Nov. 26 (Bloomberg) -- It is the tradition of this column every year at this time to recount the story of Thanksgiving. This year, with the government encroaching on the private sector, taxpayers being asked (told, really) to bear the losses from banks' risk-taking, and tomorrow's generation shouldering the tax liability for today's profligacy, it seems more appropriate than ever.

The U.S. bailout of sacred cows (Fannie Mae and Freddie Mac) and unholy alliances (Citigroup Inc.) has been ``unprecedented'' in both size and audacity, with the government picking winners and losers as events, not principles, dictate.

American-style capitalism may never be the same, or maybe it never was what it was cracked up to be. That's why it's important to heed the lessons of the past.

For source material, I rely on the accounts of William Bradford, governor of the Plymouth Bay Colony for 30 years between 1621 and 1656. Bradford's history ``Of Plimoth Plantation'' was first published in 1856.

Most Americans think of Thanksgiving as a day off from school or work, a time to gather with friends and family and celebrate with a huge feast. If children know anything about the origins of this national holiday, declared each year by presidential proclamation, it's that the Pilgrims, grateful for a good harvest in their new land, set aside this day to give thanks.

New World, Old Baggage

Adults aren't any better informed. They may know something of the hardships encountered by the Pilgrims, a group of English separatists who came to the New World to escape religious persecution. What they probably don't know, since it's not part of the politically correct high school curriculum, is how these immigrants overcame the obstacles to prosper in the New World.

The Pilgrims' first winters, after they landed at Plymouth Rock in 1620 and established the Plymouth Bay Colony, were harsh. The weather and crop yields were poor.

Half the Pilgrims died or returned to England in the first year. Those who remained went hungry. In spite of their deep religious convictions, the Pilgrims took to stealing from one another.

Finally, in the spring of 1623, Governor Bradford and the others ``begane to thinke how they might raise as much corne as they could, and obtaine a better crop than they had done, that they might not still thus languish in misery,'' according to Bradford's history.

Communist Manifesto

One of the traditions the Pilgrims had brought with them from England was a practice known as ``farming in common.'' Everything they produced was put into a common pool; the harvest was rationed according to need.

They had thought ``that the taking away of property, and bringing in community into a common wealth, would make them happy and flourishing,'' Bradford recounts.

They were wrong. ``For this community (so far as it was) was found to breed much confusion and discontent, and retard much imployment that would have been to their benefite and comforte,'' Bradford writes.

Young, able-bodied men resented working for others without compensation. They thought it an ``injuestice'' to receive the same allotment of food and clothing as those who didn't pull their weight. What they lacked were appropriate incentives.

After the Pilgrims had endured near-starvation for three winters, Bradford decided to experiment when it came time for spring planting in 1623. He set aside a plot of land for each family, that ``they should set corne every man for his owne perticuler, and in that regard trust to themselves.''

Pilgrims' Progress

The results were nothing short of miraculous.

Bradford writes: ``This had very good success; for it made all hands very industrious, so as much more corne was planted than other waise would have bene by any means the Govr or any other could use, and saved him a great deall of trouble, and gave far better content.''

The women now went willingly into the field, carrying their young children on their backs. Those who previously claimed they were too old or ill to work embraced the idea of private property and enjoyed the fruits of their labor, eventually producing enough to trade their excess corn for furs and other desired commodities.

With proper incentives in place, the Pilgrims produced and enjoyed a bountiful harvest in the fall of 1623 and set aside ``a day of thanksgiving'' to thank God for their good fortune.

``Any generall wante or famine hath not been amongst them since to this day,'' Bradford writes in an entry from 1647, the last year covered by his history.

We now know the Pilgrims' good fortune had nothing to do with luck. In 1623, they were responding to the same incentives that, almost four centuries later, are recognized as necessary for a free, productive and prosperous society.

Just how necessary, we're about to find out.

(Caroline Baum, author of ``Just What I Said,'' is a Bloomberg News columnist. The opinions expressed are her own.)

To contact the writer of this column: Caroline Baum in New York at cabaum@bloomberg.net

Last Updated: November 26, 2008 00:02 EST