Bob’s Apples

Once upon a time there was a man named Bob who owned an apple orchard. The apples grown in Bob’s orchard were delicious and plentiful. Each year when they were ripe he would take them into town and sell them at the farmer’s market, and each year the people bought all of them, since they were delicious. Year after year this happy tradition repeated itself, Bob grew his apples, harvested them, transported them into town and sold them to his eager customers.

Over the course of time, Bob realized that the people really loved his apples. Furthermore, he was the only apple seller in town. It occurred to him that he could raise the price of his apples and his customers would pay the higher price because A. Bob’s apples were delicious and B. His were the only apples in town. So every couple of years Bob would raise the price of his apples and every price increase was tolerated without complaint by his customers.

Then, one year when he was unloading his truck full of apples at the farmer’s market Bob noticed to his great surprise that there were two other apple stands at the market, filled to the brim with fresh, ripe apples. Moreover, the prices charged by these two new apple sellers were considerably lower than his. But, since he had so many faithful customers who loved his apples, he offered them at the same price as before. When the customers arrived at the farmer’s market, many of them refused to even consider buying apples from these two new apple vendors. But before long, a handful of them wandered over to the new stands and tried the free samples they were offering. They discovered that the new apples were also delicious, not only every bit as delicious as Bob’s apples but 25% less expensive. Suddenly, Bob experienced a 25% decline in sales and revenue. Bob drove back to his farm and considered this new reality.

He spent much time in thought over the winter. What was he to do? His first thought was that he would have to lower his prices. But, he quite enjoyed the lifestyle that his higher prices had afforded him through the years. Then, he considered repackaging his apples to make them more appealing. Maybe he could bake some of them into pies and pastries, or make sauce and cider out of some of them. But, that would require a lot of extra work. The more he thought about his new rivals, the angrier he became. He did some research and discovered that these two new apple merchants weren’t even from the area. In fact, nobody had ever heard of them. Turns out, they were from a neighboring county. It was upon this discovery that Bob hit upon a strategy for dealing with this new, unwelcome competition. 

Bob drove into the county seat and paid a visit to his local magistrate, who happened to be his brother-in-law. Bob explained the situation in detail and presented a plan of action...These guys don’t even live around here. They can’t even vote for you in your next election. And yet, here they are, undercutting me and reducing my profits, and I can and will be voting in your next election. The local magistrate quickly discerned the logic in Bob’s argument, but raised a potential objection...Bob, I see your point, and I am very grateful for all you do for my campaign, but if I punish your competitors, it will benefit you but it will also raise the cost of apples for all my other constituents. Bob looked at his brother-in-law and smiled...True, but last year I gave your reelection campaign a large donation without which your reelection probably wouldn’t have happened. The way I see it, the least you can do is return the favor. Pass a law that requires a 25% fee for all out of state apples sold at the farmer’s market...problem solved.

Within five years, Bob’s competitors had disappeared, his orchard had been decimated by a worm infestation, the farmer’s market had been shut down for code violations, and the price of apples had quadrupled because of acute shortages. But, Bob’s brother-in-law was now governor of the state and had passed a law which guaranteed Bob an Apple price subsidy which paid him not to grow anymore apples.

And this, boys and girls, is the story of tariffs.