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Thursday, April 23, 2015

Hats Off to Peaceful and Voluntary Exchange

A child-sized lesson in free-market economics

Dr. Seuss, The 500 Hats of Bartholomew Cubbins, Vanguard, 1938.

Economists mostly talk about Dr. Seuss in order to complain about The Lorax and its lack of appreciation for commerce, the tragedy of the commons, the importance of private property, and what Hayek called “The Non Sequitur of the ‘Dependence Effect.’” But as is so often the case, I think economists just might be reading the wrong stuff.

My seven-year-old daughter Penny and I recently read The 500 Hats of Bartholomew Cubbins to each other. I thought I remembered the story from reading it 20 years ago—a little boy refuses to take his hat off to the king, is forced to do so, and keeps magically generating new hats to replace the old one. It was, I thought, one of Dr. Seuss’s great anti-authoritarian books, along the lines of the overthrow of the tyrannical turtle king in Yertle the Turtle and the deliciously anarchic antics of The Cat in the Hat. But as Penny and I read, I realized that this is the Dr. Seuss book the economists have been looking for. It turns out that I had remembered the story incorrectly. It is a child-sized lesson in the power of peaceful and voluntary market exchange.

The story opens with our hero, Bartholomew Cubbins, heading off to market to sell his basket of cranberries. He is happy and “anxious to sell them quickly and bring the money back home to his parents.” Bartholomew is relatively poor. We know this because he has only one hat, and it was inherited from his father and his father’s father. It is “probably the oldest and plainest hat in the whole Kingdom of Didd.” As hats go, it is nothing particularly special. But Bartholomew likes it. And it belongs to him.

Bartholomew’s trip to the market is interrupted by a royal procession led by trumpeters and guards who shout, “Hats off to the King!” Everyone complies. Even Bartholomew does. (It is perhaps a sign of my long-standing anti-authoritarian streak that my memory of the book was of a defiant rather than a compliant Bartholomew.) But the moment Bartholomew removes his hat, another one appears in its place. This apparent defiance enrages the king, and it continues to enrage him for another 30-odd pages as Bartholomew removes hat after hat under increasingly dire threats of violence, only to find each hat instantly replaced. Bartholomew’s distress rises as his basket of cranberries is spilled, and he is hauled off to the castle to be taught a lesson.

The king’s wise men cannot think of a way to remove the hat. The king’s bowman cannot shoot the hat off Bartholomew’s head. The king’s magicians cannot remove it with magic. Even the royal executioner cannot chop off Bartholomew’s impudent head (and the hat on it) because the law forbids him to execute someone wearing a hat. The Grand Duke Wilfred, an obnoxious little boy who is about Bartholomew’s age, is just getting ready to push Bartholomew off the castle’s highest turret when something amazing happens.

Bartholomew’s hats begin to change. They get fancier and fancier until

he was wearing the most beautiful hat that had ever been seen in the Kingdom of Didd. It had a ruby larger than any the King himself had ever owned. It had ostrich plumes, and cockatoo plumes, and mockingbird plumes, and paradise plumes. Beside such a hat even the King’s Crown seemed like nothing.

Here, Penny and I paused in our reading. I smiled smugly, like the annoying adult that I am, and said, “I bet the king needs to say please to get Bartholomew’s hat to come off.”

I’m an idiot.

Because what happens is that the king says to Bartholomew with a smile, “It would be nice if you’d sell me that wonderful hat!”

Bartholomew does, and returns home that night with “no basket on his arm, no hat on his head, but with five hundred pieces of gold in a bag.”

Dr. Seuss’s story, it turns out, is about the advantages of voluntary market exchanges over constrained obedience. It is a kids’ version of the argument that Montesquieu makes: “Everywhere there are gentle mores [manners], there is commerce and … everywhere there is commerce there are gentle mores.”

Adam Smith knew that this ability to create peace and prosperity at the same time was the secret power of the market. He knew that, whether peasant or king,

man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self love in his favour and shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind proposes to do this. Give me that which I want and you shall have this which you want.

Voluntary exchanges make us richer. They also make us kinder.

Kingly pomp cannot make Bartholomew go bareheaded. Neither can the threat of violence or death. But when Bartholomew’s possession—rather than his subservience—becomes an object of desire for the king, the king moderates his manners and makes Bartholomew a friendly offer. Everyone ends up better off, and nobody ends up dead. It’s a lesson worth remembering.

I remembered it this morning. When I told Penny that I wanted to bring her book to my office so I could write this column, she protested. She wanted to take it to school to read during recess.

“But sweetie, Mommy needs it to write her column. To do my work!”

“But I want to read it!” she said, eyes filling and lower lip beginning to protrude.

There was a long pause—a standoff while we both thought it over.

“Penny, if you will let me take the book with me so I can write my column, I promise you that I will put your name in it this week, so everyone will know that you let me borrow your book.”

And we both ended up better off.