Food Stamp Stimulus


In the course of following the Obama Bust Tour, our own Jason Mattera drove through a puddle of vilsack and almost went flying off the road:

This is not the first time we’ve heard Democrats describe welfare spending as not only economic “stimulus,” but the best possible stimulus for job creation.  President Obama has lately been echoing then-Speaker Nancy Pelosi’s assertion that unemployment benefits promote job growth.  I wouldn’t mind seeing Tom Vilsack debate Pelosi over which is the better stimulus: food stamps or unemployment benefits.

Ed Morrissey of Hot Air asks the same question I’ve been asking throughout the President’s latest “pivot to job creation:”

So here’s the question. If food stamps create jobs, like Vilsack says here, and we’re putting record numbers of Americans on food stamps, then why aren’t we seeing record job creation? If every dollar spent on food stamps creates $1.84 in production, as Vilsack argues, and the number of food stamp recipients keeps rising, then why haven’t the GDP numbers reflected that fabulous growth?

Thus far, the only three ideas advanced during Pivot #15 are continuing Obama’s payroll tax cut, extending unemployment benefits, and spending money on “infrastructure” to create construction jobs.  I don’t know why Obama didn’t include “give out more food stamps” as a fourth plank in his platform, but maybe Vilsack was out of the office when Pivot #15 was designed.

The central idea behind all these “stimulus” proposals is that handing out piles of government lettuce to consumers will inspire a wave of consumption, upon which fabulous job growth will surf.  That never seems to happen.  Why not?  Isn’t there some logic to the basic formula of “Give people money >> people spend money >> jobs are created?”

Jason and Ed point out that sucking this money out of the private sector, and pumping it through the leaky pipes of our tottering mega-government, leads to more jobs lost than created.  If there’s any room left to feed from the slain Vilsack wildebeest, I’d point out another fallacy with this kind of “trickle-up” stimulus: wealth is not generated merely by spending money.

Spending money is, at best, only half of the story behind wealth creation.  What people do to earn the money matters too. 

Much of the job creation during the last few awful months of the Obama Depression came from McDonald’s, which went on a hiring binge.  Suppose McDonald’s pays these people a minimum wage of $7.25 per hour.  The conventional liberal view is that the corporation is essentially feeding a captive population of indentured servants, who shuffle mindlessly beneath the Golden Arches to toil for a few hours per day, and emerge with just enough money to keep them alive.  Alternatively, they hector employers for failing to perform their civic duty when they don’t produce enough jobs – especially if corporate profits rise after payrolls are trimmed.

In reality, a job is not a welfare benefit, and a paycheck is not a crust of bread tossed to hungry servants.  A job is offered by employers, who value the labor they purchase from willing employees far more than they value the money paid.  Throw in employer taxes and benefits, and that minimum-wage hire is probably costing McDonald’s $12 per hour or more.  The labor he provides each hour is worth more to McDonald’s than the $12 they pay for it. 

This is true of every voluntary, intelligent transaction.  It’s equally true of the transactions our new McDonald’s employee will make, after cashing his first paycheck.  When he spends his money, his perception of its value is shaped by the effort that went into earning it.  If he buys a book for ten dollars, it’s because he valued the book more than the $10 bill… and his understanding of what ten dollars is worth will be shaped by his memory of how it was earned.

Obama’s endless “stimulus” failures are not surprising, given the mind-set of an academic with zero private sector experience.  He doesn’t understand why handing someone $10 is not the same thing as letting them earn $10.  He doesn’t see the labor missing from the back end – the other half of the process that generates $10 in value.  He doesn’t understand the combined wisdom of a vast workforce earning its fortune, as opposed to a vast dependency class waiting for its government checks to arrive in the mail.  A future that is built shines an order of magnitude brighter than one which is given.  That’s why the future our elites have planned for us is so dreary.