run out.

    Net result is more poor people, fewer jobs, government debts, and broken promises made by politicians who promised to ‘soak the rich’ and give to the poor.

  • Albtraum

    Oh that’s so sad! The cruel government broke the spirit of the kind-hearted billionaire! I’ve never heard such a sad story! Poor, poor billionaire! Now I understand why Obama is pure evil! Thanks, parable!