I frequently teach economics principles courses, offering many college students their first exposure to the subject. While we cover all the basics—supply and demand, elasticity (consumer and producer sensitivity to price changes), taxation, trade, and externalities—I’m under no illusion that most of them will remember a lot of the material come a year from now, much less longer.

But there is one thing I hope all my students remember forever—the role of prices and private property. In particular, I want them to remember how these mechanisms are vital for a free and prosperous society. I make it clear to them that I think this material is of the utmost importance. In fact, prior to beginning our discussion of prices, I tell them I will be thrilled if the price system is one thing they remember from the class fifteen years from now.

The restaurant had no bosses, and decisions were made collectively by the staff.

Prices and private property rights are fundamentally important. Failure to grasp how these forces work leads to positively detrimental outcomes.

A recent example of what happens when one fails to understand these core economic principles occurred in Grand Rapids, Michigan. The Garden Diner and Café, formerly known as the Butchertown Diner, announced it would close its doors at the end of last month despite a pleasing menu and offering hip vegan food options.

In addition to the food, the diner’s business model received a great deal of attention. While some politely say the diner’s means of operation were “progressive,” at least one media outlet referred to the establishment as “Marxist Vegan.”

Several years ago the restaurant’s founder, Ryan Cappelletti, told a local news outlet why he had chosen a communist-inspired business model for the restaurant:

“Because of our economy, people are working 12-to-15 hour shifts, servers take home $200 to $300 a night in tips, the cooks are making $10 an hour and the owner takes whatever he takes. We’re going to have equal pay and equal say across the board. Everyone working together.”

The restaurant had no bosses, and decisions were made collectively by the staff. The workers decided when to open and close, leading to highly irregular hours. Customers might come to the establishment to eat only to find it closed. All workers were paid a “living wage,” meaning relatively unskilled workers would earn just as much as workers with more skills. Moreover, customers were not allowed to tip–meaning there was really no way for workers to be rewarded for exceptional service or work. Not surprisingly, this meant the restaurant experienced higher costs and lower revenues. Patrons often complained not just about the hours, but of the sometimes 40 minute wait to receive a sandwich.

To add to the ambience and the “collective” spirit of the business, Cappelletti had a mural of Che Guevara, Mao Zedong, and other famous communist leaders “tackling restaurant duties.” … read more here