A Supply and Demand Lesson In Happiness and Freedom
A story about tomatoes, trade bans, and how understanding supply and demand can lead to a freer, happier life.
The law of supply and demand is the simplest yet most powerful tool to guide us in any decision—financial or personal. If you had to pick just one concept to learn that could change your life, undoubtedly, this should be it.
I’ve spent 20 years studying and working in finance. Over time, I realized that much of what we apply to money and investing can also be applied to our everyday lives to increase happiness and freedom. I truly believe our wealth is more than the balance in our bank accounts—and that we should demand happiness and freedom just as we demand financial independence.
Supply and Demand: The Most Important Lesson in Economics
The first thing every economics student learns is the law of supply and demand. I wouldn’t say I have a great long-term memory, but I still vividly remember that freshman-year class with Professor Kennett at Vassar College. Maybe his unique sense of humor helped it stick for over 20 years. I’m not that funny, so I thought I’d try a different approach to make this concept just as memorable for you.
I love magical realism (hands up to all the Márquez fans out there), and somehow I was drawn to it here. If you don’t mind stepping away from traditional economics texts, join me on a journey to the imaginary world of Demandotopia.
Disclaimer: Any resemblance to actual people or places is purely coincidental. Most of my other posts focus on traditional knowledge-sharing—this one’s a little different.
Demandotopia
Story Begins
A long time ago, in a vast kingdom called Demandotopia, there were two regions—North and South.
The South was warm and happy. People grew delicious fruits and vegetables and lived simple, social lives. The North was cold and unfriendly but rich in resources. Some people were extremely wealthy, others just relatively so—especially compared to the Southerners.
The North was ruled by a dictator who banned all imports from the South. That included the delicious fruits and vegetables. And in any place—real or imagined—when there’s an import ban, you can count on a black market to emerge.
Happy lived in the North, but she wasn’t feeling particularly happy. She had grown up in the South and hated the cold. She moved North in pursuit of wealth, and though she had more than her Southern friends, she couldn’t afford the exorbitant black-market prices for Southern produce.
You see, Happy grew up eating the juiciest, sweetest, pink tomatoes every summer night. They smelled like home. The North boasted rare meats and fish, but there were no sun-kissed tomatoes.
Happy spent years dreaming of somehow keeping her Northern riches while returning to the Southern lifestyle. Her dissatisfaction grew—until one day, the Spirit of Reason took pity on her. It descended from the heavens in the form of a speaking deer.
“I came to offer you three options,” the deer said.
- Change your taste. From now on, you’ll love meat and fish. They’re abundant and affordable in the North.
- Change your means. Earn even more so you can afford the high black-market tomato prices.
- Change your mindset. Move back to the South, enjoy the simpler life, and eat all the tomatoes you want.
“But,” Happy objected, “you’re a spirit—why can’t you just change the Northern climate so tomatoes grow here, or remove the dictator so we can trade freely, or make the South richer so life is good there too?”
“Happy,” interrupted the Spirit gently, “I never said I was here to grant wishes. I’m here to show you the options—so you can grant yourself what you wish for.”
Story Ends — and the Lesson Begins
How Banning Free Trade Made Everyone Worse Off
The Northern dictator’s ban prevented Southerners from selling something valuable—tomatoes. As a result, they stayed poor. Northerners who craved tomatoes couldn’t get them unless they paid absurd prices on the black market. Sure, some people profited illegally, but even they bore risks that made long-term gains questionable.
Everyone was worse off.
And sadly, this isn’t just true in Demandotopia—it’s true in our real world too.
I recently had a call with a friend in the U.S. This time, it wasn’t about tomatoes—it was about avocados. She was frustrated by how expensive they’d become. When she told me what she paid, I said, “Honestly, they’re even pricier here in Prague.”
To me, it wasn’t unjust. To her, it felt outrageous. “Mexico is so close,” she said. “We should be able to stretch our arms and pick the fruit ourselves.”
Yet President Trump has threatened a trade war with Mexico—who supplies 90% of U.S. avocado imports.
Trade restrictions come in many forms: tariffs, quotas, subsidies, licensing requirements, technical standards, health and safety rules. But no matter the method, the result is the same: they disrupt the law of supply and demand, and everyone suffers in the long run.
Free trade has been studied extensively in economics. And while it has costs, the benefits far outweigh them. Trade makes everyone better off—richer, freer, and often, happier.
Supply and Demand in Our Everyday Life
Like Happy, we live in systems governed by supply and demand. When we don’t like the outcome, we often feel frustrated or stuck. We wish the system would change.
But here’s the truth: we don’t need an external force to save us from our reality.
We have power. We just need to analyze our situation, identify our options, and make a choice.
I didn’t tell you which option Happy chose. That’s because it doesn’t matter. Whichever one she picked, the key was that she made a choice—and that’s what made her happy again.
Your Takeaway
The first step in improving your well-being is understanding the hidden forces shaping your life.
What are you demanding from life?
What are you supplying in return?
Are you pursuing wealth at the cost of joy—or vice versa?
Once you understand the trade-offs, you can begin making decisions that move you closer to being truly happy, rich, and free.
If you want to learn more about using the law of supply and demand in your favor, check this article: https://smartypurse.com/supply-and-demand-how-prices-work/