The great unemployment/food stamp lie
By Colin McNickle
Published: Saturday, Feb. 1, 2014, 9:00 p.m.
There can be no doubt that we have become a nation of economics illiterates. Consider the debate over extending long-term unemployment benefits and the food stamp program.
Shibboleths loom large in the jaded legend of these government-led efforts to ease the pain of the jobless and the hungry poor. And those who disagree with the “social justice” crowd's advocacy for them are branded as everything from “uncaring” to “extremists.”
But it is “progressives,” with their great aversion to intellectual labor, who should be held up for ridicule.
One of the greatest lies about unemployment benefits and food stamps is that they are an “economic stimulus.” The claim has been repeated — and embellished — for years by everyone from politicians, to left-wing columnists, to the compassionate clergy. And in the case of food stamps, it's the U.S. Department of Agriculture (USDA) that keeps planting the seeds from which this lie repeatedly sprouts. And with our money.
Food stamps bring federal dollars into communities in the form of benefits that are redeemed by participants at local stores, says the USDA. “These benefits ripple throughout the economies of the community, state and nation.” The USDA further claims that “every $5 in new” food stamp “benefits generate a total of $9.20 in community spending; every additional dollar's worth of ... benefits generates 17 to 47 cents of new spending on food”; and that, “on average, $1 billion of retail food demand by” food stamp “recipients generates 3,300 farm jobs.”
Back in 2012, the USDA went as far as to claim that if the national participation rate rose 5 percentage points, $1.3 billion in food stamp benefits would create $2.5 billion in new economic activity nationwide.
Call it trickle-down welfare. Call it welfare-driven economics. Or just call it the lie that it is, as Mark J. Perry, a University of Michigan economics and finance professor, did at the time:
“(I)magine the economic stimulus that could be created if the food stamp participation rate increased to 100 percent!,” he wryly noted.
It's not rocket science. Heck, it's not even junior high science. But it is fundamental economics embodied by this immutable truth:
“In an economy, the economic effects from a transfer program always sum to zero,” Professor Perry reminds. “Simply put, there can be no economic stimulus from increased food stamp usage.”
And as with food stamps, as with unemployment benefits, economics scholar Art Laffer reminded in a 2010 Wall Street Journal commentary:
“(W)hen it comes to higher” — or, we would add, extended — “unemployment benefits or any other stimulus spending, the resources given to the unemployed have to be taken from someone else. There isn't a ‘tooth fairy.' ... The government doesn't create resources. It redistributes them. For everyone who is given something there is someone who has that something taken away.”
Nicholas Ling, a Shakespeare publisher, once offered that “Ignorance is a voluntary misfortune.” How tragic it is that our taxes and charitable donations too often underwrite this purposeful misrepresentation.
Colin McNickle is Trib Total Media's director of editorial pages (412-320-7836 or firstname.lastname@example.org).
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