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The Beer Cycle


– Beer's Importance to our Economies –

by Jezza Jones

 © 26 April 1998.
All rights reserved and reversed concurrently
(and don't you forget that!)*.


Beer is humankind's one most important invention. The production and consumption of beer together create the very backbone of trade that our national and international economies feed upon; thus making beer an international necessity. If that first bright spark had not mixed the very first batch of barley, hops, water and yeast together, our very civilisation might have never come about. But he did make that first lager, and since then beer has connoted itself to the face of humanity as firmly as trees attach themselves to the earth. Beer's importance to our global stability is vital to us all, but unfortunately the importance of beer to the world is only properly recognised in its absence. The reduction of beer from Eastern Asia's 'tiger economies' is a factor in the region's recent economic turmoils, while beer was an important aspect in the cultures of the once-thriving civilisations of ancient Mesopotamia, Egypt and Greece. Its importance then was very great. But alas and again, the present consumption of beer per person is declining. And as it does, the grave we dig for our presently luxurious lives gets deeper. Our happily cushioned and comfy society is likely to fall if this horrendous pattern is allowed to continue. We must all wake up to how important beer is, how beer has cradled humanity throughout its long and turbulent history, and what we must all do to help the beer cycle before it is too late.

Beer – the real facts...

New Zealanders drink a lot of beer. An 'average' kiwi person guzzles a 375 mL (2/3 of a pint) can of beer every day (minusing the 16% of the population which is under 15 years of age and is too young to drink). So from Christmas to Christmas this person of New Zealand nationality has indulged in about 365 bottles of this beer. This amounts to about 140 Litres (240 pints) of beer per person. That is enough to fill a large family-sized washing machine up to and a little over the brim. And furthermore, with the entire beer-drinking portion of the population of New Zealand (all 3.2 million of them) drinking a can of beer a day, that turns out to be approximately 1,200,000 Litres (300000 gallons) of beer gone per day. Assuming that a standard oil supertanker is 450 metres (1500 feet) long and holds 2 million Litres of oil, one day's consumption would take up 3/4 of this tanker's total capacity, while a year's beer in New Zealand would amount to just on 240 full-up supertankers, meaning 500 million Litres -or 110 gallons- of beer has vanished into those thirsty throats in that one year. That is a lot of beer.


Several large breweries in New Zealand produce the required half a billion (109) Litres of beer that the country demands, while many of the traditional 'I'll-do-it-myself'ers also make their own favourite brews. Collectively, these groups create and cradle the nation's economic lifeline in the simple three-step process of making beer:
  1. Get some starchy plant (like wheat or barley) from a farmer.
  2. Malt it, throw in hops and yeast...and water with it. Leave it for a week and strain it before putting it into a 'Beer' can. Leave it again in the basement for a season or so.
  3. Tie a piece of plastic around six beer cans (forming a six-pack) and sell it on to a wholesale marketer or anyone else who wishes to pay for it.

Monetary flow of beer...

Once the beer is sold off, it follows a continuous trade-and-exchange process in which people from all parts of society swap their hard-earned money for beer, the driving force behind their lives:
  1. After the beer is sold to a wholesaler, he sells it to a truck driver.
  2. The truck driver drives the beer all around the country until he finds a warehouse, where he sells it (or gives it, if the beer is pre-paid) to the manager.
  3. The manager then gets the truckie to drive the beer to a shop, where a shopkeeper buys it.
  4. The shopkeeper hires somebody to unload the beer and put it onto the shelves so that people can see it and buy it.
  5. Time passes and the beer is waiting nervously on the shelf (yes, beer has feelings too!).
  6. Then a thirsty working-class shopper comes along, sees the beer on the shelf and buys it.
  7. The beer is taken home and stored in a cold, damp fridge until the day comes when the thirsty person opens it up and guzzles it into oblivion, throwing the can into the recycling bin afterwards.
  8. And that is the end of the beer.
    As you the reader may have noticed, the constant exchange of beer for money between the people penetrates all levels of society; from producers to marketers (wholesalers and shop keepers) to labourers (truckies, shop workers, etc.), while all aspects of the population consume the beer (the workers, beneficiaries, bosses, etc.), and thus help to contribute to the cycle's process.

    This is why the beer cycle is so important. Beer is a common marketable product to all people in society and the economic benefits that flow out from it's trade are available to help everybody out.

Uses of beer...

Beer is found to be a near-addictive substance to society. People, like their local and larger economies depend on beer to keep them healthy and vibrant. And beer has an outstanding variety of uses. It is a true fact that the magazine 'Real Facts about the World' stated in its first and only printed copy (issued yesterday) that scientists experimenting in a remote mountain range deep inside South America have concluded that beer has an infinite number of uses. And that is a real fact. But since there is only one copy of the magazine in the entire world (and it is hidden in a super-secret place), there is little chance that anybody else in the world will ever see it. So to remove disbelief that the majority will have over the scientists' findings, they have granted permission for some of their findings to be shared in this document with the world:

    1. Quenching the almighty thirst

An ice-cold beer comes as a wonderfully delightful break on a hot summer's day, while nothing in the world beats a beer to keep warm on a frosty winter's day. -Delicious! In addition, beer is a marvellous catalyst for working up a good conversation and meeting new people. After a hard day's work, for example, or on a lonely weekend, people of all denominations can break social barriers, talk and get to know each other, and have a great time all over a beer or two in a public house. That is the incredible power of beer.

    2. Great with mates

Beer can also be used as a gift ("It's your birthday, eh? I'll shout you one."), as a token of gratitude ("Thanks for helping me get a raise, mate. Have a beer on me."), or as an item of celebration ("It's a girl!"). However, it is important that beer is not used to extremes. As with governments, large (and sudden) spend-ups spell instant problems for money matters. Somebody does not like it (like partners, the political opposition, the human body, etc.), and they are probably right. Too much of good thing too soon is too bad. And too much beer spells a sudden and quick doom for the liver if it is not used to it.

    NB: Take note

While the scientists were experimenting deep in the mountains of South America, they discovered many previously unknown uses of beer, as well as significantly improving numerous conventional utilisations of it. One of its most important legally printable uses concerns pest control. Beer is a simple and by far a much cheaper way to target a pest species and eliminate it from its 'nuisance areas'. And it is much cheaper than other materials used (dynamite, killer diseases, etc.) for these eradicating these noxious pests.

    3. Slug killer

Slugs are naturally addicted to beer. The lifelong ambition of slug-dom is to dive head-first into a pool of beer and swim the night away creating a hangover. Indeed, the magazine 'Real Facts about the World' reports that scientists have witnessed slugs singing the song: "I'm a super slug and I'm okay. I swim all night and I work then play..." while floating around in a beer-filled goldfish tank.
But anyhow, whenever a bucket of beer is placed in a garden, all the nearby slugs are attracted towards it and dive into the beer. As they drink the beer they start to get drunk and thus lose their balance so that when they try to climb up the slippery walls and out of the bucket they lose their footing (or suction-cupping) and fall back into the beer (as a slug loves to do).

As a result of this the slugs get stranded in the bucket of beer (nevertheless a sluggy paradise) and as a blissful sleepiness overcomes them they doze off and sink to the bottom of the bucket, permanently removing them from the slug gene pool. And while this happens the cabbages and broccoli cunningly gloat over the effectiveness of the plan and grow healthy and unharmed until harvest time.

    4. Possum trap

Ever since the Brits introduced possums into New Zealand at the end of the nineteenth century to help with a now-extinct fur trade, the pests have wrecked havoc in wild, eating many rare and irreplaceable trees and flightless birds' eggs to extinction point. But now we can get revenge on the pests.
Possums, being mammals like humans are, also like a drink of beer every now and then (refer to the 'Real Facts about the World' magazine if you are sceptical). But since possums do not know how to make beer, they have a rough time in the game of life. A thirsty time.

So when possums smell the opportunity to take a swig or three of beer from a mysterious trough perched on a high branch overhanging the ground, they do not give it a second thought. Nor do they give any suspicion to the trough as it automatically refills itself as they empty it, or to the cage that slowly encloses the possum and trough as it drinks. "Beer is a once-in-a-life opportunity; caging is not," thinks a possum.

Eventually the possum which is perched beside the beer trough drinks its fill and goes to sleep, as drunk as a pig that has got drunk, inside the cage but oblivious of this fact. But alas, the possum's greed comes at a price. In its intoxicated doze the possum loses its grip on its branch and due to the force of gravity it falls to the ground. Or rather, to the bottom of the cage. And there it sits for a while or so. Exactly ten minutes after the possum hits the cage floor (to ensure the possum does not panic and/or tense up) the cage floor suddenly gives way and the possum falls to the ground.

However, it never reaches the ground. Beneath the beer trough and cage there is a gigantic meat-grinder that the possum sniffed earlier on in the day, and deemed as another useless crackpot  idea of the humans. As the possum falls into the meat grinder, there is an ear-piercing -SCRUNCH!- and the possum is automatically chopped up into tiny pieces so small that worms need glasses to see them. After this, the remains of the once-living possum are frozen and bottled, ready for a farmer to collect it and sell it off the next day as cheap dogfood.

    5. Fish 'bait'

According to the scientists in the 'Real Facts about the World' magazine, fish do not like beer. But since fish eat, sleep and do everything else in water, they can still get drunk if they come in contact with it, whether or not they want to. Because beer consists of about 90% water (the rest being alcohol, fizzy and a few other chemicals) it mixes well with water. So if somebody pours a keg of beer into a stream and dams the end, all the local fish end up swimming in a very beery world.

As a result of this the fishes end up breathing in the beer and slowly getting drunker and drunker. Fish know the dangers if they get drunk, but in a dammed creek they have no choice, especially if the rest of the creek is diverted to below the dam (they cannot swim upstream to escape the beer-filled water). Slowly but surely the fish get tiddly and shaky on their fins, while later they become boisterous and macho. When they are in this sort of a mood, some of the fish, often the most physically inclined, start doing strange things, actions that all the Lord Fishes of all time have condemned since earlier than the mind can remember. Many drunk fish ignore the sacred 'Law of Fishdom' and try to venture into the 'Forbidden World' above, where it is said that other fish went long ago and never returned. Drunk fish tend to try jumping up into the air to see what the 'World of Air' looks like, turning their white tummies pink as they slap the water with great belly-flops.

Eventually some of the fish get so drunk that they think themselves as these birds or animals that they see or hear about, and so –with an almighty burst of energy– they propel themselves at terrific speeds out of the water and onto the dry land. These fish finally find out what their fins are for –swimming, and not for flapping, galloping or frolicking– and many get stranded on the land for the rest of their lives unless they can slide back into their world.

Take note.

The fish that end up on the land are the usually the young and active, not the old and tough ones. This means they are the pick of the school, and the nicest to eat. And flying-fish catching is a developing sport in the world. Amateur flying-fish catchers who train hard can grab fish as they slide from the land to the water after a jump, while some talented experts have been noted to catch fish in mid-air as they jump (ask the scientists in the magazine 'Real Facts about the World' for videoed proof ).

And here is a super-secret secret: Get into the sport early on before it becomes too commercialised, so that you can enjoy the less competitive and more relaxing side of the sport while there are plenty of fish to catch. Just like in rugby and cricket, when you want to play a game or two for fun there are always the 'I-bet-I'm-better-than-you' people who tend to boil your blood with their tedious attitudes rather than playing a fair game merely for the sake of it.

Economic Effects of Beer Usage...

Because beer is so important to the world's economies, it obviously has significant and dramatic effects on them, depending on the ways that beer policies are applied. In a drastically simplified way, the effects of beer on an economy are explained below:

 a) Socialism...

    1. Tax rises

When beer is having a hard time in the marketplace, the economy is usually also feeling the pinch. Belts have to be tightened and economic growth is minimal, if anything. Deep in the trenches of parliament, politicians increasingly find themselves with less and less money to buy their beer with. Beer is a complimentary part of a politician's job. Eventually, life in parliament becomes so cash-strapped that there is not enough money to run it. And then it happens. To counter the parliamentary crisis, politicians have two choices: to cut their (beer) spending or to get more money. Naturally, politicians could not go without their daily dosage of beer, so they have to -somehow- get more money to fund parliament. And so they raise the taxes.
Meanwhile, the cash-strapped public are desperately emptying their piggy banks and biscuit jars to scrounge up enough money buy their beer with when they hear news of the tax rises. As a result, they then have even less money in their coffers to spend on beer, and as a consequence three solutions to the deepening crisis of "How can we pay for our beer?" arise:

    1. revolting against the politicians,
or 2. reducing their beer intake (and switching to a cheaper substance like milk),
or 3. working harder.

Since in real life idea number two would be a mortal sin to even be thinking about, and number one would be useless (since the politicians are already revolting enough), the only choice left for the public to follow is solution number three: To work harder and thence earn more money with which they can buy more beer.

So if by working, harder construction companies build more hydro-dams, tractor factories make more tractors and beer brewers brew more beer, they all end up with more money in their pockets for taking on the increased workloads. This idea works especially well as extra hydrodams mean more and cheaper electricity, more tractors mean farmers can grow more crops (rather than using the traditional horse-and-plough method) and beer-makers can supply more beer for the desperate public to drink, thus completing the beer cycle (beer production versus beer consumption). Most importantly however, everybody is involved in the process of the beer cycle; the farmers, the stockists, the consumers, and the everybody else-ers.
As people earn more money in their jobs, they can afford to buy more beer. This initiates the farmers to grow more crops (like wheat and barley for beer), for brewers to work harder in making more beer for the public to buy and for retailers to work harder in selling the increased loads of beer to the drinkers. This is why the beer cycle is so important and works so effectively for the world's economic stability; nobody is left out in the production-consumption cycle (unless they foolishly wish to boycott beer). But nevertheless, humanity's undying craving for beer is the unifying catalyst which enables communities to together bring themselves out of recession and economic doldrums by increasing production and trade, and into eras of high and widespread economic prosperity.

    2. The tax money...

Of course, the politicians do not drink away all of the money that they collect from the huge tax rises. Often the tax money is used for the public benefit, frequently for helping regulate the continued flow of the beer cycle. But if the public gets really hostile about the tax increases (and if the politicians are less liked than usual), then sensible politicians will decide that pleasing the public is safer for them than ending up with an improved version of Guy Fawkes or the French Revolution.
In this case, either a tax rebate should be given, or something should be done that will help the public and simultaneously give credit to the politicians.

          ...I Subsidised beer

For the beer cycle to work at all, the public must want beer. Therefore it is extremely important that anarchist-anti-beer-movements never ever gain enough influence so that they can in any way whatsoever disrupt the beer cycle, and initiate the global collapse of civilisation. That would not be a good idea. By returning to the tax money, rather than using it as wallpaper in the prime minister's 'Thursday-office', it could be used to subsidise beer, and make it easier for the hard-working public to buy beer. And because people think about the price of beer in relation to the first numbers, not as a percentage of their total after-tax income, they will believe the price of beer has fallen and acclaim the politicians for their 'achievement'.

          ...II School beer

Up to the 1960s in New Zealand, pasteurised cows' milk was supplied free of charge (by the tax-payer) for children to drink in schools. However, since that no longer happens, it is evident that the milk cycle did not work (after all, milk goes off in three days, while beer can sit through all of winter and still taste good afterwards), and so the beer cycle should be implemented in schools instead.
And why not indeed?

The key economic mechanism which the world feeds upon for its prosperity -the beer cycle- should be taught to tomorrow's working generation so that it can continue understand and continue the process and importance of the beer cycle in future years.

The education in schools of how to use beer, 'beer instruction', should become a compulsory aspect of school life, from tot to teenage years. An allocated portion of the extra tax money should be reserved for supplying free beer to schools, just as milk used to be. But -hold the protest!- of course it would be an outrageous and highly stupid idea to supply real, full-strength beer to children at such a young and impressionable age; children are like possums, they have little or no restraint on drinking beer and their bodies would not know how to handle it. Sensible beer instruction would involve school children getting a small daily ration of diluted beer, watered down according to a student's year level, while teachers (specially trained in this subject) would teach children how to sensibly use beer. As a student progresses through school life, the dilution of the his/her beer will slowly change (although the dilution could be free to change slowly throughout the year as well), until the ration reaches near-real-life proportions at the end of secondary school, preparing students for what life with beer out of and after school would be like.

The benefits of this beer instruction program would be plentiful and diverse. The problems of youth drunkenness, drink driving and alcohol abuse would be reduced, if not eliminated, as there problems are caused by a lack of knowledge concerning how to deal with beer. Indeed, since many crimes result from people over-using or not being used to beer (often the first-timers), if people knew how to handle it properly these crimes may not happen, and so the crime rate, road toll, jail populations and casualties at the A&E (Accident and Emergency) Departments at hospitals should be reduced, lowering the costs needed to run these public services.

In addition, if these values of how to handle beer properly are taught and retained effectively, they could help the younger generations solve any problems that the unlearned older generations may have with handling beer in their lives, helping to promote co-operation between different generations. As a result of all this, society could become a much safer and happier place to live in, due to the little (or lot) of money supplied by the country's taxpayers.

          ...III State beer

As well as subsidising beer to make it cheaper for the public, the politicians could use the rest of the taxpayers' money –the money which was taken away to stimulate economic rehabilitation– to invest in the beer cycle itself. By making beer in state-run breweries. This 'community-owned' beer industry could be used to ensure that a plentiful supply of beer is kept circulating around the country, balancing the beer cycle and the economy.

The state-oriented beer network would obviously require many jobs to help start it up, and many others to maintain its role in producing beer for the country. This will lower the unemployment level, allowing many lazy dole-bludgers to earn some decent money and buy more beer than they could get from being on the benefit.

With the introduction of more beer to the market, the price of beer could go tumbling, (as state-made products are usually priced either too high or too low, and if the price ends up too high nobody will buy it, so it will to go down anyway), and life will be better off for consumers. This publicly-owned beer could also help out when there is a beer shortage, as it will probably keep its price too low when it should rise, benefiting consumers, restricting the shortage and helping balance the amount of beer in the beer cycle.

    Note: Look at what can go wrong

Sometimes politicians, or even the people ignore, or simply forget about the beer cycle. In other times they can get caught up in the anarchist-anti-beer cults and help their country to welcome impending doom with wide open arms. Whatever the reason is, if beer is ignored in an economy, when it rightfully should be there (and it always is)...oh well, you have been warned about what will happen. But to all those critics of the beer cycle out there, here are some examples of how the beer cycle has not been practised properly, if at all, and what happened afterwards:

                    ...Lesson Number One: Eastern Asia

Eastern Asia is an unfortunate example of how the politicians have ignored the importance of the beer cycle in several of the region's economies. During the last decade, and mostly in the last year or so before the end of 1997, the consumption of beer had fallen drastically, but the politicians did nothing to remedy the situation. So, as a punishment, the beer cycle caught up with the politicians and the economies of Hong Kong, Indonesia, Japan and South Korea went -puff!- and they nearly sniffed themselves out. Indeed, South Korea was so bad a situation that an enormous multi-billion dollar financial aid package was drawn up, and now all those broken economies have to start recranking their starters and make sure the politicians get it right this time – that they do not doubt the power of the beer cycle for even one instant.

                    ...Lesson Number Two: the Great Depression

After World War I there was a widespread hope that such a horrendous event would never happen again. To make sure of this, the League of Nations was set up, and it followed the similar 'might is not right' approach of the United Nations, although it had several underlying constitutional problems which are not relevant to this discussion and so will not be discussed here. Anyway, in the early 1920s a widespread belief arose that beer, being an alcoholic substance, caused violence and on a larger scale, war. (It does not, unless it is wrongly used; see Economic Effects of Beer Usage...Socialism – Tax Rises...II. School Beer for detailed information on this subject).
By the late 1920s this belief had reached cult-size proportions (although no history books in the world report about this movement – it is a not-quite-forgotten legend which was shared by one of the scientists who experimented in the lost South American mountainside to his comrades, which is now mentioned in the magazine 'Real Facts about the World') and as the cult grew more and more of the general public started to regard beer with a distinctive distaste, for favour of other substances which will not be mentioned here, like milk. One year went by under the damning clutches of the cult, two, three-and-a-quarter years passed. And then in the period of the 24th to the 29th of October 1929, with the beer cycle running at epidemically-low levels, the US sharemarket also underwent an almighty slump, matching the level of beer production in the economy (low low low levels). This triggered a great depression which ended up being called the Great Depression of 1929. The beerless chaos that followed caused a world-wide recession, which ended up with World War II occurring, costing the world a tragic number of lives and misery.

 b) Capitalism...

    1. Lower taxes

From time to time when the economy is steaming along well the politicians decide to cut back the taxes and return the money that the public originally gave as a 'temporary tax' fifty years earlier. There are many reasons why they return the people's money back to the people, but all of their 'explanations' have the same ring of truth, 'Vote for me, please?' But that last note is not important to the beer cycle. The removal of taxes is important, especially with how it affects beer in the heavily-taxed society that is now enjoying a new-found trade and production boom.

          ...I End of the beer subsidy

When this happens some funding is usually cut back from somewhere else, and the people have the opportunity to pay for their service(s) more directly, rather than via the tax department. Naturally, politicians could cut back all the wasted money that circulates around them, but more often than not it is the 'least essential' service(s) that face the funding axe. The most likely thing to go to the chopping board is the subsidy for beer, meaning the prices of beer will go up. By itself, this move is more than a mere black mark against the politicians, it means the hard-working public will have to work itself even more to buy its beer, and a great mutiny or even a revolution edges itself along the cards, as it happened in Indonesia in May 1998.

          ...II A more efficient beer cycle

However, the beer prices will not rise and stay out of the public's reach. In response to the subsidy cut, the public will receive a tax rebate, effectively meaning that instead of the inefficient tax department and its many employees paying part of the public's beer for them (from their taxes), the public can get that money back and spend it on their beer by themselves. This will give the people more freedom in buying their beer, and it will shrink the IRD (Inland Revenue Department) down a few sizes, although the danger is that some stupid nitwits may spend the money on something else, like milk, but this is highly unlikely as beer is the national drink of all healthy nations. (Although the rebate could be reversed if the beer cycle falters due to the onslaught of the useless milk cycle or whatever else.)

As a consequence, the poorer people (the ones who either are not working hard enough or cannot work hard for some reason) will consequently have to pay more money in relation to their total income on beer (they pay less tax, so therefore get less back to spend on beer), but the politicians should take this into account and give them financial assistance, maybe by a benefit increase from the saved money which used to be spent on hiring the IRD employees to pay the tax into the beer subsidy, or from somewhere else. On the other hand, the lazy louts who cannot be bothered earning a lot of money (because they fear working hard) will have to get up overcome their phobia and go to work and work hard...or else go without their beer after the subsidy finishes.

But least or most importantly (depending on the viewpoint), the tax refunds create the nearest thing to a 'peaceful harmony' between the people and the politicians, as the people celebrate the return of their money to their pockets and the politicians celebrate that they have to do less work as the IRD has been shrunk.

    2. Commercialising the beer industry

Once the beer-subsidy tax has been removed, the next thing politicians do is wait a while before they take their next step: to remove the state's (and their) authority over the beer industry and the beer cycle.

          ...I Deregulation

Deregulating the beer industry means that there will no longer be any restrictions put in place by the politicians, so that people expert in the subject can be put in charge of its process instead, theoretically improving its efficiency. This is all done to iron out hiccups and free up the trade flow of money in the beer cycle, helping it to get healthier and stronger.

Overpricing of beer is a major concern for politicians, as their jobs depend on their ability to lower the overall price of beer for the fussy public, whose votes decide on who becomes a politician and who becomes a dole-bludger. If beer conditions (prices) do not improve by election time, the tick simply moves to another candidate's box. So it is important for a politician that things look up just after and just before an election, when the watchful eyes of the public are the most open. And thus deregulation (promoting cheaper beer) is a sound idea to put into practice near election-time.

               ...a) Promoting competition

To kick-start the action, politicians tend to like breaking up the big national beer company and turning it into many small state-owned enterprises. These remains of the fragmented state network are told to try and make money by selling beer against each other, and they must sell [this number of] cans of beer a year. This practice is done to stimulate competition in the beer market and make it easier for the people to buy their beer.

               ...b) Beer wars

In order to make money, the little companies need to make the customer buy their beer, not the other companies'. But immediately after the dissolving of the big state-beer company, there are a few big problems in the marketplace. There is only one type of beer (eg. Beer A) which was made by the former company, and now the fragmented companies (eg. X and Y) both make and sell it at the same price.

This causes confusion for the customer, as there are now two types of state-funded beer in the shop, and they are priced no differently to before. So they buy half of their beer from both brands, just to be sure. As this happens, the two feuding companies wonder how they can sell more beer then their competitor, and make more money.

               ...c) Price wars

As an experiment, Company X decides to make its beer better than the other. It discounts its beer to see if buyers will buy more of it. The people (who absolutely loathe spending money) do, since they can get more of it per dollar. Meanwhile, Company Y starts to notice that is not selling as much beer as usual, and ventures out into the big wide world to find out why. It eventually finds out that its beer is more expensive than the other beer, and it shrewdly matches its price with the competitor's.

But Company X is smart too. It lowers the price of its beer even further and dares the other company to match is new price or not. It does not. Company Y looks at the new-and-improved price of beer and notices that the competitor's profit margins (the amount of money made) must be getting very low. And it thinks "I don't want that". So it sits down to think for a while and comes up with a brilliant idea...

               ...d) A new beer is born

Company Y makes another type of beer, Beer B. This beer is actually cheaper to make than Beer A, and therefore, it can sell at a lower price. When customers come into the shops and see that there is a very-low priced Beer A, and a lower-priced Beer B, they stop to think. Since they do not know how good Beer B tastes, they are undecided. Some  keep on buying their old favourite, Beer A, while others try out the new liquor, as it is cheaper. Meanwhile, Company Y ponders how to win over the dedicated 'Beer A-drinkers'.

To remedy this situation, Company Y puts out a huge media campaign with free samples at every shop bus stop in the country. Because many people happen to like the beer and its price, especially when it is given away free at their request, they buy it. So the sales of Beer B skyrocket while the dearer Beer A stays put on the shelves overlooked, lonely and forgotten. And Company X fumes in dismay.

But however, as this change in sale levels happens, a mysterious price-muddling force – one which pops up whenever the buying and selling things of occurs – comes in and fiddles around with the price of beer, making the beer market even more challenging.

               ...e) Price Woes

As more people want to buy Beer B, demand on it increases. This means that many people desperately want the beer – so much that they are willing to pay more than the RRP (recommended retail price) just to get it. Sellers notice that since most of the buyers are willing to pay more and more money for the beer, they raise the price so that they can keep up with the 'extra money' rises, and so the price of Beer B soars..

However, with Beer A being sad and dejected on the shelves, Company X has to lower the price just so that it can just sell some of it, and fill their quotas. And so the price war takes on a new stand, two different beers competing on price.

But with the price of Beer B rising, many 'financially challenged' people are no longer able to afford it. Eventually their beer consumption of Beer B gets so low that they switch back to Beer A, which is now cheaper, and so they can buy more beer with their money. As the price of Beer B continues to rise, more switch back to the cheaper Beer A, balancing the flow of beer in the beer cycle once again.

But the sudden resurgence of popularity for Beer A (due to its low price), and the dwindling popularity for Beer B (because of its over-the-top price) causes the system to go into reverse. Beer B has to lower in price to sell well (remember the quotas) and the heavier demand for Beer A causes it to rise again in price...

    NB. Problems with Deregulation

Although deregulation liberalises the beer cycle and promotes the many good things that are described above, it does experience problems which can jeopardise its and the beer cycle's success.

               ...I Funding

Even though the dissolved state-beer industry is supposed to wage war against itself, the taxpayers still fund the companies because they are state-owned. There is thus an obvious danger that the employees of the companies take the lax approach: "The funds pay our wages, so we won't disrupt your sales if you don't disrupt ours...please?" Of course, the quota system may prevent this ideology developing, and since the politicians are still paying them the tax money, they could pester the companies to lower the prices of beer or else face a funding chop.

               ...II Cost cutting

If funding is cut, or if the bosses of the companies are especially intent in getting a higher number or zeros in their wage, it is likely that mass sackings will occur to employees in 'less essential' positions. When this does happen, it is often the maintenance staff and other 'manual' jobs that go, leaving behind a skeleton staff which can operate the manufacture of beer through computers and balance the budget from their offices, but do little else. Beware. Extreme crises can occur if this happens.

For example, an anonymous power company which supplies electricity to central Auckland (the New Zealand electricity market has been deregulated) did just this and so failed to maintain the lifeline of its business, the power cables. So when the main power line failed, all four of the 'back-up' cables broke down, as they had not been checked in a long time to see if they still worked. This meant that it could not supply the local area with power for quite a while, and could not make money. Furthermore, the electricity users (the 'powerless people') became really annoyed as their electronic equipment would not work, and so they could not run their businesses.

The secondary problem is that when deregulated companies do reach a healthy profit, they prefer not to re-hire the sacked staff as they are deemed costly and unnecessary, and so the zeros on the bosses pay-cheques increase.

               ...III Higher unemployment

The mass sackings will leave many people out of work. They must then find another job, or if there are not enough jobs to go around, they must go on the unemployment benefit. These new beneficiaries will quickly discover that the dole is peanuts to buy beer with, and they will have to look for new work or dig into their life savings to afford their beer. In addition, the rise in unemployment will mean much more money has to be forked put by the reduced number of taxpayers to pay for the unemployment benefits (and the financial aid for them to afford their beer), meaning economic growth and the total production of the country will be hindered.

          ...II Privatisation

Once deregulation is done and the fierce competition in the marketplace means the price of the great variety of beer is competitively cheap, the next step is due. Politicians decide that the state beer industry has developed far enough to reach its next step: Privatisation of the national beer industry.

               ...a) Getting rid of it all

Now that the beer trade has freed up a lot, and the marketplace is full of the competitive little state-owned beer companies, the private companies which took a really hard hammering during the days of the state beer industry's monopoly can restart their businesses in the country and enter the market to take on the remains of the monopoly. Once this happens the state companies start experiencing what a real battle in the marketplace is like, with themselves and other companies fighting against each other for the potentially great (but extremely hard to get) profits that the beer industry offers.

This move promotes competition even more as the notoriously fierce price wars and diversification of beer heat up. And with that, the politicians start to question whether the public needs to own the state beer companies any longer, since most of the profits of the beer industry end up going in private companies' coffers anyway, and a lot of hard-to-get taxpayer money (which could be spent on benefits) is used to subsidised these state companies, which are not returning their share of the profits to the people. And so the politicians sit down to strategise what to do next.

Eventually the politicians realise that selling the state beer companies off will mean the public will stop paying for the companies' profits, especially as they are actually acting as individual, semi-private businesses in a cut-throat marketplace.

               ...b) The results of selling up

Since the taxpayer no longer has to pay for the national beer industry, the country saves a mint of money. This saved money can be used for other purposes, or refunded directly to the public so that they can buy their beer more easily. Gone will be the days of the fairly confusing cycle of having money siphoned off from the public to the politicians, who then divert it to make beer cheaper for the nearly-cashless society. Now, the people have the opportunity to pay for their beer themselves, saving money and allowing the beer cycle and the economy to flow along much more easily.

If the money is returned to the people as a tax rebate, then the people could create more wealth by buying more beer and promoting more trade and production. Beer must never ever be forgotten for its success in the world. Or alternatively, people could start up their own businesses with the money, employ many of the fired workers from the former beer industry (if they have not yet been employed by the other businesses) and collectively earn more money to buy beer with and further enhance the economy and the beer cycle.

    NB. Problems with Privatisation

Privatisation, like all the other directions that the beer industry can take, does have itsproblems if it is abused, set up or operated wrongly.

               ...I Conspiracies

In a fiercely competitive world, companies always look for the easiest way to get an upper-hand over their competitors in the battle of beer-selling. It is this motivation which often drives competition and companies to extreme levels. But sometimes companies (or rather, their bosses) are not very honest over their market strategies in liberal economies.

Dishonest companies may form treaties between themselves in which the "I won't ruin with you if you don't ruin me" strategy is used, although it is illegal in New Zealand, as it is in most countries. This effectively ends competition between the two companies, and this also makes them more powerful. With this alliance, they have a slight upper-hand over their competitors and can fight better against other companies in the next stage of beer wars.

               ...For example

If Company X manufactures Beers A and B, and Company Y also makes the Beers A and B, they and many other companies will be engaged in a price war. Life is hard, and the profit markets are low. But then, like a sledgehammer, an idea hits home. If X and Y form an alliance and work together they could save money in the beer wars. If they agree that Company X will only produce Beer A, and Company Y will just manufacture Beer B, they will not be battling between themselves to sell the beers and so they will save money by acting like a large company.

               ...Monopoly formation

This cut-competition market strategy can benefit the coalitioned companies, as they can offer cut-price beer (a great move in the public's eyes) while still earning a small profit due to its large production turnover. However, this situation might encourage the two companies to get closer to each other... they might form a merger and turn into one big company.

This would mean hard times ahead for the smaller, honest companies, as they would not be able to match the big company's beer prices. They would have the choice to lower their prices to extremely-low levels or not. They would have to keep the price very low merely to sell their beer, but that means they would make an insufficient profit (due to their low production levels). But then again, if they kept their beer prices higher than their competitor's they would risk not selling as much of their beer, and their profits will go down. Either way, they would not be able to earn a decent profit on their small beer production levels, and so they would go out of business.

Once this happens a few times over, the big company has no competitors left and it becomes a monopoly. Now it is free to raise its beer prices as much as it wants, as there are no competitors left, and cream off  enormous profits from the beer-thirsty public.

              ...For example

The formation of commercial monopolies happened in real life in the 1920s, while the beer cycle was winding down into near-oblivion. Europe and the USA were convinced by the anarchist anti-beer lobbies [see 'Economic Effects of Beer Usage...b) The tax money......Note: Look at what can go wrong...Lesson number two: the Great Depression'] that by implementing non-intervention 'laissez-faire' policies (meaning 'leave the markets to sort themselves out'), then the beer cycle will improve itself through increased competition and lower prices (which only lasted as long as it took for the big companies to wipe out their competitors). By the time nearing the beermarket and sharemarket crash in 1929, the price of beer had got so high that people had to decide whether they wanted to sacrifice their roof, vehicles and clothing, or go without their weekly feed of beer. So in the end the people cracked, and the world's economies snapped and went into a terrible recession that triggered World War II, which finally broke the monopolies.

    A beerless society?

In the modern world, it is vitally important that nothing like privately-owned beer-making monopolies come into existance as they did in the 1920s and 1930s. They spell out impending doom and destruction of wealth and wellbeing. But if the worst does come to the worst and this does happen, then it is up to the public to intervene. The public absolutely must –without any hesitation– pressure the politicians to intervene and penalise the companies that break the fair treading rules, or threaten to revolt, either by mutiny, riots or voting the politicians out of office.

But often the politicians trust too much in the marketplace and wait to see if the sole survivor of the intense competition will maintain the low prices. And by then it is often too late. Britain and France kept on waiting to see what Hitler would do with his military forces when he heavily rearmed Germany in the 1930s. But they found out that Hitler wanted when he invaded nearly every country on Germany's borders in World War II, and how shoddy their own armies were.

In this sort of situation, politicians asking other companies to come in from overseas to try and downsize the huge monopoly is fruitless. They probably had already been beaten in the marketplace by the beer giant, and would be reluctant to take on the giant again. Thus, taking the 'easy way out' is not effective. The monopoly will remain, all the time deteriorating the chances of the economy surviving the beer crisis and increasing the chance of an approaching disaster striking.

    The Ultimate Solution

By now the beer-starved society will be getting desperate for a real drink. If the privately-owned monopoly beer company will not supply the cheap beer that society wants and needs, the politicians should directly intervene with the beer industry and take charge of it, for the sake of resuscitating the crippled beer cycle. Dictating what the private beer monopoly company charges for its beer is a path that should not be followed. While the politicians quibble about the beer and how much it should cost, the monopoly will still be siphoning the peoples' money in exchange for a little beer, and so the beer cycle will still not be balanced.

Instead of acting like powerless commanders, the politicians should take real initiative to the crisis and actually solve the problem. The most reliable way to do this is to either buy out the monopoly (using the money they received for selling the small beer companies) or start up a publicly-owned beer company, which will aim to eradicate the monopoly from the marketplace.

A state-owned company will make cheap beer, cheaper than that supplied by the monopoly-company. This will cripple the private beer company if it does not lower its price of beer, so it has a choice to make: lower its price or get no profits. All this is good news for consumers, as they again will be able to have a cheaper access to beer. But that by itself would not be enough to keep the prices down – having the state wage a huge battle against a powerful private company.

With all the other players wiped out of the beer industry, the politicians should not discontinue the new state-owned beer company when the monopoly beer company lowers its prices. Instead, to punish the monopoly company for its dishonest actions (wiping out the competitive beer industry at the expense of competition), it should seek to cripple it to bankruptcy by subsidising the state-produced beer to extremely low rates, effectively cutting off the monopoly's income (just like it did to others).

To develop the new state-owned beer enterprise, the politicians should offer new jobs to help remedy the high unemployment rate. This will in turn promote economic productivity (because there are more people working and therefore more work is being done), and they should also continue to supply subsidised (cheap) beer to help the public have easy access to their national drink. This process will slowly improve the economy's sluggish production and trade levels, bringing it from gloomy doldrums into economic prosperity.

Only when the weakened beer cycle is surely flowing properly and strongly, and the newfound state-owned beer-producing company is fully established should the next step be taken by the jumpy politicians. 'Where will all the money which is needed to fund all of the changes come from...maybe by raising the taxes?'


If you, the reader have not yet figured out what the beer cycle is, or are confused about how it works, here is a brief and tidy explanation of how the beer cycle and the rest of the world works.

By making beer, many people are involved in the process of its production, selling and consumption. Farmers make the ingredients of beer –hops, yeast and barley or wheat– and they sell these on to brewers who just add water, pour it all into a can and wait for the beer to 'ripen'. Once the time is right, truckies drive the beer to the shops, where the shopkeepers (or their employees) sell it to the thirsty customer, who hands over money he/she has earned at work and drinks it up. This completes the circle as everybody, from the farmer to the shopper drinks the beer, and so everybody uses the beer cycle.

By making beer cheaper, more people will drink more beer, and more will be involved in this process of the beer cycle, thus improving the economic outlook of a country (more production means more work done). But to make beer cheaper, money has to be taken out of somewhere. By raising the taxes the subsidies will be paid for, but it will also mean that people will have to work harder to buy their beer, as they have less money to buy it with after tax. After a while, with people all working hard at their jobs, the economy is bouncing back from any hardship it was previously experiencing and national (if not global) prosperity follows.

Eventually, the taxes are lowered as a reward to the people for their hard work and as a consequence of this the beer subsidy is cut, meaning the public has to use the tax refunds to pay for the increased price of beer. Slowly, as the taxes are relaxed, the beer industry is deregulated and privatised, as the beermarket becomes more efficient and develops an increasingly more competitive spirit.

But if something goes wrong in the process of privatisation, or the system is abused by greedy companies, then the whole beer cycle will slow down, and the economy will match its fall. The politicians will then have to quickly start the whole process over again, before the entire country undergoes a severe economic collapse. And we do not want that. We need our beer.

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