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This story is used in economic courses in Hungary, as an easy example to show how socialism destroys and kills. The events explained here are inaccurate, ecsact locations, sources and ecsact dates are unknown to me - but they probably does not matter. An englishman probably could fix the inaccuracies in the story, if he is aware of the original events. The story explained below probably began about the late 1700's, and end in the early 1800.
A british tailor and an engineer invented a method to produce cheap cloths in a semi-industrialized way. As they were living in one of the most poor and underdeveloped regions, they had the cheap workforce to operate this business on low expenses, and make a great profit on it. The people in this british region were living on the edge of starvation. Basically there were lack of production of anything. No jobs, no local natural resources. Children usually died from malnutrition. The inventors were able to recruit a lot of these poor people, including a lot of people and children too. As the local population were unable to pay for these cloths, they exported it. The quality of the cloths (mostly suits) wasnt perfect, but it was exportable. As at that time, there was a general poverty in Britain, the people could not afford to buy it - especially not the workers - so they started to export the cloths to Hungary.
The events speeding up
Hungarian shops started to sell these cloths in large quantities, as they were cheaper, and somewhat better than the Hungarian cloths. They became popular, almost all of the hungarian shops started to buy a few cloths from this manufacturer. The company expanded to be able to satisfy these demands. They keeped the prices down, worked with a small but steady profit margin to ensure the hungarians will continue to buy these cloths. Within a few year, most people in the nearby towns worked for that company to manufacture the cloths, as the demand became so big.
The money they received from the Hungarian buyers were burned right away in Hungary. They bought food, gold, jewelry, shoes, agricultural devices, luxury items. They bought the items to Britain, where they sold it again. The workers, and the nearby population were accessed these goods. The starvation ended. This resulted the rapid rise of population, and the rise of life standards. People were able to buy proper food, shoes, agricultural devices, and even some luxury items. They homes started to look more modern, everyone had a job, better hygiene, education. People started to live more conscious lifes, they started to be actively take part of politics.
THE FACTORY ALSO SHOULD PRODUCE CLOTHS TO THE WORKERS!!!
British activists from other regions investigated the economic miracle. The owners of the corporation became extremely rich, they proudly explained the new stategy of operating on margial costs on a large volumen. At that time, this stategy were unusual, most company operated with small volumen and large profit. As this new idea flipped the strategy, resulted in rapid growth. These activists, however, pointed out one thing: this company produces these nice cloths, but why the corporation refuses to produce cloths for they own workers? The activists didnt realized how fragile the economy is, and how important is to sell every single piece of cloth in Hungary.
The activists were able to convience most of the workers. As they had rising life standards, but were still unable to afford these cloths, they started demanding to allocate a part of the production for the workers. The leaders of the corporation refused, trying to explain how important is to sell every single cloth in Hungary. As the owners of the corporation became very rich, the workers accoused them of being just greedy. The workers started to organize protests, which started to became more violent.
The owners sold the corporation. The new owners agreed to allocate a percentage of the cloths to be produced for the workers. The workers now finally were able to wear these cloths. As a percentage of the cloths were now allocated to the workers, the company wasnt able to ship them to Hungary. In Hungary, people got hit by a shortage of this type of cloths, so they started to import from alternative manufacturers, and they also started cloning these cloths on they own. Another side effect of the lower selling figures is that the salaries started to decrease. People started to protest again to rise the salaries. Of course, this wasnt possible. The workers started to protest again, and the protests started to became more violent. The previous activists appeared again, demanding from the ,,evil'' corporation to end ,,slavery'' and rise the salaries. To keep up the profitability of the corporation, the cloth prices had to be rise. The people had they previous salaries again, and they were happier than ever.
The cloths became too expensive. Hungarian shops discontinued the orders for this manufacturer. They simply switched to other brands. The economic chain collapsed. The corporation bankrupted. The flow of Hungarian food, gold, jewelry, shoes, agricultural devices, luxury items ended. Just within a month, everything were gone from the market of the local british towns, including food. After the people ate they last slices of breads, picked up scythes. They invaded the building of the company, annoucing the overtake. They operated the manufacturing devices for a few days. They watched the cloths for a while, then they realized they could not eat those. The protest escalated into riots. Without export, the nearby farms were not able to sustain the larger population, people started to due from starvation. The protestors started to clash with the police, demanding the operation of the factory to be restored. Of course, the police wasnt able to find a new market, because they are police, not enterpretours. People attacked the police, and the police answered with massacre. The factory never re-opened. All the wealth were gone from the region. Population fell far below the original levels, and people were not able to eat properly for another decades. At least the greedy bastards were gone, and socialism won.