U.S. Economy

The differences being that quality third basemen are a lot rarer than Ivy League MBAs, and are publicly and relentlessly evaluated. Steroids or no steroids, one bad season and they're replaced by a 22-year-old from the Dominican Republic. That's one of the things keeping us fans hanging on.

Not so in the corporate world. As recently as 2008, the geniuses running Wall Street investment banks bankrupted their companies and came perilously close to collapsing the world financial system. And what happened? A few CEOs departed via "golden parachute," but most executives stayed shamelessly in place, profited from multibillion-dollar TARP bailouts and then began awarding each other obscene bonuses almost before the smoke cleared.

Meanwhile, a substantial part of a generation's retirement savings vanished into thin air. Had the Bush administration succeeded in "privatizing" Social Security back in 2005, the damage could not have been worse.

Over time, American institutions appear to be growing steadily less accountable. Hayes cites the Catholic Church's sex abuse scandal, which strikes me as a red herring. Yes, the bishops averted their eyes, placing the putative well-being of the church above children. Yes, ecclesiastical lectures on sexual sin are a bit harder to take. But the church has been hierarchical, secretive and self-protective since forever. Moreover, as recent developments in Ireland and Germany show, the problem is international.

More to the point, "look at CEO pay," Hayes urges. "In 1978, according to the Economic Policy Institute, the ratio of average CEO pay to average wage was about 35 to 1. By 2007 it was 275 to 1." In comparison, the ratio remains approximately 20 to 1 in most European countries; roughly 11 to 1 in Japan. Yet people complain about labor unions.

Hayes cites Nell Minow, an expert in corporate governance nicknamed "The CEO Killer" by Fortune magazine, to the effect that all many executives know how to do is "manipulate the levers of governance and devise ingenious methods of guaranteeing themselves windfalls regardless of their company's performance." The unvarying defense of the latest Wall Street bonuses, of course, is that the talented and gifted recipients might otherwise change teams. Why, perish the thought.

Only recently, reporters have begun catching up with the bankruptcy examiner's report on the failure of Lehman Brothers investment bank, the precipitating event in the 2008 financial crisis. According to law professor and former white-collar prosecutor Peter J. Henning, writing in the New York Times' DealBook blog, the 2,000-page document "discusses some accounting gimmicks that are eerily reminiscent of how Enron tried to prop up its balance sheet back in 2001 before it collapsed."

And for which, it will be recalled, a number of Enron executives went to prison. The details can be dauntingly complex. But what they amounted to were a series of short-term accounting tricks designed to make the bank's financial health appear robust as it "teetered on the brink of ruin."

The examiner's report calls CEO Richard Fuld "grossly negligent" at minimum, and reserves even harsher terms for Lehman's accounting firm, Ernst & Young. Remember when accounting was a respectable profession? No more. They're buccaneers today.

The basic gimmick was called a "Repo 105," moving bad real estate-based assets off the books by using them as collateral for short-term loans just long enough to file quarterly reports, then unwinding the deals as quickly as overnight.

It's as if your brother-in-law assumed your debts and deeded you his assets overnight so you could qualify for a bank loan, then took them back. Except Lehman was doing it to the tune of $50 billion a pop. You and your brother-in-law would go to prison for that, and so should somebody at Lehman Brothers. Hopefully, somebody with a brilliant academic record and impeccable social credentials, so the rest of them start paying attention.

© 2010, Gene Lyons. Distributed by United Feature Syndicate, Inc.

 

The timing of the piece's online publication could not be worse. On Wednesday, the Bureau of Labor Statistics released the Producer Price Index, which shows prices for finished goods (not including food and energy) inching up at 0.1 percent rate. If you add food and energy into the mix, falling gas prices actually pushed the index down by 0.6 percent. As Ryan Avent notes, with the help of a nice chart, the chances for deflation seem at least as likely as inflation.

Also today, the Obama administration released a joint statement by three top Obama economic officials, Peter Orzag, Timothy Geithner, and Christina Romer, laying out the administration's economic forecast. Because of "the high levels of slack in the economy," the "Troika" projects inflation of "1.0 percent in 2010, 1.4 percent in 2011, and 1.7 percent in 2012." Hyperinflation, this is not.

High levels of slack refer to high unemployment -- which the administration projects as still hovering around 8 percent by 2012 -- and other attributes of a weakly recovering economy. It will be quite some time before we are worrying about low levels of slack and economic overheating. The Fed, which is fully stocked with relentless inflation-fighters who will immediately start raising interest rates the moment they sniff the slightest tendril of inflationary smoke, sees nothing in the current economic landscape to worry about. The Dow Jones Industrial Average closed at a 17-month high on Wednesday, in part, according to some market watchers, because the lack of inflationary warning signs ensures that the Fed will keep rates at rock-bottom for the foreseeable future.

Which reminds me of a completely different subject. Remember Donald Luskin's "unified rightwing crackpot theory of the stockmarket" declaring  that the market's long rally from its lows last March "tracked the demise" of the Obama administration's policy initiatives, and blamed the post -Scott Brown downturn on a fear of anti-Wall Street populism? I'm waiting for his explanation of today's 17-month high, at a point where it looks like health care reform, once again, may actually pass. Though I'm not counting any chickens.

While organic and local foods seem like luxury items to many, it's important to understand that cheap food is the result of government subsidies while local farmers get little to no assistance. Cheap food is the real extravagance. My interest in food stems from my having to care for a diabetic father, and good food is the only form of healthcare I have access to. Even when I was working full time for a publishing company, I received no benefits, and paid an average of $2,500 to Uncle Sam every tax season despite wages that were meager by any American standard. Ultimately, though, this debate isn't about my personal story, it's about the shifting class boundaries in this country. The comments both attacking and defending people like me reflect the insecurities and fears we all harbor in a nation where, in a time of corporate bailouts and "Too Big To Fail," even upper-middle-class people struggle to put food on the table.

Many people leaving comments have assumed that I am white, which I am not, though I would question the relevance of this fact unless you assume that race should be a criteria by which we decide who receives public assistance. In any case, the word "hipster" as a pejorative seems to imply "white," and that reflects the larger race and class conflicts in this country -- the underlying sentiment behind many people's hatred toward artists is that art is purely the domain of the wealthy and the privileged. I can tell you that many of the artists I know in Baltimore work as dishwashers, baby sitters, house cleaners, movers and dog walkers. They temp, sling coffee and freelance. They teach inner-city kids and counsel rape victims to make ends meet. They come from all walks of life and from all parts of the country, they are black, white, Asian and Latino, and all of them struggle to varying degrees. What makes them less deserving of assistance when they need it than anyone else who qualifies, and why is it such a travesty that food stamp recipients have access to quality, healthy food?

This is, however, irrelevant because the core of this discussion is an ideological debate between those that believe private entrepreneurship and simple hard work are the cures for poverty, and those that believe that the the poverty line is permeable in both directions. Among the latter, there is yet a deeper debate about whether we can, in a deep recession with record unemployment rates, make the same old assumptions about class based on race, occupation and education, particularly when increasingly, only poorly paid, unprotected, insecure jobs are available even to people with master's degrees.

If someone with as many advantages as I've had can find himself unemployed and struggling to find a job, if traditionally secure people find themselves unable to keep their heads above water, you can either talk about our failures as human beings, or you can take it as yet another sign that our economy has some very shaky foundations.

By the way, a whole rabbit at Lexington Market is $10, feeds at least four people, and is healthier than factory-farmed chicken (around $6 for a whole one at the same market).

The two friends weren't tabulating the cash in their wallets but what remained of the monthly allotment on their Supplemental Nutrition Assistance Program debit cards, the official new term for what are still known colloquially as food stamps.

Magida, a 30-year-old art school graduate, had been installing museum exhibits for a living until the recession caused arts funding -- and her usual gigs -- to dry up. She applied for food stamps last summer, and since then she's used her $150 in monthly benefits for things like fresh produce, raw honey and fresh-squeezed juices from markets near her house in the neighborhood of Hampden, and soy meat alternatives and gourmet ice cream from a Whole Foods a few miles away.

"I'm eating better than I ever have before," she told me. "Even with food stamps, it's not like I'm living large, but it helps."

Mak, 31, grew up in Westchester, graduated from the University of Chicago and toiled in publishing in New York during his 20s before moving to Baltimore last year with a meager part-time blogging job and prospects for little else. About half of his friends in Baltimore have been getting food stamps since the economy toppled, so he decided to give it a try; to his delight, he qualified for $200 a month.

"I'm sort of a foodie, and I'm not going to do the 'living off ramen' thing," he said, fondly remembering a recent meal he'd prepared of roasted rabbit with butter, tarragon and sweet potatoes. "I used to think that you could only get processed food and government cheese on food stamps, but it's great that you can get anything."

Think of it as the effect of a grinding recession crossed with the epicurean tastes of young people as obsessed with food as previous generations were with music and sex. Faced with lingering unemployment, 20- and 30-somethings with college degrees and foodie standards are shaking off old taboos about who should get government assistance and discovering that government benefits can indeed be used for just about anything edible, including wild-caught fish, organic asparagus and triple-crème cheese.

Food policy experts and human resource administrators are quick to point out that the overwhelming majority of the record 38 million Americans now using food stamps are their traditional recipients: the working poor, the elderly and single parents on welfare.

But they also note that recent changes made to the program as part of last year's stimulus package, which relaxed the restrictions on able-bodied adults without dependents to collect food stamps, have made some young singles around the country eligible for the first time.

"There are many 20-somethings from educated families who go through a period of unemployment and live very frugally, maybe even technically in poverty, who now qualify," said Parke Wilde, a food economist at Tufts University who has written extensively about food stamp usage and policy.

The increase in food stamp use among this demographic is hard to measure, as they represent a cross section of characteristics not specifically tracked by the Agriculture Department, which administers the program.

But general unemployment figures among the group are stark: Between the ends of 2007 and 2009, unemployment among those aged 20 to 34 rose 100 percent, and between 2006 and 2009, unemployment among those with a bachelor's degree or higher was up 179 percent.

And in cities that are magnets for 20- and 30-something creatives and young professionals, the kinds of food markets that specialize in delectables like artisanal bread, heirloom tomatoes and grass-fed beef have seen significant upticks in food stamp payments among their typical shoppers. At the Wedge, a market in the stylish Uptown neighborhood of Minneapolis; at New Seasons Market, a series of nine specialty stores in and around Portland, Ore.; and at Rainbow Grocery, a stalwart for food lovers in San Francisco's Mission District, food stamp purchases have doubled in the past year.

"The use has gone way up in the last six months," said Eric Wilcox, a cashier who has worked at Rainbow Grocery in San Francisco for 10 years. "We're seeing a lot more young people in their 20s purchasing organic food with food stamp cards. I wouldn't say it's limited to hipster people, but I'm certainly surprised to see them with cards."

Young urbanites with a taste for ciabatta may legitimately be among the new poor, but their participation in the program is far from universally accepted. A New York Times story in late November about the program's explosive growth generated a storm of comments online, with many readers lobbing familiar accusations of laziness and irresponsibility.

But there seems to be a special strain of ire reserved for those like the self-described "30-something, unemployed, ex-fashionista, EBT armed, post-hipster, downtown mom" from New York who, in January, drew nearly 500 comments on the Web site Urbanbaby.com, many seething with fury at her for trying to maintain the trappings of a materialistic, cosmopolitan life while using an Electronic Benefit Transfer card -- food stamps -- to feed her family. (Her blog is now password-protected.)

"You're hosting dinner parties and buying cases of wine -- on taxpayers' money!" one person wrote. "Your attitude is so objectionable that you're like a trainwreck; it's hard to look away." (One cannot, in fact, buy wine with food stamps, though dinner party ingredients are fair game.)

And on the blog Stuff Unemployed People Like, along with "not showering regularly" and "sleeping in while your significant other goes to work," a post last year touted "buying Perrier with food stamps" and sarcastically claimed that "the fancier the food, the more glee there is in knowing the government has once again helped in enabling a lavish lifestyle." Of the reader responses that poured in, many were food stamp users who defended their shopping choices (including, yes, Perrier) while others attacked them.

"While one person works their butt off," one wrote, "another is just waiting in line so they can recieve [sic] their 'luxury' food stamps and recieve [sic] basically whatever they want."

But among young food stamp recipients I spoke with, there's less glee than traces of embarrassment about their situations; few want to be seen handing over applications at the human resource office, and they can be sheepish about presenting their snap cards in a checkout line.

Josh Ankerberg, a 26-year-old who lives in Brooklyn, N.Y., started getting food stamps a year ago as an AmeriCorps volunteer, a group that has long had special dispensation to qualify for them, and he has continued using them while he job hunts. He uses his $200 in monthly benefits at Trader Joe's, Whole Foods and a local farmer's market to maintain his self-described healthy flexitarian diet, and notes that two of his roommates -- a graduate student in poetry and an underemployed cook, both in their 20s -- also started getting food stamps in the past two months, as have other friends and acquaintances.

Still, Ankerberg said, "There's a sort of uneasiness about it. A few friends that are artists in Williamsburg are like, 'Don't say we're on food stamps too loudly. Just keep it between you and me.'"

At the same time, there seems to be little moral quandary about collecting a benefit traditionally thought of as intended for the downtrodden. In a nondiscriminating recession that laid waste almost across the board, the feeling is that anyone who meets the near-poverty level requirements for collecting food stamps shouldn't feel guilty about doing so.

Controversy about how they use food stamps marks an interesting shift from the classic critique that the program subsidizes diets laden with soda pop and junk food. But from that perspective, food stamp-using foodies might be applauded for demonstrating that one can, indeed, eat healthy and make delicious home-cooked meals on a tight budget.

And while they might be questioned for viewing premium ingredients as a necessity, it could also be argued that they're eating the best and most conscious way they know how. They are often cooking at home. They are using fresh ingredients. This is, after all, a generation steeped in Michael Pollan books, bountiful farmer's markets and a fetish for all things sustainable and handcrafted. Is it wrong to believe there should be a local, free-range chicken in every Le Creuset pot?

At Magida's brick row house in Baltimore, she and Mak minced garlic while observing that one of the upsides of unemployment was having plenty of time to cook elaborate meals, and that among their friends, they had let go of any bad feelings about how their food was procured.

"It's not a thing people feel ashamed of, at least not around here," said Mak. "It feels like a necessity right now."

Savory aromas wafted through the kitchen as a table was set with a heaping plate of Thai yellow curry with coconut milk and lemongrass, Chinese gourd sautéed in hot chile sauce and sweet clementine juice, all of it courtesy of government assistance.

"At first, I thought, 'Why should I be on food stamps?'" said Magida, digging into her dinner. "Here I am, this educated person who went to art school, and there are a lot of people who need them more. But then I realized, I need them, too."

The news comes just a month after a South Carolina legislator introduced a bill seeking to ban Federal currency altogether, and replace the upstart greenback with gold or silver coins. A half-dozen other states have considered similar legislation, reports the Tenth Amendment Center. But there's a key difference between the Idaho plan and the bills proposed in other states, most of which fall somewhere on a spectrum ranging from Tea Party rage to Ron Paul goldbug-ism. (The South Carolina bill, for example, claims that "the State is experiencing an economic crisis of severe magnitude caused in large part by the unconstitutional substitution of Federal Reserve Notes for silver and gold coin as legal tender in this State.")

In contrast, the sponsor of the Idaho bill, Republican Phil Hart, seems to be marshalling wide support by crafting legislation that is straight out industrial policy aimed at boosting Idaho's silver industry. The text of the bill is quite clear.

The intent of this act is to use the abundant silver resources of the state of Idaho to create a means whereby the people of Idaho can pay their taxes to the state using silver mined from the ground of Idaho, processed in Idaho and finally minted into a medallion in Idaho. It is the intent of the Legislature to create mining jobs in Idaho while giving the people of Idaho a means to store their wealth in a precious metal that is immune from the effects of inflation while complying with the mandates of our federal Constitution.

The Idaho bill therefore incorporates tax incentives for silver processors located in Idaho.

From The Idaho Reporter:

That, Hart believes, could bring hundreds, if not thousands of jobs to the state. In conjunction with the creation of the medallion, Hart's bill would also try to lure silver processing companies to Idaho, and in particular, north Idaho, which, according to Hart, was once called "the silver capital of the world." The bill would give companies that come to Idaho to process silver for the medallion a 10-year exemption from income taxes, as well as property taxes. The exemption would be open for 20 years and would sunset after that period of time.

Hart believes one of the advantages of silver is that it would resist inflationary pressure better than paper money. But since states aren't allowed to mint their own money, the value of the silver medallion will have to fluctuate according to market forces. In just the last ten years, the value of an ounce of silver has zig-zagged between four and twenty dollars.

Well, here's the positive spin: The teacher clearly has a future in stand-up comedy, because, told in a Janeane Garofalo deadpan, that is one guffaw-worthy line. As with most good comedy, though, it's funny because it hits on a raw reality: The recession has so many feeling profoundly hopeless -- and for women, true economic desperation often means selling our bodies in one way or another. Just last night, my roommate was mulling how she could possibly make ends meet while going to grad school in New York and I said dryly: "There's always prostitution." Much as I'm a rabid defender of sex work as a valid and respectable profession, the truth is that for most it's a last resort; and selling your eggs for money -- as opposed to doing it for altruistic reasons -- can be a similarly physical and emotional sacrifice. I can't count the number of times in the past year or so that I've heard my financially-strapped female friends toss off the same sort of sarcastic quip, and sometimes I haven't been entirely sure they were joking.

Maybe this teacher was merely joking, maybe not, but I think high school students are fully capable of processing the bleak reality that brought about their teacher's outburst. Talk about a teachable moment.