Chocolate and Gold Coins

Sunday, June 26, 2005

The Lemonade Stand

In Patrix’s excellent blog, he describes a common American summer phenomenon: young children with a touch of entrepreneurial energy set up lemonade stands. They don’t make much money but they do learn a little bit about the market. Set your prices too high and you get no customers, set your prices to low and you lose out on potential revenue, and let your lemonade get warm and you get bad word-of-mouth.

Patrix is from India and he noted that the equivalent of the lemonade stand in India is not there. Sure, children do engage in commerce but its only very poor children and it is not for fun. Middleclass children simply don’t try to earn money for the most part because having to earn money is a signal of low class. Do the middleclass of India miss an important testing ground of entrepreneurial skill by passing on the lemonade stand experience, or is the lemonade stand overrated in teaching market lessons?

I’m somewhat inclined to believe its the latter. I remember my own little moment from my childhood of trying out a minor business. I was about nine years old. I took my father’s shoeshine kit and went door-to-door offering shoeshine service. I discovered the hard way that vanilla shoe polish is not the same as white shoe polish. I still remember the lady’s anguished cries, “Oh, you ruined my shoes.”

Well, that’s what comes of trusting your nice shoes to a nine year old. I also learned that if you run fast, you could escape your problems, at least temporarily. However, I would estimate that about 99.8% of everything one would need to learn to be a successful entrepreneur was left unlearned on that day. Nevertheless, giving little children the freedom to try to make an honest dollar via their own entrepreneur skill is precious: you never know.

5 Comments:

  • I still believe that just getting out or offering your service,however redundant it might be, instills a work ethic and makes earning money not something to feel uncomfortable about.

    Thanks for taking up the issue though :)

    By Blogger Patrix, at 6:58 PM  

  • There is also the angle of emotional authority. The parents think that children going off and doing part-time jobs is an affront to their ability to support and nurture their children. Especially in the eyes of society.

    As misguided and misplaced that notion is, it is a fact that it is quite common.

    By Blogger Subra, at 9:13 AM  

  • Hi Patrix an Subra
    I had some friends in high school who spent summers painting the outsides of houses. That was a pretty serious business and made them some money. I'm sure they learned a lot.

    I think the issue of the fact that your children are working might be signaling bad things about the family is unfortunate but it could happen. It may be true of the upper class in the U.S. ( I don't know, I'm not one of them). It might be true of the middle class in India.

    By Blogger Michael Higgins, at 9:25 AM  

  • Michael......as always an interesting post...
    More than teaching kids economics, i think in India this can play an enormous role in causing social change. Middle class/rich kids think it is "demeaning" to work in a restaurant, or polish shoes, or clean cars (it's the attitude they are brought up with). But if they go out in summer, doing this to make some pocket money.....it's bound to change a lot of social attitudes. Think about that.......

    By Blogger Sunil, at 12:42 PM  

  • Middle class children in India do not engage in business for several reasons. Earning money is certainly not low class but one could argue that earning money by selling lemonade or shining shoes will be seen as low class by the Indian middle class. The most important reason for lack of exalted child labour is that cheap and reliable labour is available in plenty in India. If I am running a tea-shop, I can higher cheap labour that will stay on for years and not just the summer. Same goes for newspaper-boys. I would rather deal with a semi-literate worker than some pampered kid. In the US, such cheap labour is not available partly because of immigration restrictions.

    Class differences have a very important utility. Like everything else in the world class-consciousness has its advantages and disadvantages but I will not discuss that here.

    P.S: Some communities in India, do make a point to train their children in their caste-trade.

    yum yum

    By Anonymous Anonymous, at 12:26 PM  

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