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EDITORIAL: Free-lunch economics
White House insists food stamps and handouts drive growth
Question of the Day
After five years of stimulus schemes ranging from federal bailouts and a trillion-dollar stimulus package to the Cash for Clunkers program, Americans have yet to enjoy the “Recovery Summer” that they were once promised. Now, President Obama is promoting food stamps as the next great form of economic stimulus.
The White House last week featured on its website a list of things Americans should “keep in mind” on Thanksgiving. Food stamps (officially known as the Supplemental Nutrition Assistance Program, or SNAP) were at the top of the list. “SNAP is boosting the economy right now,” the administration explained. “SNAP’s effect extends beyond the food on a family’s table — to the grocery stores, truck drivers, warehouses, processing plants and farmers that helped get it there.” While Mr. Obama has occupied the Oval Office, the number of Americans on food stamps has gone up 67.7 percent. Our economy ought to be going gangbusters by now.
This is hardly the first time someone at the White House has made this implausible claim. “I should point out,” Agriculture Secretary Tom Vilsack said on MSNBC two years ago, “when you talk about the SNAP program or the food-stamp program, you have to recognize that it’s also an economic stimulus … . If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs. It’s the most direct stimulus you can get in the economy during these tough times.”
White House spokesman Jay Carney thinks unemployment checks are also a form of stimulus. “There are few other ways that can directly put money into the economy than providing unemployment insurance,” he insists. Rep. Nancy Pelosi, San Francisco Democrat, claimed extending unemployment benefits would “add 600,000 jobs to our economy.” Sen. Chuck Schumer of New York says unemployment benefits are the “best stimulus there is.”
This form of thinking is Marxism — not Karl, but Groucho. Food stamps and unemployment benefits are supposed to lend a temporary, helping hand to those in need. They’re not intended to be the primary vehicle for driving economic growth. The money that funds food stamps and welfare programs has to come from somewhere. Whatever isn’t borrowed from China must be extracted from hardworking Americans in the form of taxes before being redistributed to others. This process creates no growth. As Milton Friedman once wisely observed, “There’s no such thing as a free lunch.”
Taking money from Peter and handing it to Paul doesn’t create new wealth or opportunity, it just relocates existing wealth. With people who don’t understand this obvious principle running the country, it’s no wonder our economy isn’t going anywhere.
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