This is one of my personal favorites, and not just because it was one of my first sales and was chosen one of the Year's Best for 1993 and subsequently translated (translated!) into French for another anthology. I also think it's pretty funny.

Pointless historical analogue: The inspiration for this came from a book I was reading about the colonization of the New World, which pointed out that the influx of gold and silver from Spain's colonies caused enormous inflation in Europe. So I got to thinking of other instances where large amounts of cash might be infused into an economy ... which is not usually the way humorous stories start, but what the hey...

The Wealth of Kingdoms (An Inflationary Tale)

By Daniel Hood

The current state of the local economic and political situation can be traced to the recent destabilizing influx of hard currency, in the form of golden eggs, precipitated by the transfer of assets from the giant of the beanstalk to Jack, a poverty-line family agriculturalist living in the resource-poor hinterlands in the east of the kingdom.

Jack's rapid ascent from subsistence farming to independent wealth, and the concomitant stresses placed on the local economy and, later, the kingdom's economy, deserve a closer look. Indeed, as we hope to prove in this case study, his ascent lies at the root of many of the troubles our kingdom is suffering at the moment. We will begin by discussing the microeconomic results, and then broaden our discussion to the macroeconomic issues.


The morning after liberating the golden goose from the giant, Jack immediately used his new wealth to hire several local carters to haul away the giant's corpse. Because he had not yet found a way to break the eggs, he paid the farmers with one apiece, creating a momentary boom for the transport trade in the region and increasing the tax base to the point where local administrators could begin improving roads, bridges and other infrastructure.

In addition, Jack built himself and his mother a new house, a grand estate that sparked a round of conspicuous consumption among the provincial gentry as they tried to keep up with him. He also donated the beanstalk to the local poor and the struggling farmers, providing a sort of primitive welfare system.

All well and good, it must have seemed at the time, and indeed the media -- town criers, wandering bards and the like -- applauded the generally positive upward trend, giving Jack much of the credit.

However, after a brief period of relatively high expectations, the provincial economy began to suffer, for the following reasons:

1. Jack's habit of paying for goods and services with whole eggs (he had not yet acquired the necessary technology for breaking them into smaller pieces) caused a rapid inflationary spiral, as people with large, oval hunks of gold began to compete for the rare consumer goods available in this primarily agricultural, self-sufficient region.

2. The unrealistic rise in real estate and construction activity, which inevitably slowed after a period of months.

3. An increase in the number of below-poverty-line farmers, as those who could provide neither goods or services in return for gold were turned off their land, hit by inflation, and forced to join those on the Beanstalk Dole.

4. The depletion of the Beanstalk Dole itself, as more and more people clamored for the rapidly-diminishing trunk. When the beanstalk was finished, Jack did not realize that a substitute was necessary, and many of those who had been forced to rely on it for food found themselves without. This engendered a rural mob of sorts, a mass of unemployed, jobless wanderers with dangerous expectations of governmental assistance.

5. The strains placed on local government. Noblemen and officials found themselves faced with a growing underclass expecting beanstalk-type largesse. At the same time, the rise in tax revenue from Jack's initial infusion of golden goose eggs had caused them to invest in long-term infrastructure projects, many of which were financed with equally long-term debt. When the tax revenues leveled off (because Jack had stopped handing out the eggs left and right, as he had at first), local government was forced into deficit spending.

6. Unrealistic expectations on the part of carters, who began to refuse to transfer goods for any form of payment other than golden eggs. Those farmers who had managed to continue to grow staple food crops found their produce rotting in their barns, because wagoners would not carry them. (For more information, see Grimm & Grimm's excellent "Yokes, Yolks and Yokels: The Carters' Guild in the Eastern Provinces").

7. Finally, a rash of plagues and diseases that decimated the local population. Environmental studies have revealed that much of this was the result of the giant's corpse, which the carters had hauled into the mountains that housed the local watershed. When the corpse rotted, it contaminated the water table of the area, bringing with it the related devastating diseases.

This last might have had a salutary effect: the decrease in the population of laborers and the rural mob (who were particularly hard hit) might have eventually evened out the inflationary spiral, by bringing scant resources and smaller population into proportion.

However, at this point Jack decided to move to the capital, perhaps because of the growing problems of the countryside (for which he himself was largely responsible!), and his actions began to have a much broader effect on the kingdom as a whole.


Jack's entry into the royal city, as with his time in the countryside, was attended by a honeymoon period. The city was far better able to accommodate the influx of golden eggs, and Jack was also put in touch with proper smelting technology for breaking his eggs into smaller pieces, facilitating a more reasonable market price.

Indeed, the grace period lasted far longer here, and for almost three years Jack was a force for progress in the national economy. The greater pool of luxury goods at his disposal allowed a natural outlet for his growing income (the goose had, due to the advanced scientific feeds being developed in the capital, nearly doubled production), and the higher taxes imposed by Prince Charming's government siphoned off much of the excess.

Jack's spending encouraged greater trade, and routes were opened or expanded that connected the kingdom with Never-Never Land, Oz and Wonderland. The boost in both exports and imports allowed for higher tax revenues which the Charming Government used to both improve infrastructure and deal with many of the problems Jack had caused in the countryside. The Ministers of Straw, Wood and Brick in particular were the main architects of this pump priming (again, for details, see Grimm & Grimm's "Huffing and Puffing and Building Your Economy Up").

Private sector industry experienced a long-lasting healthy boom as well. In partnership with the venture capitalist Rumpelstiltskin, Jack began the development of the giant's former kingdom in the clouds. A new beanstalk was grown and an entire complex of condominiums and amusement parks was erected around the giant's castle, as well as various public housing projects legislated by the Charming Government. A number of joint ventures were formed, of particular importance those with Mad Hatter, Inc., of Wonderland, for importing tea, and with the Wizard of Oz for importing brains, courage and hearts. (Baum's "Imports and Exports and Tariffs -- Oh My!" offers a brief but informative history of the last.)

But the honeymoon was brief. Jack and Rumpelstiltskin's Cloud Kingdom Development Zone began to draw more and more workers from the earth-bound economy. Inflation began to spiral again, and then the Charming Government was rocked by internal dissension. The Three Pigs resigned in disgust, and were replaced by the much less effective Three Bears. Various protest groups sprang up, most notably the quasi-socialist Red Seven, former associates of Queen Snow White, who claimed that Jack's golden goose was ruining the gold industry by undercutting their prices. Interest groups like the Orphan's Defense Fund, run by social activists Hansel and Gretel, were calling for more governmental funds for the underprivileged and harsher punishments for witches.

Finally, the illusory health of the kingdom's economy was shattered by the elves' wildcat strike. By walking out on the old shoemaker they literally halted the kingdom in its tracks -- without shoes, no one could go anywhere. (When told that the peasants had no shoes, King Charming's daughter-in-law Princess Cinderella is reputed to have answered, "Let them wear glass slippers!" Andersen's "Forced to Work All Night: The Unionization of the Shoemaker's Elves" makes the point that Cinderella's comment was typical of the Charming Government's basic failure to understand the situation.)

The unlikely Pinocchio was chosen to replace the disgraced Three Bears. With little credibility and an inability to lie effectively in public, few worse puppets could have been appointed. He caved in to literally every demand -- nationalizing the shoe industry, raising prohibitive tariffs, funding all social programs (whether effective or not) with huge deficits, and raising taxes through the roof.

Wonderland and Oz responded by forming a free trade area that effectively forbade trade with our kingdom, and Never-Never Land's impulsive Minister of Finance Pan enacted an open embargo.

Confidence in the government fell to an all-time low. The Red Seven began a series of terrorist attacks, the elves took to the streets again, and Jack and Rumpelstiltskin were forced to close off immigration to the Cloud Kingdom.

With the kingdom poised on the brink of disaster, the final straw broke the camel's back: Jack's goose died. As part of his immense establishment, Jack had hired a cook from England, whose cuisine apparently made up for his stupidity. On Christmas Day, unable to find another goose in the larder, he killed and cooked the golden egg producer, serving it up as the main course at Christmas dinner.

Black Christmas, as it has come to be known, effectively crippled the kingdom. Without the goose to support the Charming Government's gold standard, kingdom money became worthless, and inflation rose to an unheard-of 200%.

Only the immediate declaration of marshal law by the Charming Government, now with the shrewd Riding Hood as prime minister, saved the kingdom from potential civil war.

From this point of view, few can doubt that Jack is immediately responsible for most of the ills currently facing the kingdom. Riding Hood's policies -- the removal of all subsidies (except those for grandmothers), her vigorous pursual of harsh punishments for terrorists, monopolists, and wolves and the re-opening of trade with other kingdoms -- may enable us to gradually work our way back to economic health.

But recovery is a slow, painful process, with no quick fixes or easy solutions. As Prime Minister Riding Hood herself pointed out (in "What Big Expectations You Have," a recently released government white paper offering bleak near-term prospects), "If you take short cuts, you usually end up in a wolf's belly."

This is the real world, after all -- not some fairy tale.