The US Economy 2012: All Hail the Farmers and Workers Soviets

Farmers! Workers! The Party( Which one?  Doesn’t matter.) Fight for You!

 

Earlier in the week, the President reached into his stash and produced $170 million to “help” livestock producers by directing the federal government to step up meat purchases.

The caption for this photo in Businessweek was”Pigs at the Lehmann Brothers Farms LLC in Strawn, Illinois. Photographer: Daniel Acker/Bloomberg.” But actually, it’s Lehman Brothers with one “N” and it’s not the Wall Street guys. Too bad, I could really have riffed on that.

As a result of the this  year’s drought –and the permanent mandate that 40% of the U.S. corn crop be turned into ethanol – feed prices are rising so that producers are selling animals for slaughter early, thus leading to a glut, and lower costs to consumers.

Can’t have that.

From Bloomberg:

Obama said he also directed the Defense Department to speed up purchases and hold the meat for later use. The buying will help farmers, and the government will get a better price on products than if they were bought later, he said.

So, the government – which uses our money, and the money it borrows on our behalf -, will get a better price, while we pay more.

Nowadays, you aren’t allowed to call stuff like this cheese. “Processed cheese food” is the correct nomenclature. Lasts forever, and rates and roaches won’t touch it.

What rally floored me about this was that the government is still buying food commodities  directly.  I thought the era of government cheese was long since over.   I know people who remember receiving a Velveeta like substance in waxed cardboard boxes( and thus the origin of the urban vernacular term “cheese,’ meaning money, but I had assumed that USG these days put its food requirements out to tender on the open market for ready to use products.

Wrong.

The President went on to say:

“We’ll freeze it for later — but we’ve got a lot of freezers,” Obama told supporters in Council Bluffs as he kicked off a three-day visit to Iowa, a swing state that is also the country’s leading producer of pork, soybeans, corn and ethanol. “That will help ranchers, you know, who are going through tough times right now.”

 

So somewhere, the Government has a whole heap of foodstuffs frozen for whenever or whatever.

Have you heard of USDA’s Agricultural Marketing Service(AMS)?  I hadn’t.

AMS Commodity Procurement Division purchases a variety of food products in support of the National School Lunch Program and other food assistance programs. These purchases also help to stabilize prices in agricultural commodity markets by balancing supply and demand.

I thought supply and demand balanced themselves.  One requirement for government jobs must be that one not have taken Econ 101, and this applies apparently, not only to the permanent bureaucracy but to the executive and legislative branches as well..  The hoary grail of “price stability” dates back to the New Deal, if not the Wilson war time administration.  Price stability, one could note was a characteristic of the old Soviet Union, where prices remained the same for decades, for phantom goods stocked on empty shelves.

Coming from California, I well remember periodic uproars over the high price of lettuce( we do love our salads) during seasonal price spikes that were entirely predictable. After a lot of hot air in Sacramento, during which debates I found something else for the salad bowl, $1.59 head lettuce sooner or later when down to $.59, two for a buck on coupon days.

FDR’s Agricultural Adjustment Act was not popular. Nor did it make sense: a depression is characterized by a severe drop in output. Mandating an additional reduction leads to…more depression. Nor was destroying food food popular when so many went hungry. In the previous decade, the Bolsheviks had taken a different approach, simply stealing all the food and leaving the farmers to starve. So, I guess we’ve made some progress.

I suppose this is better than buying food and destroying it, as was done in New Deal Days, although the ethanol program comes close, taking food off the market to produce a fuel with less BTU yield than the fossil fuel used to produce it.

This kind of nonsense crosses administrations, party lines and decades.  The best agricultural policy would be none at all.  Ask yourself this: have you ever gone down to the store and found that there wasn’t any food?  Yet governments remain convinced that they can get it right so that in Europe,  once known for mountains of surplus dairy products, Norway can also experience as it did not long ago, a butter shortage.

Old timers in Indonesia where I was raised, and now live, fondly recall when government employees and workers in large firms were paid in a mix of commodities and cash. A barely developed consumer economy, largely lacking infrastructure, and periodic hyper inflation made this a valuable perk.

This former “third world” country(Now classified as lower middle income by the U.N.)has largely abandoned such practices, while we seem to be a heading for a future in which a large part of the population lines up for government cheese.

It gets worse:  When I saw a link on Drudge to a story on Labor Department subsidies  for payrolls in the states, I assumed it meant state and local governments, the destination of a good deal of stimulus funds, but to my amazement when I went back and had a look, I found this:

US Labor Department announces nearly $100 million in grants available for states to implement, improve short-time compensation or ‘work sharing’

In other words, funds will be provided  so that private employers can avoid layoffs. Now, in the US economy, 100 million isn’t a whole lot, and when apportioned among the states the amounts are laughably small, as the Labor Department  graphic shows, indeed so small that one wonders if the administrative cost will exceed the benefit, as is the case for the entire US government anti poverty effort, which if simply divided by the number of poor people, and then disbursed to them, would lift all of them over the poverty line, with a bit  of a surplus to boot.

What isn’t laughable here is the principle:  In a small part, the government is going to be paying the wages of some private sector employees.  Keep going, and, one day, you have state socialism.

So, this is manifest evidence of the Obama administration’s commitment to government management of the economy, right?  Well,  it isn’t.  You will find this odd program as subtitle D in HR3630, best known for its extension of the payroll tax cut, but which contains all kinds of other little goodies like this one.

I don’t know whose idea this was.  Rep Pelosi didn’t care for the bill at all, but she doesn’t mention this part, so perhaps it was a Democrat effort. It really doesn’t matter  It’s a proudly owned GOP bill..  Republicans have quite rightly decried Federal subsidies to state and local government payrolls.  Do similar – albeit, at this stage, far smaller – subsidies to private payrolls have virtues that those advocated by democrats do not?

The only virtue the mainstream Republican party has is that it is not the Democratic party, and that, rather than being a virtue, is just smaller scale vice, and smaller only due to lack of opportunity rather than any overriding principle.

Both parties claim to work for the benefit of the middle class, want to help struggling farmers and workers, but

The old German DDR symbol has grain for agriculture and the traditional hammer of industry, but also a calipers signifying technology. This might be closer to the mark for today’s emerging collective. Perhaps an iPad substituted for the calipers.

reach for power by favoring one group over another as it suits them. Those attracted by these blandishments should remember that that icon of oppression, the hammer and sickle, was first thought to represent the tools of honest labor, but in the end were used to crush  all into a dependent class, and to cut down any who dared to rise.

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