moneypolitics & government

The plague of skooch

No Gravatar

Media automation and access sometimes still let you down. There was an excellent video on the local news which I cannot find a link for. If only I had taken the lo-tech approach when it aired and scribbled down a few notes or at least written the channel on my arm. A more practical explanation of the predicament is here but I will try to reproduce the irony and agony of the original piece that we might call The Pie-man Learns About Free Money.

There have been some economic problems in the land and on the sea lately, you may have heard. The weight has fallen with severe effect on Georgia. This is something we are ill-used to, as generally with our limited institutions, diverse production and strategic positioning, we have been lightly impacted during these events compared to the nation at large. Not this time. Georgia’s unemployment rate has been among the worst and has been more stubborn than other parts of the country except the most desperate, like California. We were hit early and soundly depleting the state’s unemployment insurance fund (which had been compromised already), suffering the same fate of ALL these “safety net” programs which is a simultaneous spike in claimants and crash in payments leading to empty coffers in short order. The solution? Borrowing, of course. In this instance the state has borrowed from the federal government as have many others. News hits on this subject go back to 2009 easily and now the accumulated deficit that Georgia owes to the Treasury is nearing $800 million. That doesn’t sound like much these days; a rounding error to a solar panel project. And as Nancy Pelosi  has famously said, nothing is more “stimulative” to the economy than unemployment checks. Which may well be true but that stimulation still comes at a cost, doesn’t it? Yes, the feds clearly want even this pittance repaid… with interest… and the time has come, much to the shock and chagrin of The Pie-man.

The Pie-man is no fat cat, at least not financially. The newsies went out on location to cover this story, gravitating, perhaps because of the smell, to the famous industrial bakery that churns out Mrs. Edwards’ Pies IN the city and largely FOR the city. It’s a magical place, like Willie Wonka’s chocolate factory. Stainless machines hum along stamping out crusts, filling them with apples or whatnot and sending the product to the stores. It looks like maybe a 500 man operation, excluding management. The surprise meeting The Pie-man, who seems to be the shift manager, is that come January 1st Mrs. Edwards (who does not exist) will be paying $42 per head to the federal unemployment fund instead of $21, to begin whittling down that account. Yes, it is an annual dunning; less than $2 a month, hardly worth carping about, is it? Ordinarily perhaps so but all enterprises, excepting only liquidators, are on a knife’s edge at the moment, does anyone dispute that? Now this homegrown success story and employer of hundreds who are high-school educated at best and supporting families, must write a check for $21,ooo instead of the $10,500 they were expecting.

The Pie-man, as you can imagine, looked quite stricken He was hearing this news on camera, having been conspicuously let down by both media and government, given this bad news redounded to no one’s political benefit. Like so many of our recent surprises, this one gets worse the more closely one looks at it. First, the terms of the loan are pretty awful. Georgia is getting 3.94% on this note while large banks and institutions are getting practically 0%. Is it that the state of Georgia is a lesser risk than Wells Fargo? Sadly that may prove to be the case and if all our arrangements are made as shrewdly as this one that will certainly be so. A quick bit of calculating reveals that it will take some seventy-five thousand payments of the sort The Pie-man contemplates to pay off this debt today. If we can’t write that check, of course the interest accrues. As it stands the state has not even kept up with the interest because, naturally, there are STILL new claimants and STILL depressed contributions. This comes on top of the fact that the state unemployment premium (hey, they aren’t TAXES, after all) has gone from $69 dollars in ’09 to $213 in ’10! I have been unable to find the rate for this year or next but do you think they have gone down? Yeah, probably they have gone down since the benefits are going down. That’s how these things work, right? And here is a longer-term bit of bad news for The Pie-man; until the debt is completely paid the federal levy will increase $21 AGAIN every year. So on January 1st 2013 instead of the $21,000 check, it will be $31,500. Then $42,000. Then $52,500 in 2016, the earliest the debt could plausibly be repaid. These are pennies, I know, but still they add up, wouldn’t you say? Yes, they add up but the debt and interest also adds up. The only solution is to cut benefits and this, yes, the state is about to do.

Any one of these leechings seems minor; almost a petty thing to complain about. That is, of course, the strategy. It is Boiled Frog Syndrome. It is The March of the Inch Worm. It is Revolution by Slices and the slices are getting thicker while there is not, to  my reckoning, a slice so thin that you would want it to come off of your own precious posterior. Still those slices are shaved. Still they do not satisfy the beast. But diversion comes to the rescue of those demanding payment, at least for now. A mouthpiece for the state Dept of Labor, a certain Sam Hall, heaves a sigh of relief and hopes it is contagious as a yawn.

There is good news for employees. There will be no trickle down affect onto their paychecks.

“That’s a tax paid by employers. Employers cannot pass that along to their employees,” said Hall.

So at least the hairnet crew, when they are out on their smoke breaks don’t need to pollute the air with concerns of any sort. The pies, after all, must be baked. Of course this hiking of the cost of employment will never cause the employer to invest rather in automation. Even less likely are these added costs going to raise the wholesale price of the pies, nor the retail price since then, as anyone could warn you, there might be fewer pies sold, bringing even less lucre to The Pie-man, that lousy one-percenter whose white smock certainly conceals a double-breasted suit, waistcoat with gold watch and chain and the usual canvas bag full of money the foreman is always carrying so he can wallow in his ill-gotten green over lunch. And there is exactly NO chance, is there? that the enterprise over all will become untenable, closing its doors and turning the entire payroll over to the unemployment line? No, that is certainly impossible. If not, we would be terrified.

It is not only The Pie-man subject to this poisonous skooching. This tried, successful tactic is at play in every corner subject to humanity’s reach, at every level of government, business and law. In Alabama nearly invisible alterations to water use regulations have made sewerage rates quadruple in a few years. Finance and so-called environmental concerns collude, as they habitually do, to discourage mad profligacy like daily warm baths and flushing toilets with every use. Likewise the “standards” for light bulbs are meticulously if quietly tightened in hopes of outlawing Edison bulbs for their reckless squandering of energy. If the increased costs mean less dough pours into the pockets of pro-wrestlers and county fairs, that is all to the good; it spares our superiors the bitter feud that would result if they tried to just outlaw such vulgar distractions from more worthy pursuits like composting.

At every turn there is a nudge, a flashing light, a glowering cop or just a well-trod rut. We are not loaded down with chains or steered along with whips but guided by speed bumps both cultural and financial that accumulate one on the other, often contradictory, until we reside in a cell; ignorant that it is a cell because it is also a maze, the walls of which LOOK solid but are really just plaster and balsa. Who will test those walls, though? Not the disgruntled Port-o-let subscribers in Lower Alabama; they cry out for the feds to rescue them, appealing to the architect of their confinement for respite. The Pie-man can only pay his dues and look to make it up elsewhere, perhaps in using other limes instead of Key limes for their Key Lime Pie; or adding mechanization. Or cutting production and staff. Or closing down. The government’s solution is same as it ever was; MORE borrowing! Hey, we can get this debt service down a bit if we sell some bonds to pay it off!

But to whom will you sell your bonds, friend? And who will then buy our pies?

Latest posts by Ken Watson (Posts)

Print This Post Print This Post

Discussion Area - Leave a Comment