Thursday, December 26, 2013

Not So Re-Distributive

THE buzzword of 2014 is going to be "redistribution"--as in income or wealth "redistribution".  Unable to run on the popularity of the Affordable Care Act or a reduction of unemployment, Democrats across the country will try to distract voters with the idea that they aren't getting ahead in life because the "evil rich" are hoarding all of the money.  Like modern day Robin Hoods, they will "take from the rich and give to the poor"--in order to make things more "fair".  But unlike 13th Century English peasants and serfs, modern low and moderate-income Americans won't hide away the "King's gold"--because they have a bad habit of giving their money right back to the rich.

Take for instance Food Stamps.  Care to guess who is the number one processor of Supplemental Nutrition Assistance Program transactions?  It's WalMart (run by the mega-rich Walton family).  Target is the second largest recipient of SNAP funds.  Between the two retail giants, they get about 50% of all Food Stamps money spent.  While you may think that WalMart and Target have added grocery departments to compete with local and regional grocery chains for the middle class shopper--the real growth has come with the incredible expansion of the SNAP program in the past six years--and the steady flow of government money that comes with it.

Another example would be Medicare Part D--the program that made sure the elderly didn't have to "choose between eating and taking their medicines".  The largest dispenser of prescriptions for Medicare Part D is Walgreen's drug stores (whose stock makes up the bulk of the portfolio of "Millionaire Congressman" Tom Petri).  Number Two is--again--WalMart.  And those rankings could reverse, as Humana--one of the largest providers of Medicare Part D drug programs--has named WalMart as its preferred pharmacy starting next year.  Again, WalMart may want Joe Middleclass to have his prescriptions filled at their pharmacy--but Uncle Sam is providing a very nice, steady income for the Walton's as well.

But what about raising salaries and the minimum wage for the lower and middle class masses?  Sounds great, until you consider that income is not the greatest deterrent to upward class mobility.  It's debt that is keeping most people from getting ahead in life.  The average American is $70,000 in debt (a combination of credit cards, student loans and mortgages)--nearly every penny of which is owed to big banks like CitiGroup and Bank of America or lending institutions like Fannie Mae and Freddie Mac--who all make big money off of interest on that debt and fees imposed upon those who fail to pay it back on time.  Given the fact that American personal investment rates are at the lowest they have been since the 1930's, even if that debt was paid down through higher income, the average American would just borrow it away with more credit because "they could afford it now".

So when you hear the Robin Hoods come calling next year promising their "redistribution" of wealth, remember that anything they take we will gladly give right back to those from whom it was taken--rather than putting it away for ourselves--which would actually "redistribute" the wealth.  Minus, of course, Uncle Sam's cut to feed the burgeoning bureaucracy needed to give it to us.

No comments:

Post a Comment