Trego's Mountain Ear

I noticed that Tim Walz has explained that EBT (once known as Food Stamps) creates $1.80 in economic activity for every dollar that goes out. Economic activity is a term that doesn’t necessarily mean what it seems. An old rancher described it as swapping pocketknives – “I spend ten grand buying a herd bull from my neighbor this year, next year he spends ten grand buying a bull from me.” That’s economic activity – each needs a herd bull, and they pay each other an inflated price to (hopefully) raise the value of their livestock to other potential buyers.

I took a class in economics back when I was a college freshman – the professor opened the first class by explaining no Republican had ever got better than a C in his class, then went on to explain Keynesian economics. I understood why – The Motley Fool describes Keynesian economics: “The United States has had a complicated history with Keynesian economics. While Keynesianism has frequently been used during downturns, the jury is still out on its long-term effectiveness.” https://www.fool.com/terms/k/keynesian-economics/

Not all “economic activity” creates wealth – pocketknife swaps merely create the illusion of value. John Maynard Keynes theorized that “government intervention is needed to stimulate demand and stabilize the economy, particularly during recessions.” While Adam Smith held that a free market would provide full employment (meaning employees would accept the wages offered), Keynesians held that government spending would increase demand. I’m pretty sure that the amount of government spending we have means we’re all Keynesians. No other choices in a world filled with deficit spending.

To Adam Smith, labor and the accumulation of capital were key components of economics – and Karl Marx basically agreed when he defined capital as dead labor (there are a lot of custom rifles built on old Mauser military actions, with new barrels and stocks added – pick your own example if you like). A pocketknife swap neither includes labor nor the accumulation of capital. It does include the illusion of value.

I figure the SNAP program increases labor (some share of producing and processing food) and accumulation of capital (though that may go more to Sam Walton’s heirs). But I’m skeptical whenever a politician uses the words ‘economic activity.’ After all, I ended a career one floor above the economics department.