Economics Is A SNAP

            You get up in the morning and it is drizzling. The night before the 11 o’clock news didn’t forecast any rain. Tonight’s news the weatherman will give an explanation for why it rained today and will or won’t tomorrow. Then again, he may choose not to even mention last night’s forecast. Gas prices in Newark are about the same. The Nigerian Oil Minister stubbed his toe, so the prices must go up. Today oil is trading at over $105 a barrel yet Newark gas prices are around $3.30 a gallon. During the fall, competition with heating oil production was always cited as a reason for raising prices. If we’re lucky, we get an explanation from economists. Stock quotes run the same. Projections say this or that figures or earnings reports are due out. The Fed has spoken and stocks go up or down. Recently, after the stocks went down when the reports were up, an explanation was given, “the market was disappointed with consumer spending.” Like the weather, the price of oil and the stock market, it all must just be too much for any central Ohio resident to fathom. In an article entitled “Income gains for 1% break records” (CBS/AP/ September 10, 2013) it is reported that “The top 1 percent of U.S. earners collected 19.3 percent of household income in 2012, their largest share since 1928. Last year, the incomes of the top 1 percent rose nearly 20 percent, compared with a 1 percent increase for the remaining 99 percent. The share held by the top 10 percent of earners last year reached a record 48.2 percent.” Analysis questions what or with whom the market was disappointed. Was it with the 90% of Americans who earn 52% of the income? Did they not “consume enough”, spend enough with their consumption? Or was it with the 10% of Americans who earn 48% of the income? Are they not consuming 48% of what is needed to make the economy the dynamo of success that the market demands? It gets complicated when one realizes that the 90% who take in 52% of the earned income probably don’t get much of it from capital returns in the market itself. The 10% that earn 48% probably do. Which all begs the question who is disappointed in whom? If the market is disappointed in the lackluster pace of consumer spending could it be that it is really the 10% that are disappointed in the other 90% for not helping them earn an even greater share of the country’s earned income? Our leaders tend to feel it is the latter. If only we put even more money into the pockets of the 10%, they will in turn invest in making us all better off. Someone with more bathrooms in their house than bedrooms and kitchens and rec rooms combined will obviously be “consuming” more. Common sense will still tell us that an individual, whether rich or poor, can only dump so much, so often, in one day. There’s a limit to how much they can contribute. And that’s the part that the great wizard behind the curtain doesn’t want the “consuming” 90% to consider. It is called surplus, what is over and above what can be “consumed” and hence is invested or saved. The 90% saves little, for they consume most. The 10% can’t consume it all. Much gets “invested”. All investments are not created equal. 9-13-13 Bill Moyers’ guest Dave Zirin states “I live ten minutes away from a horrific slum with mold and ventilation problems and rats. Alex Rodriguez owns the slum. It’s called Newport Ventures. And this has become a big local story in Washington D.C. that Alex Rodriguez owns this horrific building. I mean, so the guy has made $350 million in his career.” Money makes money. If money is disappointed with the returns, it finds ways of making more money. Not all of them are in the public interest. Some are just in the interest of making more money (and not being disappointed).

            Speaking of disappointment, the Newark Advocate ran an article in its 9-15-13 edition entitled “Food stamp recipients facing tougher rules.” Yes, it was insightful in how things are about to change. The online comments for the most part perpetuated the myth that SNAP recipients were mostly spending it on pop and potato chips and just couldn’t wait to get up in the middle of the day so they could go out and swipe their cards for more. No mention was made of the farm bill, and the other subsidies that are abused, to the tune of even more dollars spent on fewer “corporate” individuals (the same ones who lobby to include soda and chips as part of the SNAP program). “The Department of Agriculture paid out $20.3 million more than it should have last year to farmers and other aid recipients, according to a new report released Wednesday by the USDA’s inspector general. As members of Congress return from their recess and prepare to head to conference over a 2013 farm bill, establishing policy for farm subsidies among other agriculture-related policies, they confront news that the USDA sent out more money than it should have for subsidies and that other farmer assistance rose by 67 percent in 2012. In comparison, overpayments totaled $11.7 million in 2011, according to the IG’s report, which tallied only “high-dollar overpayments.” For an incident to make it into the report, the USDA had to pay out 50 percent more than it should have and the amount of overpayment had to be a minimum of $5,000 per person of $25,000 per entity. In one example, the IG says the USDA made two payments of $45,096 each as part of a Farm Service Agency program when the payments should have each totaled $2,048. But the biggest overpayments were made to recipients of subsidies provided through USDA’s Federal Crop Insurance Corporation, according to a breakdown of the dollar amounts included in the report. The USDA spent $7.149 billion in fiscal year 2012 to subsidize the crop insurance premiums that farmers pay.” Maybe the Advocate didn’t bother to mention the inspector general’s report carried on multiple sites because Licking County and central Ohio is the heart of agriculture. I used the quotes from BILL TOMSON’s 9/4/13 Politico article entitled “Feds overpaid farmers by $20 million The USDA paid 50 percent more than it should have.” In conjunction with this it is important to note that today is the anniversary of the collapse of Lehman Brothers in 2008. This was an opportune time for our governor to look about for new employment, as he wore a Lehman Brothers uniform suit at the time. Various sources cite the US government bailout as being close to $250 million. It is also reported that most of that money has been repaid. The executives of companies like Bank of America, Goldman Saks, Chase, etc. can pride themselves with ads on how they’ve succeeded (as well as given themselves bonuses) thanks to a little help from “our” government (The Supreme Court Citizen’s United ruling now includes them in the “our”.). But the thousands of folks who have turned their lives around thanks to SNAP and other public assistance programs can’t afford to “pride themselves” with ads giving witness to their contributions to our economy and the quality of life in America. Instead, they find themselves shackled with the servitude of wasting public money through addiction to pop and chips. In light of the inspector general’s findings, The Newark Advocate could have earnestly anticipated this mythical response by providing some context. The enormous subsidies given to a limited number of individual corporations that account for overpayments offset the small percentage of abuse found within the SNAP program.

 

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Tags: Central Ohio, Economics, Newark Ohio, SNAP