Category Archives: Economics

They Didn’t Teach that in History!

Imagine soup lines stretching city blocks, spanning streets.  Americans – hungry, malnourished and without work.

Imagine the Department of Agriculture (DoA) – obviously worried about the situation – releasing information on four sample diets: a liberal, moderate,  minimum and emergency diet. 

Imagine the government announcing to the nation: “Figures show we cannot produce enough food for our population for a minimum diet, a mere subsistence.”

Now, with that “Great Depression” backdrop, consider the following:

“We had men burning oats when we were importing oats from abroad on a large scale, killing pigs while increasing our imports of lard, cutting corn production and importing 30 million bushels of corn from abroad…while Wallace [then Secretary of Agriculture] was paying out hundreds of millions to kill millions of hogs, burn oats, plow under cotton…” – historian John T. Flynn:

The DoA signed up around 1 million cotton farmers, and paid them $100 million to plow under 10 million acres of farmland.  Why?  To force up prices.  But the results were disastrous.  Economist Clifton Luttrell explained, “…a large portion of the American cotton crop was grown for export and a number of close substitutes were available.  Wool, silk, and other vegetable fibers…and a new and vigorous rival – synthetic fibers – emerged to take an increasing portion of the domestic and world fiber markets….”  The false shortage that government policies created simply drove the cotton business into the ground, and gave competitors a boost.

The government paid hog farmers to slaughter 6 million baby pigs.  California peaches were left to rot in their orchards.  Less than 1/10th was saved as food and used in relief efforts.

Why in the world did this happen?  Let’s back up a few years.  During World War I, American agriculture experienced increased demand, since European farms were devastated.  After WWI, American farms did not cut back so when the Great Depression hit, there were too many farmers cultivating too many acres.  Political support from farmers was important to FDR (and a big reason why he was elected in 1932), so he sought to enact policies that would help them.  Farmers lobbied for mortgage moratoria.  Congress authorized the DoA to restrict the output of food processors and began to tax them, giving the proceeds to farmers in return for reducing their acreage.  Were they successful in raising prices?  Yes!  However, they raised prices in the midst of deflation and millions of industrial workers being unemployed, and – ironically – the price hikes caused the farmers themselves to pay more for manufactured goods.  The aftermath ruined the small family farms – since many were unable to pay their mortgages, or make enough to live in a market the government had forced to contract.  The more acres you owned and kept out of production, the more subsidies your received from the government.  Sharecroppers were hit the hardest, while large corporate farms began to gobble up the smaller ones who could not afford to stay in business.  The very “forgotten man’” that FDR and the New Dealers claimed to be fighting for was trampled underfoot by their policies.  It’s no wonder that the Supreme Court ruled the Agricultural Adjustment Act unconstitutional in 1936.

These are wonderful examples of how well-intended ideas can wreak havoc when made into law without any consideration of their real-world impact.  Too often, government officials only assess the political impact.  A global market is a highly dynamic environment.  In order to have all the necessary knowledge to predict every possible outcome, and to know how each consumer in the market will respond, in addition to the ‘natural’ factors like drought, earthquakes, etc., one would have to be God himself to centralize control of prices, supplies and consumption and actually execute it successfully.  Yet, doesn’t it seem that our government is constantly infatuated with the idea that they can do the impossible?  The temptation to rely on technocratic solutions is a strong one, and officials often believe that they just need more of the right information to do it correctly.  An earlier post of mine explains that at some point, the brain can no longer absorb information, and attempting to do so makes it more difficult to make right decisions.  There are simply too many moles in this cosmic game of whack-a-mole for us mere mortals to presume we can beat them all down at once.

Why I Will Shop More at Whole Foods

Recently, John Mackey – CEO of Whole Foods – wrote an op-ed expressing opposition to the President and Congress’s health care plan(s) and offering some alternatives instead (it’s well worth the read – regardless of where you stand).  Shortly thereafter, the UFCW decided to pick a fight with Mackey and Whole Foods.  They are handing out fliers similar to the one below:

ufcw

What incredible irony!  Ironic that no one on the left is expressing outrage at the blatant lie being spread about Mackey in an attempt to ruin him and his company.  Ironic that he doesn’t oppose "reform" – but specifically he opposes the President’s ‘reform’.  (Is it only "reform" when Congress or the President propose it?)  Ironic in that these people have no idea who Mackey is nor the values he’s instilled in his company.  They’re just being mindless drones (which both parties seem to have, apparently) – blindly following ‘their guy’ as if he (or they) could do no wrong.
So – who is Mackey?  I pulled this from the Whole Foods forum:

  • Mackey lectures at Universities about the horrors of factory farming
  • He says "Right now, Americans have to pretend factory farms don’t exist. They turn their eyes away, because there’s no alternative, there’s no choice.  Once there is a choice, we will allow ourselves to be outraged."
  • He makes $1 a year and donates his stock portfolio to charity.
  • He set up a $100,00 [sic] fund to help his employees with personal problems.
  • He’s a vegetarian and his company will not buy from producers that treat their animals unethically.
  • He flies commercial, rents the smallest cars, and stays in the cheapest hotel rooms – not because he’s cheap, but because he has no need for largesse
  • He and his wife participate in yoga
  • He gives over $1 million a year to animal welfare groups, education, relief work, and spiritual movements.
  • Employees have full say in who they work with – a new employee must receive a 2/3 vote in order to make it past probation.
  • Employees also vote on all company-wide initiatives
  • There’s a salary book in every store – "no secrets" management believes everyone should know how much everyone else is making
  • Executive salaries are capped at 14 times the lowest workers salary – If they want more money, everyone else has to get more money first
  • Non-executive employees hold 94% of company stock options
  • Pay is linked to team performance – profit sharing
  • At least 5% of annual profits go to local charities
  • Full-timers get 100% of their health care costs paid for – under plans the employees have selected
  • "They just have a lot more respect for you as a person here" says an employee

And because he had a different idea about how the United States can fix it health care situation, none of this matters?  He’s a caring person and many of you want to treat him like a monster.  Why?  Not because he opposes reform, but because he’s bringing more ideas to the table.

I was actually surprised after I read that list.  My respect for him and his company grew tremendously, even if I don’t agree with everything he says.  That a company would index executive salary based  the lowest worker’s salary is astounding in and of itself.  I absolutely love that Mackey shatters the typical "political categories" – on both sides of the aisle.  The post from which I pulled that list closes with the following:

"If the country had more CEO’s like Mackey, this country would be a greater place."

To which I wholeheartedly agree and would add "Let’s not stop at CEOs.  Can we get some politicians with character and ideas like this?!"

So This is What We Are?

Rant alert.  I’m livid and not likely to be so kind.

No offense to the supposed ‘millions’ of people devastated by Michael Jackson’s death.  Believe me, but I don’t think anyone’s death should be belittled.  However, enough is enough.  The world is on fire with changes that will have terrifying consequences for us and our children, and yet we want to watch washed-up-has-beens sing at the ticketed funeral of a pop-icon who, while arguably a musical genius, was also obviously a conflicted, tortured and misguided person.  Enough doubt lingered over his life to convince many that his relationship with children was anything but appropriate.  <Cue screeching halt and screaming fans />  WHY did I mention that last item?  Because political figures with more power and influence have had their lives destroyed on the basis of mere accusations less controversial than what Michael Jackson was accused of, and yet we have members of the lowest rated Congress in history proposing House Resolutions to honor him??!

Yes, that’s right.  Our Representatives – who apparently don’t have time to read a 1200-page (oh, wait, they added 300 more pages only hours before the vote), make that 1500-page “Cap and Trade” bill that will literally transfer our wealth to other nations simply by making us pay offsets in a sham-of-an-energy-derivatives market – but they have time to write and bring to the floor a bill honoring Michael Jackson.

Meanwhile, North Korea fired 7 more missiles on our Independence Day – a clear sign of defiance by a rogue state who has a proven history of bullying and bombast (albeit, now backed up by nuclear capability).  Japan – clearly concerned about North Korea, will most likely build up its military capabilities (and some have hinted at a nuclear option).

Then there’s Iran.  Simultaneously aiding raids against our forces in Iraq, ruthlessly crushing the people’s hopes for freedom (warning: graphic) and still working to build a nuclear weapon, Iran has made utter fools of the US in the eyes of the world.  Some believe that other states, like Saudi Arabia, will seek to arm themselves with nuclear weapons if Iran succeeds in building one.

And….Honduras.  The situation is not as cut and dry as the US Administration says.  Zelaya is not a “good guy” – and the people there are begging for prayer and assistance.  They don’t want their government to become yet another pawn of Hugo Chavez.  So, we ignore the cries of Iranians for assistance as they are beaten and shot in the streets, and yet we immediately side with Chavez and Zelaya on Honduras.  “Dude – where’s my country?!”

Our government is racked with corruption – from sweetheart mortgages for Senators, to increased pleasure travel on taxpayer money (while condemning auto executives for flying their private jets), to Argentinian affairs – all the while the Federal government has extended its power beyond anything ever intended (and beyond what our system can actually sustain)….and yet, here we are with wall-to-wall coverage of Michael Jackson.

My God, America, get a grip.  You now owe a minimum of $516k per household with our current national debt….and that debt is growing (thanks to interest) at least $1.2 BILLION PER DAY.  Oh, and all that money we’ve been printing?  Is it any wonder that China, Russia and India are just the latest in a line of nations calling for the dollar to no longer be the ‘dominant’ (i.e. – reserve) currency?  Does ANYONE get what this means?  If our treasury “debt auction” sales drop, we have no way to finance the out-of-control spending….and we’ll be left with an inflated currency, insane interest rates and the inability to fund all the entitlements so many hold dear (social security, medicare, etc.).

But that’s ok. Go watch the Michael Jackson memorial and memorize every fricking detail – because you better be able to describe in utter detail to your children and grandchildren what you were doing when you sold them into peasantry and slavery.