JG INSPIRES PERUVIAN AUTHOR GABRIEL RODRIGUEZ

I have always enjoyed writing scripts and short stories about liberty and economics. One of my greatest inspirations has always been Bastiat; that is why I founded my club under his name: Bastiat Club. In his works, I found didactic ways of spreading economic ideas, including some short stories that managed to explain complex concepts in a simple way.

His style definitely set a precedent in the dissemination of laissez-faire economics. However, many of the authors who tried to follow Bastiat’s divulgative approach seemed to imitate his use of metaphors and simple explanations more than his ability to build parables or short stories. In reality, after Bastiat, there is very little truly influential economic storytelling that has had a similar impact.

With the exception of I, Pencil, many of the novels about liberty that I found were mostly political novels, focused mainly on political freedom, such as the works of Orwell or the books of Rand. The latter, although they have a strong philosophical foundation and excellent drama, seemed to me to offer rather superficial economic lessons.

It was not until I met Ken Schoolland at Liberty Camp in Peru, and later discovered his book The Adventures of Jonathan Gullible, that I found the kind of work I felt was missing in libertarian literature: a complete story with different economic lessons, one that reminded me of Bastiat’s stories, where situations are exaggerated in order to explain economic laws and problems in a satirical and didactic way.

Ken’s book was, for me, a definitive inspiration to continue this tradition of spreading libertarian ideas, and especially economic ideas, through parables and stories. This form of communication is definitely not dead; on the contrary, it can find a huge space in this era, where storytelling carries more weight than almost any other kind of rhetoric, even though many libertarians have left it aside.

Gabriel Rodriguez

Don Ernesto Mercado: Success in the Free Market

By Gabriel Rodriguez

Don Ernesto Mercado was a businessman who lived in a town with a very limited government. From a young age, he had one clear goal: to make a great deal of money. Perhaps, to many

people, it was not the most ethical purpose or the one that most elevated the soul, but that was his

aim. No beating around the bush.

He inherited a family bakery and, with ambition in mind, set out to make it the most profitable one in

town. Business was doing well: he earned a respectable profit. Still, Ernesto was not satisfied. A

few blocks away, other bakeries sold bread at similar, and sometimes even lower, prices. So he

thought with cold logic: ‘If I eliminate those bakeries, people will have to come to mine. That will

make me rich.’

He spent the night thinking. ‘What if I go there myself and destroy their stalls?’ That was his first

impulse. But he quickly dismissed it: the local justice system was serious. The police did their job. If

he committed a crime, he would not get away with it. The law was not a tool for protecting powerful

businessmen; it protected everyone.

Then he considered a legal option: ‘With the savings I have, I can buy the rival bakeries,

monopolize the area, and raise prices however I please.’

The next day, he spoke to the neighboring bakers. Aware of the value of their businesses, they

named higher prices than he had expected. Ernesto accepted anyway; he believed he would easily

recover the investment through future profit margins.

Once the purchases were completed, he raised his prices to four times their previous value. At first,

it seemed like a success. Profits grew exponentially. But the illusion did not last long. A

businessman from a nearby town noticed the opportunity and opened his own bakery in the area,

charging half of Ernesto’s prices.

Ernesto worried, but thought, ‘It’s only one. It won’t make much difference.’ Soon, however, a

second bakery appeared. Then a third. Competition returned naturally, without the need for any

regulation. High prices had attracted new players to the market.

Ernesto began losing customers. He had to close two of his bakeries. He tried to speak with one of

the new bakers, who told him, ‘No one can stop me from opening my business. We all have the

right to compete.’

After three more bakeries went bankrupt, Ernesto had no choice but to lower his prices and focus

on his original bakery. Angry and frustrated, he spent another sleepless night looking for a way to

dominate the market.

He considered colluding with the new bakers to raise prices. But he remembered his experience:

whenever profit margins became excessive, more competition appeared.

Then he considered aggressively lowering his prices to drive them out of business, only to raise

them again later. But he also remembered that doing so could bring heavy losses if others entered

the market after spotting the opening. He thought about reducing costs, but he had already optimized everything he could. Cutting further would mean lowering quality, and in that environment, customers would simply leave.

‘What if I use deceptive marketing?’ he thought. But he quickly answered himself: ‘It might work the

first time. But when they try it and see that I did not deliver what I promised, they will not come

back.’

Finally, an idea struck him like a brick to the forehead: ‘What if the only way to make money in this

market is by giving customers the best possible product at the best possible price?’

That whole week, Ernesto worked on that idea. He hired an experienced French baker, and

together they developed a new recipe unlike anything else in the region. When they launched it,

the public responded. His customer base grew quickly. He had a superior product, something no

one else offered.

With this new momentum, he opened branches in other regions, no longer by buying out or

crushing the competition, but by surpassing it through quality, innovation, and good service. His

dream of making a great deal of money was beginning to come true, but in a way he had never

imagined at the start.

Through experience, Don Ernesto discovered that self-interest in a free and competitive market is

not fulfilled by destroying others, but by serving customers better. And that in a free society with clear rules and limited government, an entrepreneur does not become wealthy at the expense of others, but thanks to them.

Don Ernesto Planificado and the Secret of Government Success

Don Ernesto Planificado was a young man with many aspirations. One of them, perhaps the

greatest, was to make a great deal of money. In his country, that ambition was frowned upon. Still,

he was determined to achieve it in order to support his family and fulfill his dreams.

He lived in a nation with a government that was becoming larger and more intrusive by the day.

Policies grew increasingly burdensome for entrepreneurs, but Ernesto was determined to grow his

business.

By a twist of fate, he inherited his parents’ bakery. The business was not doing badly, but

regulations kept increasing, making any attempt at expansion difficult. Ernesto had a basic

understanding of economics and knew that an entrepreneur had to serve consumers: success, he

believed, meant offering a good product at a good price. Guided by that principle, he got to work

enthusiastically.

Soon, he realized that some workers were inefficient. The cashier who dealt with the public, for

example, was rude and ill-tempered. He warned her once. The second time, after noticing that she

was costing him customers, he tried to dismiss her and hire someone more efficient.

She replied arrogantly: ‘Have you not heard of the new Employment Stability Act? If you fire me

without a Job Reassignment Plan, you will end up in court—and you will lose.’ ‘Another law,’

Ernesto thought, frustrated.

An idea crossed his mind: ‘Does no one realize that, by protecting someone inefficient, they are

denying a job to another person who genuinely wants the chance to get ahead?’

Without wasting more time, he decided to look for alternatives. Perhaps he could not fire the

cashier, but he could improve customer service. He would hire young people with enthusiasm,

people who would treat customers well.

So he contacted two young people with little experience but a strong desire to work. It would be

their first job; they considered the pay fair, and it would help them cover their studies. Everything

was going well—until the radio began playing in the bakery:

‘Our beloved leader has done it again! In a historic move in favor of the people, he has tripled the

minimum wage. Now no one will be exploited!’

Ernesto went pale. He knew labor inspectors were showing up more and more often. He looked

sadly at the young people and said: ‘I’m sorry, but it is impossible for me to hire you.’

Once again, the opportunity to offer and receive value voluntarily was destroyed by an arbitrary

rule. Ernesto did not give up. He thought about innovating. He spent several weeks shut away with his

bakers to create a new bread recipe. When they finally had it ready, his excitement vanished: he

discovered that every new product had to undergo laboratory studies, submit to inspections by the

Ministry of Food, and obtain an expensive quality seal. With the losses he had already

accumulated, it was no longer worth it.

The final straw came at the end of the month. An official entered the bakery with a solemn air. ‘I

have come to collect what belongs to the people,’ he said. ‘The money is there, in the envelope,’

Ernesto replied, pointing to the register.

‘Haven’t you heard of the new Anti-Greed Act? The tax on profits is no longer 30 percent, but 55

percent. And the sales tax has risen from 10 percent to 20 percent.’

Ernesto felt a knot in his stomach. ‘Can’t you see that this is destroying my business? I know you

do not like profit, but I am leaving several people without jobs—and the community without bread. I

have always tried to give my customers the best. I only wanted to prosper. What am I doing

wrong?’

The tax collector laughed. ‘You do not understand how this country’s economy works. Here, we all

speak against profit and greed—but let’s not fool ourselves: everyone wants more money. The

problem is that you still believe wealth is earned by serving others. No, my friend. Around here, the

person who earns the most is the one closest to power. Learn to take a cut from those who still

believe in competing and producing. Maybe then, one day, you will fulfill your dream of becoming

rich.’

Ernesto closed the bakery a few days later. Resigned, he accepted a position on the Anti-Greed

Oversight Committee. Ironically, his income improved. But his salary came from squeezing others

in the same way he himself had been squeezed.

It was then, sitting before a mountain of forms and penalties, that he understood: When the State

commands and the market obeys, the one who earns the most is not the one who serves the most,

but the one who extorts the most.

Final Reflection

These two stories dismantle the lie that, in a free market, the wicked entrepreneur who does not

care about others is the one who succeeds.

The reality is the opposite: in a free economy, an entrepreneur only earns a profit by serving

others, by meeting real needs through voluntary exchange.

But in a statist society, wrapped in false benevolence, the person who prospers is not the one who

serves best, but the one who best connects with the State’s institutionalized theft.