Spoilers Below:
This episode starts up with a shot of Fluttershy's cottage, early in the morning. Fluttershy is rudely awakened by Rainbow Dash who quickly flies off with her to Sweet Apple Acres, explaining that it is the first day of Cider Season, and she wants to beat Pinkie Pie in the lineup to get some Apple Family Cider. Pinkie Pie's ability to get ahead in the line before Rainbow Dash, and the Apple family always running out before RD can get any provide a little comic relief throughout the episode.
Upon arrival, RD and Fluttershy discover a huge lineup has formed of ponies eager to get their cider who have camped out overnight (Pinkie Pie, of course, is first in the line). The Apple's open for business and start serving cider. After serving Fluttershy (and with RD next in line), they run out and all the ponies in line (including RD) are disappointed. The Apple's proclaim that it takes time to make the cider just right and they will have more cider the next day.
At this point two unicorn brothers, Flim and Flam steam into town aboard a strange, mechanical contraption and break out into a musical routine about their "Super Speedy Cider Squeezy 6000" which is a magic, cider making machine that can make enough cider for all of Ponyville.
Initially, the Flimflam brothers make a low ball offer to the Apple family, telling them if the Apple's supply the apples and the brothers make the cider, they can split the profits 75/25 (with the brothers getting the 75). Applejack reveals that selling cider is their primary source of income, essential to their orchard's survival and refuse the deal.
Flim and Flam than go on to tell the Apple's they instead will compete against them, and with their mechancial device capable of providing enough cider in an hour for all of Ponyville, they will run the Apple's out of business. The brothers throw down the gauntlet, and taunt the Apple's into a cider making competition the next day, with the winner winning the right to be the sole provider of cider for Ponyville.
The next day, the brothers and the Apple's face off. Initially, the Apple's fall behind in their production, with the brothers producing 3 barrels of cider for every 1 they make. Twighlight, steps in, and with the other Mane 5, ask the Mayor who is overseeing the competition if "honorary family members" can help. The brothers in their hubris agree, as does Applejack.
With the other Mane 5 ponies helping, the Apples are able to catch up and outproduce the brothers, who in desperation, "double the power" on the Super Speedy Cider Squeezy 6000. In the process, the build int quality control module on the Squeezy rejects all the input apples. One of the brothers (I think Flam) decides to simply disable the quality control module, and the Squeezy starts pumping out twice as much cider (albeit containing all kids of junk) as the Apples. Initially, Rainbow Dash tries to compel Applejack to do the same, but the Apple's refuse, saying that it's both cheating and will spoil the whole lot.
The contest ends, and it is clear the brothers produced nearly twice as much cider, winning them the competition. The dejected Apple family concedes defeat, and lets the brother sell their "cider," which the town residents immediately reject - as the brother's cider is absolutely awful.
In the end, the brothers run off like the snake oil salesmen they are, the Apple's keep their farm and have enough cider to serve all of Ponyville (including Rainbow Dash).
The lesson that Applejack shares with Princess Celestia is to let the quality of your work stand for itself, to have the integrity under pressure to not cut corners and cheat, and to trust your good friends and family at times when the pressure is on.
End Spoilers
There are several subtle but profound lessons about the virtues and benefits of capitalism in this episode:
Scarcity of Goods
Let's start with the basic way in which goods and services are exchanged. In reality, goods with value exist in scarce quantities. Rainbow Dash eloquently describes Apple family cider that way.
Because goods and services exist in scarcity, the fairest system to distribute them is when parties mutually agree to exchange them for something else of value that each party considers fair and accurate representations of the effort and resources expended of the good or service being exchanged. This is capitalism.
Sound Money
As Pinkie Pie shows, the ponies who want to buy Apple family cider exchange what, for all of human history, has been the most fair and accurate representation of expended effort and resources: gold, gold, GOLD!
Gold is an accurate representation of expended effort and resources, because the effort and resources needed to prospect for, mine, and refine it is constant. In other words, in order to bring gold to the market, a reasonably consistent amount of value has to be spent to procure it. This gives gold intrinsic value, unlike worthless fiat currencies where the expenditure needed to bring it to the market is virtually non-existent.
Equestria's economy is very similar to a cash and carry, free market economy. There are no credit cards, lines of credit, or fiat currency. Goods are voluntarily exchanged between parties using sound money, without coercion from the government.
Free Market Solutions
When the Flimflam brothers make their appearance on the scene, the mayor of Ponyville did not introduce protectionist tariffs, Princess Equestria did not create "Buy Apple Family" subsidies nor did she send her armed soldiers to harass the Flim Flam brothers, the way the US government does with it's food producers:
In Equestria, the free market resolves supply shortages and independently regulates shady business practises.
Competition and Profit Motives Improve Living Standards
In such a market, suppliers voluntarily choose to negotiate, refuse, and compete with one another based on individual profit motives that are most applicable to each individuals unique needs.
It's not like in the formerly (fully) communist China in the 70's, where families had zero incentive to be productive since there was no profit motive for their labour. As a consequence, not only was there no high quality cider, everyone just starved to death.
Profit motives and competition increase productivity, which increases supply, which increases quality of life. Apple bloom says so herself.
Free Markets Regulate Themselves
Not only does free market capitalism, competition and profit motive increase productivity and provide a better quality of life to consumers, they ALSO self regulate and punish negligent or malevolent market participants who engage in shady business practises.
When in competing with the Apples the Flimflam brothers discover they are falling behind in their production and resort to what most producers do in those circumstancse: rush and sacrifice quality for volume. This business practise is NOT uncommon in every industry (I work in "Quality Control" myself, and I can certainly attest to that fact).
Markets ALWAYS punish businesses that resort to a policy of bringing inferior products to them, much in the way the Ponyville ponies do with the Flim Flam brothers. There is no need for government regulation and oversight, since individual consumers are smart enough to know not to pay money for cider that tastes bad and has rocks in it. Equestria doesn't have a bloated government bureaucracy like the FDA, to tell it's citizens that.
The power of free markets to refuse to fund poor businesses is what punishes those that are uncompetitive, unproductive, or that produce inferior or dangerous goods and services. I find it interesting that the Apple family did not need government subsidies to remain viable. If this happened in the real world, I suspect the Flimflam brothers would have petitioned Princess Celestia for a government grant, the way Solyndra did - and probably with the same outcome.
Socialism Means Well, but Fails... Always...
Rainbow Dash had a line that highlights very well why socialism is always a disaster.
First off, socialists always go around masqurading that there should always be enough supply for everyone (serving the "good of the many")... as long as they get theirs first.
This of course is a complete fallacy that fails to consider the inescapable laws of supply and demand, scarcity of goods and services, and market expectation of reasonable quality. During the competition, Rainbow dash was just about to throw these inescapable laws out the window, and while a socialist will tell you her actions would have guarunteed adequate supply for everypony and thus were justified, that same socialist probably wouldn't be willing to drink a nasty tasting cider, full of rocks.
Tragicaly, socialist despots the world over from the USSR, to Cuba, to China have a perfect record of being are more than willing to subject their citizens to that kind of torture (and worse), all because they mean well.
Integrity Will Always Be Rewarded
While Applejack's tone in her letter to the Princess was a bit conceited, the lesson she shared was one that I think everypony can related to. In free societies where capitalism is the law of the land, integrity will always be rewarded, While dishonesty will be punished. Not by government taxes, fines, prisons, or firing squads - but by the magic of capitalism.
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