The spit-take was epic. Then again they always were. For a student of economic history, Market Forces(1) was easily startled by what others would see as fairly mild turns of events. Then again, his natural talent for seeing the long-range consequences of even fairly minor events, indicated by the row of three dominoes on his flank, was what made him such a valuable economic advisor to the Princesses. What insight they had gained by long planning and even longer experience, he was able to grasp almost intuitively. From time to time he even managed to leap ahead of the Princesses' own projections by a step or two.

So it was little surprise when, at an unscheduled debriefing over First Breakfast with the Princesses(2), Princess Celestia's casual one-sentence announcement caused him to spray tea over the table like a fire hose:

"It appears my faithful student is about to discover the secrets of Earth Pony magic."

Several minutes of choked out apologies and a round of napkins passed about to mop up the spillage, Market Forces managed to squawk "What?"

"He seems alarmed at the prospect," Celestia noted to her sister, amused.

"Methinks he is sharper than the average castle assistant," Luna retorted drolly.

Celestia regarded Market Forces with her trademark enigmatic smile. "Let us see what he thinks," she said. "Very well, Market Force, tell us; why does that little bit of news alarm you?"

The blonde-maned, green pegasus stared at her. "Let's start from the beginning," he said. "When she says 'The secret of Earth Pony magic,' she means--"

"A way for earth ponies to perform magic as powerful, controlled, and focused as Unicorn magic," Celestia finished. "Yes, that was the implication of the news she sent me."

"News?"

"Yes," she said. "It's all rather shocking." To his astonishment, she actually seemed to be perturbed. "It seems that there is an entire chapter of Pony history that was lost to us, that Twilight Sparkle only recently uncovered in the Crystal Empire's archives... in fact, a significant portion of our own country's history has been discovered to be... mistaken." She shook her head in disbelief.

In brief, she told him the story; the truth of the hearthwarming tale, the Crystal Heart, the schism, the founding of the Crystal Empire. With every passing sentence Market Force's jaw hung a little lower. By the time Celestia finished, his mind was reeling. "The implications," he said. "They're just staggering." He poured himself a fortifying cup of tea and downed it.

Luna looked distressed ." Strewth," she said unhappily. "What changes will this make in yon Hearthwarming Day celebrations? When tis discovered how much of the tale is fore to aft..."

"Indeed," Market Forces admitted. "But I'm thinking more of the economic and political implications. When the unicorns find out that earth ponies can sling spells like they can--" He did a double take. "And your highnesses didn't know about this?"

"Market, the Hearthwarming Tale was already unbelievably old when Luna and I were born," Celestia said. "The founding of Equestria was as much folklore to us as it is to you."

"In truth, I do feel distraught," Luna said, picking up her cup and looking at Celestia, distressed. "I did love the pageants as a filly. To find out they are a lie..." She looked down in her cup, disconsolate. "Chancellor Puddinghead was my favorite," she said in a small voice.

"It is rather like when we found out Santa wasn't real, isn't it," Celestia said sympathetically. She sighed. "In retrospect this version of the tale makes far too much sense."

"How do you mean, your Highness?" Market asked.

Instead of answering, Celestia set down her cup and got up. "Walk with me, Market Forces," she said kindly. Nodding obediently, Market Forces got to his hooves.

Luna got up as well. "If you will excuse me, Sister, I must be off to my chambers." She gave Celestia a nuzzle and turned to leave. "I must needs be rewriting the Hearthwarming Play for this coming winter," she mumbled to herself in discontent.

Celestia and Market Forces strolled slowly through the halls of the palace. "Tell me, Market," Celestia said. "When you were growing up, did the Hearthwarming pageant story ever seem off to you?"

Market Forces paused in mid stride, then continued walking. "Well, yes," he admitted. "Now that you say it. Yes, it did."

"In what way?"

Market Forces reminisced, speaking slowly. "Even when I was a colt, the ending of the tale seemed too pat. Too trite. 'Oh, they all became friends and the Fire of Friendship drove the windigoes away, and they lived happily ever after, the end.' Oh I'm sure the Fire of Friendship... or rather, the fire of the Crystal Heart, if what your student has found proves true... did save the day. But in the end they hadn't solved the real problem."

"Which was their prejudice and racism," Celestia said.

Market Forces shook his head. "No. Not that those weren't problems, but they were caused by another, deeper problem."

"Which was?"

"Economics." At Celestia's glance he shrugged his wings. "Look, your Highness, I know ponies crack wise about how I have a cash register for a brain, but I see things in these sort of terms. And the real problem that was causing all the strife was an economic one."

"Continue," Celestia said, ever benevolent.

Market Force's thoughts began to pick up steam. "You see, let's say the Hearthwarming version we all know is correct," he said. "Even as a colt I knew it made no sense. It's always presented that all three ancient tribes contributed equally, and that all three tribes were equally at fault for the conflict. But that's rubbish. It's plain as the nose on your face that the earth ponies were getting shafted."

"But all three tribes contributed something," Celestia pointed out. "The pegasi controlled the weather; the unicorns raised the sun and moon--"

"Yes, but the earth ponies were the only ones making an actual sacrifice," Market Forces said. "They were having at least two thirds of every crop taken away. Two thirds!" He shook his head and snorted. "That was food right out of their children's mouths. I dare you to find any subsistence farmer today who could survive on one third of all his crops, and that's with modern agricultural methods. And for all their work, did the pegasi get two thirds less weather? Did the unicorns get two thirds less sunshine? No. They suffered no actual capital loss-- and they were producing what they had to anyway, whether the earth ponies existed or not.

"You can see where this would have to lead. The earth ponies are laboring under a tax burden so high as to be unsustainable, and seeing nothing substantial for their contribution; and because the earth ponies had less and less to themselves each year, the unicorns and the pegasi would get less and less tribute each year--- a bigger and bigger piece of a smaller and smaller pie. And then the windigoes moved in." Market Forces shook his head. "It could be an object lesson in the folly of socialist or communal systems, the consequences of price fixing, the fallacy of absolute values, tax revenue curves..."

"An enlightening insight from an interesting perspective," Celestia said.

"Um, thank you?" Market Forces said uncertainly.

She lowered her head and looked him in the eye as they walked. "I'm not politicking, Market Force," she said, amused. "It really is. And it's also one hundred percent correct."

"It is? I mean, it was?" Market Forces was pleased. Knowing you were right was one thing, but having other ponies say it was always so much more validating.

"Yes." Celestia straightened up. "Though the Hearthwarming tale does get the timeline wrong." She frowned prettily. "More than Luna or I suspected, to judge by what I read in the book Twilight sent me."

"Er, timeline?"

"Yes. One can put the puzzle pieces together, with Level Head's journal. The arrangement the three tribes had-- the one that the Hearthwarming Pageant shows at the beginning-- is the arrangement the three tribes had after the Windigoes were defeated," she said. "Arranged because it seemed the fairest to all three tribes. It was obviously a vast improvement over the slave and serfdom system of lost antiquity. Which, I have to repeat, neither my sister nor any of our generation I knew of. When we were born the hearthwarming legend was already old...

"At any rate, we were born during Discord's reign. After we overthrew him (and finished scraping the caramel off the palace), the ponies of Equestria began to return to that three-way system. It took barely a year for its flaws to start to surface.

"My sister and I went into deep discussion over the matter. We consulted with every sage we knew of every race; dragons, griffins, the buffalo, the zebra-- we even used the Window of Dimension to peer into other realms and speak with creatures of other times and planes of existence. Von Mises, Hayek, Bastiat, Sowell...(3)

"After much consideration, we took the necessary step..." Her eyes twinkled. "Can you guess what it was?"

"Um, you took the throne and forced everypony to play nice?" Market Forces hazarded.

"Well, we did do that," Celestia admitted. "But--"

"No wait," Market said, coming to a halt so suddenly he sat on the marble floor. He tapped his hoof as the thought gelled, a smile spreading on his face. "Oh, brilliant-- you took the Sun and Moon out of the equation."

Celestia nodded, pleased. "Exactly! Mind, the fait was rather accompli when our cutie marks appeared. But in retrospect they were perfect. By their natures, they could not be biased, could not be used to show favoritism to one group over another, could not be used divisively, or at least not without terrible difficulty.  Their light was a utility that had to be, by their natures, distributed with perfect impartiality to all ponies, great and small, and nopony could prosper from it at another's detriment."

"But more importantly," Market Forces said, interrupting in his eagerness, "was what it did to the unicorns. It put them out of a job." He got back to his feet and trotted alongside the princess.

"I think you have the gist of it," Celestia said. "But continue."

"I can imagine what it was like," he said. "One morning all the unicorns wake up and discover that the Sun and Moon are no longer in their control--"

"You should have seen the look on Princess Platinum the Fourteenth's face," Celestia smirked. "Ah, I wish I'd had a camera back then. Or a portrait artist; she held that pose for nearly half an hour."  The ever-dignified Sun Princess reared her head back, bugging her eyes out and dropping her chin dramatically.

Market snorted with laughter. "---And suddenly the entire tribe is, well, unemployed," he finished. " They have to go looking for new ways to earn their daily bread; paying for it with their actual labors, rather than relying on their 'fair share' for raising the sun every morning.

"Unicorn magic makes unicorns the most flexible of the three tribes, with more diverse abilities. With effort, they can do whatever the other two tribes can. A unicorn can make weather..." he mentally recalled a stage magician who had summoned small storm clouds as part of her flamboyant stage act. "A unicorn can grow food, too. They won't be as naturally good at it, mind, but they can work their way around.

"Which means the other tribes now have marketplace competitors. So they have to step up their game; find better ways to use their natural abilities, or maybe work outside them... and the free market requires everypony to give their best value for the bit, while working under the same rules-- fairness, equality, open trade, free and voluntary exchange. Nopony can just demand payment anymore; they have to earn it."

"By offering other ponies what they want and need," Celestia said, "and by accepting what ponies are willing to pay for what they offer." She came to a halt; they had traversed the length of the castle and were now standing on one of the many open-air balconies that dotted the sides of its many towers. A fresh morning breeze blew, ruffling Market Force's mane. "That's the secret of Equestria," Celestia continued. "It's not the Magic of Friendship that makes it go. Oh, make no mistake, that magic is the lubrication, the vital grease in the gears. But it is competition that makes those gears turn."

"Not perfectly though," Market Forces ventured.

"Nothing is perfect, nor ever will be," Celestia said. "But no, it is far from perfect. The triangle is still lopsided. The pegasi still hold a monopoly on the weather and on the sky. We ameliorated that somewhat by making the weather service a government agency, on the grounds that it was something that needed to be administered impartially--- but it's far from a satisfactory fix. Perhaps even a step too far in the wrong direction, for their sakes. And the unicorns still hold a vast advantage over either of the other two tribes, due to the power and versatility of their magic."

"That wide an advantage?"

"Take a pegasus, an earth pony, and a unicorn and show them a doorknob and see which one has the advantage," Celestia said dryly. "Did you know that earth ponies are nearly eighty percent more likely to get infectious diseases, including oral infections, just from having to turn doorknobs with their mouths?" Market Forces winced. "Off the hoof, Market Forces," the Princess continued. "What will be the result, if Twilight Sparkle's research yields fruit?"

"Short version, the economy will go nuts," Market Forces said. "Wild speculation, stock bubbles, ponies throwing large sums of money at fringe market investments and outlandish speculative industries. An explosion in questionable businesses and outright scams ranging from 'learn the secrets of the Earth Pony ancients' to 'Don't fall behind! Triple your hornpower!' " Market snorted at that one.  "A push for either the doors of the School for Gifted Unicorns to open to Earth Ponies, or a new school solely for Earth Ponies. Agitation for more investigation and research into pegasus magic..."

"And all that from those who are not actively hostile to the discovery," Celestia nodded. "And there will be a few who are hostile to it. Very much so. My little ponies don't like change very much."

"To say nothing of what it will do to the Hearthwarming Day," Market Forces added. "No small issue; Hearthwarming is a huge economic 'bump' right at the end of the year. The ripples from that won't exactly be trivial."

Celestia nodded. "It appears that my sister and I have a lot of planning to do," she said. "A lot of damage control to plan in advance."

"I'm afraid my advice is limited in that regard," Market Forces said apologetically.

Celestia chuckled. "That's quite all right, my little pony," she said. "Your job is to read the tea leaves for me, not to brew the tea." She looked out over her kingdom, shining in the early morning sun.

"No, I have others who do that..."

(1)A young pegasus from the Forces family. His aptitude for economic, rather than aerial combat had been something of a disappointment to his family. At least till the day he earned his cutie mark by doing a financial takeover of every cloudberry-juice stand in his neighborhood.

(2) or after dinner tea, in the case of Princess Luna.

(3) She didn't mention consulting with Keynes, Marx or Galbraith, for the same reason you would not mention the time you had passed through a small town in a foreign land and patiently listened to the ramblings of the village idiot... Marx was an eighteenth century crackpot who thought a cherry pie and a mud pie should cost the same because they both took an hour to make. And Keynes thought that having the government take your wallet and max out all your credit cards would improve your finances, because spending lots of money was proof you had a robust economy... This sort of thinking requires a lifetime of higher education; No mere mortal could be that idiotic.