Paying For Points

I belong to many different airline and hotel rewards programs (which I am sure the rewards program pros would say is not a good approach, by the way). Lately, it seems like I am increasingly being offered a chance to buy points or miles in those programs. That happens whenever I check in for a flight on one of my rewards program carriers. Similarly, one of the hotel programs recently sent an email announcing that I can get “free” miles by buying points and then having the hotel chain match the points I’ve purchased.

The notion of buying points or miles seems incredibly weird to me–like using real money to buy Monopoly money. Sure, points can be used to buy certain things, but there always are conditions, limitations, and strings attached. Why would you want to take money that can be used unconditionally, to purchase whatever you want, and convert it into something that can be used only to buy one thing, with restrictions? My inherent cheapskate tendencies rebel against that notion. At least some people who profess to be proficient in rewards programs agree that, except in very limited circumstances, paying for points or miles doesn’t make sense. And the exceptions kind of prove my point. You need to spend a lot of time with rewards program provisions to figure out whether your circumstances justifying buying the points or miles–and who has the time to study rewards program fine print?

There’s one other thing about the buying points or miles that bugs me: the program sponsors are being paid for doing nothing. It’s no wonder that prospect of purchasing points or miles is raised so frequently. And it also seems to distract from the businesses’ attention to their core activities, too. Rather than figuring out whether they can entice me to spend money on points or miles, I’d rather that the hotel chains focus exclusively on providing clean, decent rooms in good locations, and the airlines focus on offering safe, on-time, uncancelled flights.

At The Far End Of The Comparative Pain Scale

If you’ve ever had any kind of painful injury, a doctor probably asked you to assess the extent of your pain using a smiley face scale like the one shown above. Often, quantifying pain is difficult, and you may have mulled over whether your condition came in at a four or a five on the scale.

Sometimes, though, the pain scale assessment is easy. For example, right now pretty much everyone involved in the investment world is at 10–suffering through the worst possible pain with the reddest, most anguished non-smiley face. In fact, if there were an 11 on the pain scale, like the speakers on This Is Spinal Tap, the current market conditions would qualify.

Words don’t adequately describe just how awful the investment markets are right now. Across the board, every form of investment is getting creamed. The S&P 500 has fallen more than 20 percent since January, moving into “bear market” territory, and bond prices have “tanked.” Cryptocurrencies have gotten crushed. Even good old cash in the bank isn’t safe, as inflation rates continue to climb–and the New York Times reports that the May inflation results suggest that the inflation rate may be “accelerating.”

If it is any consolation, everyone is getting pulverized. The Bloomberg Billionaires Index shows that the world’s 500 richest people have lost $1.4 trillion this year. It may make you feel better to know that Mark Zuckerberg, Elon Musk, and Jeff Bezos have all reportedly lost more than $60 billion this year. Of course, even those staggering losses leave them plenty of money to fall back on–which isn’t the case for most of the people who are investors.

If you are a retiree or someone who is getting close to retirement who sees the value of the portfolio and savings that you are counting on to fund your retirement years falling every day, you wonder what to do. There doesn’t appear to be any safe harbor in any of the standard, or even not-so-standard, investment options. With no viable options, most of us will just try to ride out this intensely painful period, avoid making decisions that lock in the impact of the current downturn, try not to constantly check the market indices, and hope that the needle on the pain scale starts to move in a more favorable direction.

When The Supply Chain Issues Hit The Office

Several years ago, our office went from the old-fashioned Bunn coffee maker that made entire pots of coffee to Flavia coffee machines that make one cup of joe. The Flavia machines use little packets of coffee, like those pictured above, that you insert into the machine to get your brew. My coffee of choice is the Pike Place roast. It’s a medium roast coffee that Starbuck’s describes as follows: “A smooth, well-rounded blend of Latin American coffees with subtly rich notes of cocoa and toasted nuts, it’s perfect for every day.”

And I do, in fact, drink it every day when I’m in the office. Multiple times every day, in fact.

Yesterday we ran out of the Pike Place, which caused me to experience a momentary flutter of disquiet. Later in the day, the guy who fills our coffee stopped by to refill the supply of our Flavia coffee packets. I was relieved to see him and told him I was sorry I had guzzled so much of the Pike Place. He shook his head sadly and explained that there was no Pike Place to replenish the supply on our floor. He noted that our firm was totally out of the Pike Place, and when he called the warehouse to see why our order of Pike Place wasn’t delivered, he was told that the local warehouse was totally out of it, too. He then put up a hand-lettered sign above the coffee machine to explain the situation in hopes that it would prevent Pike Place drinkers from rioting in the hallways.

We’ve all heard of the supply chain issues that the country is experiencing, post-pandemic. I had not heard of coffee being affected, but apparently I wasn’t paying attention, because there have been stories about the coffee supply being affected by the weather and shipping delays, and shipping snafus caused by congestion at ports have compounded the problem.

Of course, in the grand scheme of things a shortage in one particular coffee packet isn’t the end of the world; I can just shift to Cafe Verona or even (horrors!) decaf in a pinch. (There always seems to be a very ample supply of decaf, doesn’t there?) But the tale of Pike Place coffee packets in one office in one city shows just how precarious the supply chain can be.

The Great Crypto Crash

I frankly don’t get the whole cryptocurrency concept. I don’t understand how it works, or how it can have value. It seems like the most volatile, unpredictable possible investment. And the fact that it is the preferred form of ransomware payment required by computer hackers doesn’t exactly give it a veneer of legitimacy, security, or credibility, either.

In short, I’ve never invested in a cryptocurrency, and I can’t believe that will ever change. After this past week, I’m glad I’ve taken that conservative stance. To be sure, the stock market has been taking a beating recently–the S&P 500 is now down 18 percent since the end of December, and the Dow is down 13 percent over that same time period–but that is chump change compared to what has just happened in the crypto world. MarketWatch described last week as a “bloodbath” for cryptocurrency, with multiple different crypto currencies losing huge chunks of their market value. One crypto trading firm said last week represents “the largest wealth destruction event in the short history of the crypto markets.”

The abrupt valuation changes for some of the crypto firms is truly shocking. MarketWatch reports that one cryptocurrency, LUNA, was trading at about $80 in early May, only to fall “nearly to zero.” Another cryptocurrency that had been pegged at one to one with the U.S. dollar fell to as low as six cents. In all, it is estimated that the crypto market lost $400 billion in value over just seven days. Those are sudden and catastrophic losses on the same scale as the stock market crash in 1929. Imagine being one of the people who bought a cryptocurrency at $80, only to see their investment vanish within a week!

The crypto market has had some tough times before, but has rebounded. Will it bounce back this time–or will people begin to wonder whether getting into crypto is just too risky? One of the reasons the American stock market keeps its value, even during difficult economic times like the present, is that millions of American workers have a portion of their paychecks invested in the market through their employers’ 401k plans. That constant infusion of money is a nice little support mechanism that the crypto market just doesn’t have. When the big players decide that it’s time to get out of crypto–as they apparently did this past week–there is no safety net to absorb the shock.

Those Empty Theater Blues

As America works to recover from the various social, cultural, and economic impacts of the COVID pandemic, it’s becoming increasingly clear that one segment of the economy is facing a particularly difficult challenge: movie theaters.

The data on movie theater ticket sales tell a very sad tale for the industry. Ticket sales hit a high point in 2018, when 1,311,300,934 admission tickets were sold, producing revenues of $11,945,954,034. Sales dipped a bit in 2019, the last full pre-pandemic year, when 1,228,763,382 tickets were purchased–and then the bottom fell out. In 2020, when theaters were closed for most of the year in most of the country, only 221,762,724 tickets were sold, and I would guess most of those sales came in January and February, before shutdowns occurred in earnest in March. From that low point, sales rebounded slightly in 2021, to just under 500 million tickets, and if current trends continue, ticket sales in 2022 are on pace to hit just over 725 million–which is slightly better than half the industry’s best year.

In short, if you go to the local movie multiplex right now, you’re likely to find a lot of empty theaters, and you’ll get pretty good seats.

Interestingly, Gallup has periodically asked Americans about their movie attendance, and the recent data is dismal. In January of this year, Gallup announced that its polling data showed that Americans watched an average of 1.4 movies in a movie theater in the prior 12 months. The more compelling story, though, is told by individual movie attendance: 61 percent of respondents didn’t go to a theater at all during that 12-month period, 31 percent went out to watch between 1 and 4 movies, and 9 percent (figures are rounded for the math mafia out there) watched 5 or more movies. In 2007, by comparison, 39 percent of respondents attended between 1 and 4 movies in theaters, and 29 percent saw five or more movies. The Gallup data shows that movie attendance is particularly depressed among older Americans.

Gallup suggests that the movie theater business was grappling with challenges posed by competition from streaming services when the pandemic hit. With theaters then closed during the early days of the pandemic, and many people avoiding reopened theaters as new COVID variants emerged, the question now is whether people’s habits have changed to the point where going to a theater to watch a movie is even considered. And some of us would question whether the offerings being served up by Hollywood, where superhero movies and special effects rule the day, are going to entice broad groups of Americans to buy a ticket and a box of popcorn and settle into a theater seat to watch a film again.

Investing In A Nuclear Era

The war in Ukraine goes on, and since it began Russia has absorbed a series of embarrassing defeats and setbacks, including most recently the sinking of one the ships in its Black Sea fleet. The stout defense of Ukrainians is heartening for those who oppose evil aggression and the slaughter of innocent civilians, but it also has raised the possibility that Vladimir Putin might be tempted to do the heretofore unthinkable: launch some kind of nuclear weapon. Ukrainian President Volodymyr Zelensky warns that the world should be prepared for precisely that inconceivable scenario.

It’s a frightening time, for sure. And yet, things haven’t been as panicky as you might have thought. No one is hiding under the bed or encamped in their home fallout shelter. People live their lives and go to their schools and jobs, the economy bumps along, we worry about inflation and gas prices and shortages, and stocks continue to be traded. In fact, when you think about it, the stock market is pretty weird right now. Frightening times typically are bad for the stock market, which always reacts badly to uncertainty–and yet the market has held its own, even as concerns about the Russia-Ukraine conflict escalating to the nuclear level are raised. Why is that?

Paradoxically, it might simply be that the possibility of nuclear war is just too scary to really affect the markets. It’s too colossal a risk, and far outside the normal issues that affect trading in securities. If you’re worried about inflation, you can adjust your portfolio and trading patterns; if you’re concerned that equities are overvalued due to irrational exuberance, you can shift into fixed income investments. But there is no plausible investment strategy that can protect against the devastating impact of a nuclear exchange.

That’s why some analysts are encouraging their investors to stay bullish on stocks, even in the face of the risk of Putin launching nuclear weapons. One Canadian firm, BCA Research, recommends staying in the equities market for the next year, reasoning that financial risks are immaterial in the face of a potential existential risk. One article quotes BCA Research as saying, bluntly: “”If an ICBM [Intercontinental Ballistic Missile] is heading your way, the size and composition of your portfolio become irrelevant.”  

If you were searching for evidence that financial analysts are cold-blooded, look no farther! But, in a strange, counterintuitive way, this apocalyptic approach to investing makes sense in the current circumstances–and it may be why the market hasn’t plunged into Black Friday territory. The BCA Research approach might seem like the caterpillar approach from the fable of the ant and the caterpillar, but what else can an investor do? In such extraordinary times, the best approach may be to keep your head down, follow your investment strategy, and hope that Vladimir Putin keeps his finger off the button.

Getting Down To The Last KMart

The New York Post reports that the KMart store in Avenel, New Jersey is closing. By itself, the closure of a discount store wouldn’t be news, of course–unless the closing of the store means that the countdown to the very last KMart in America is getting close to completion. With the closure of the Avenel store, there are only three KMarts left. Given the fact that KMarts have been closing regularly–here’s a report of the last Buffalo KMart closing, for example–we’ll soon be down to the last KMart, just as we are down to the last Blockbuster.

In a way, it’s hard to imagine that there are only three KMarts left, but in a way it’s hard to imagine that any KMarts are still around. It’s hard to imagine there are only three left because KMarts were once ubiquitous in America, with more than 2,000 stores that were found just about everywhere. KMart was a dominant low-cost retailer, and the KMart “blue light special”–a flashing blue light that alerted shoppers to especially cut-rate deals, along with an accompanying announcement that began “attention, KMart shoppers”–was the stuff of retail legend and the butt of countless jokes. Everybody laughed at those jokes, because everyone had been in a KMart. It was a kind of shared national experience, like the three television networks or McDonald’s french fries. Back in the ’70s and ’80s, no one could have predicted that KMart wouldn’t continue to be a blue light leader forever.

But viewed from today’s perspective, it’s hard to think that KMarts still exist. The store’s business model seems like a relic of a bygone era. It’s not that Americans aren’t still bargain hunters, of course, but now no one wants to think that they are buying something cheap, and the whole KMart linoleum-tiled experience screamed “cheap.” Now Americans do their bargain-hunting online, and not in the glare of a blue-light special.

The demise of KMart shows, once again, that the American economy is a constantly changing, ever-challenging interaction of consumer preferences, cultural trends, socio-economic movements, fads, and countless other factors all combined into one complex, roiling mass. If you lose the golden thread–as happened with KMart, and with Blockbuster and other forgotten retailers before it–the fall to failure and oblivion can be swift.

End Of The Malls

Columbus’ local ABC affiliate is reporting that the city has filed nuisance abatement actions against the owners of the old Eastland Mall. The article linked above reports that, in the court action, the city has presented photographs that reflect a property in decline, with accumulated trash, broken windows, crumbling canopies, dilapidated walls, and a sinkhole underneath the parking lot. According to the article, Columbus code enforcement also offered photographs showing people living in tents on the mall sidewalks.

The sad tale of the Eastland Mall is another sign of the end of suburban American mall culture. Indoor malls were a phenomenon that swept the country in the ’60s and ’70s, putting many downtown stores out of business and shifting retail activity to the ‘burbs. Featuring “anchor stores,” countless smaller stores, food courts, and acres of parking spaces, indoor malls were generic places where people could shop, retirees could walk to the accompaniment of mall music, and kids who became known as “mall rats” could hang out with their friends.

No one who grew up in the ’60s and ’70s would have dreamed that their clean, antiseptic mall could turn into a crumbling eyesore, but the handwriting has been on the wall for years now. In Columbus, the travails of the downtown Columbus City Center mall was the canary in the coal mine that showed the indoor mall era was ending. City Center opened with great fanfare in 1989, struggled, and closed two decades later; it was then torn down and became the Columbus Commons greenspace and the location for mixed use developments. Other Columbus malls, like the once-thriving Northland Mall, also have been torn down, and the retail trends have shifted to open air shopping venues, like the colossal Easton Town Center development.

The American economy is vibrant, but ever-changing. The rise and fall of the indoor mall culture is a good sign of that reality.

Stimulation Follies

High gas prices these days are a continuing shock to drivers. But what’s even more shocking, in my view, is the fact that some lawmakers propose to deal with the skyrocketing pump prices by sending more “stimulus” checks to residents, who can then use the money to pay for the expensive gas.

In Congress, Democratic lawmakers have proposed a bill that would send as much as $300 per month to families as long as the average price for gas in the country exceeds $4 a gallon. And in California, which has the highest average gas prices in the nation, Governor Gavin Newsom proposes to send $400 in direct payments per vehicle, capped at two vehicles, to all Californians.

We’ve apparently gotten to the point where the reflexive political response to every problem is to send checks to people. You can argue about whether such “stimulus” checks make sense in the face of a recession, or when people lose their jobs due to government-ordered pandemic shutdowns, but does any rational person actually think they are a sensible way of dealing with high gas prices?

Elementary economics teaches that commodity prices respond to the law of supply and demand and are a classic example of Adam Smith’s “invisible hand” that guides the setting of prices. The best way to deal with high gas prices is to increase the supply (something that will necessarily happen, in the absence of restraints on production, as producers seek to cash in on high prices) while letting the high prices have their inevitable dampening effect on demand. Consumers can modify their behavior to minimize their need for gas–by car pooling, by using public transportation, by consolidating their trips to the store, and by cancelling that driving vacation this summer, among others–and if they do so the “demand” side of the equation will fall. With increased supply and reduced demand, the “invisible hand” will move prices lower.

Stimulus checks to deal with high gas prices therefore are a colossally bad idea, because they artificially interfere with the “demand” part of the pricing equation. Consumers who get the checks will be less likely to engage in those possible methods of minimizing their use of gas, demand for gas will remain high as a result, and the demand pressure will help to keep gas prices at an elevated level. Sending stimulus checks as a way of dealing with gas prices is akin to smashing the fingers of the “invisible hand.”

Outside of California, it isn’t clear that the gas price-stimulus check proposal will get much traction; there are signs that Congress may recognize that such spending makes no sense under the circumstances. It remains to be seen whether Governor Newsom can convince the California legislature to adopt his approach–but if he does, Californians can expect to be dealing with high gas prices a lot longer than the rest of us.

Shrinkflation

We’ve all noticed the impact of the current inflation–7.9 percent for the 12-month period ending in February, which is the highest annual rate since January 1982–at the gas pump, at the grocery store, and in countless other elements of our daily lives. In addition, some observant consumers have noticed that inflation is having a less obvious effect on certain products. The effect isn’t as apparent because it isn’t reflected in the listed price for the product, but in the amount of the product that is being supplied.

In short, we’re not only seeing higher prices, but product shrinkage as well. Some have dubbed the phenomenon “shrinkflation”: it occurs when the consumer pays the same amount as before, but gets less. And because most busy consumers don’t carefully read the disclosures on the products they buy, or notice the weight and size of the packaging, the effect of “shrinkflation” may have escaped your attention–which is kind of the goal of the manufacturers that use this tactic. (Of course, this option isn’t available for products that are sold in standard sizes, such as a gallon of gas; imagine the reaction if you went to the pump and saw that the listed price was for a quart of gas, rather than a gallon.)

The article linked in the last paragraph provides examples of shrinkflation that occurred in 2021 in products as diverse as paper towels, toothpaste, and snack chips. A bag of Doritos, for example, went from 9.75 ounces to 9.25 ounces, which amounts to five fewer chips than the price bought before. The article quotes a representative of Frito-Lay, which makes Doritos, as explaining: “Inflation is hitting everyone…we took just a little bit out of the bag so we can give you the same price and you can keep enjoying your chips.”

There’s nothing intrinsically wrong with this practice; companies are entitled to package their products as they see fit. As long as product packaging disclosures are accurate, consumers can figure out that they are getting less than they used to for the same price. But the practice of “shrinkflation” shows that inflation can get you in two ways: you can pay more, or you can get less. It’s also a good reason to pay attention to the packaging of what you buy.

Fighting On The Financial Front

The Russia-Ukraine war may be the most sprawling, multi-front conflict in history. There’s brutal fighting on the ground, of course, and also in social media and in cyberspace. And a another new front has been opened in the financial sector, where an allied group of countries are throwing haymakers at Russia’s economy, with the goal of crippling Russia’s ability to sustain the conflict.

The current set of financial sanctions that have been brought to bear against Russia may be the most sophisticated and extensive in history. A group of countries that include the United States, the European Union, the United Kingdom and Canada have cut off Russian banks from SWIFT, a global financial messaging service. Even the historically ever-neutral Swiss have joined in the sanctions and frozen Russian assets. The U.S. also banned U.S. dollar transactions with the Russian central bank. The overall goal is to prevent the Russian central bank from accessing the reserves Vladimir Putin was expecting it would be able to tap to finance the conflict.

We’ve come to expect economic sanctions to take a while to work, but that hasn’t been the case here. The assembled sanctions caused an immediate drop in the value of the Russian ruble, as shown in the chart above that shows its value against the dollar. You don’t need to be a financial whiz kid to recognize that any data that shows the value of a nation’s currency tumbling off a cliff isn’t good news for that country. A ruble is now worth less than a penny. The sanctions also caused a run on the banks by everyday Russians who are afraid the purchasing power of their savings will vanish as the ruble crashes and inflation takes hold. And the sanctions also caused Russia’s central bank to raise interest rates and halt any trading on the Moscow stock exchange, which also aren’t positive signs for the Russian economy.

Financial sanctions can be effective against some countries, but not so much against others. Countries without advanced economies, or that are willing to become pariah states like North Korea, or that have secret benefactors that might help them skirt sanctions are better equipped to withstand the impact. Russia doesn’t really fit into any of those categories. In fact, the prompt and devastating impact of the sanctions is causing some people to wonder whether they might be too effective, and back Putin into a corner that might cause him to entertain doing the unthinkable and escalating the conflict to a nuclear stage. We’ll have to hope that other, rational forces in Russia prevent that.

Unfortunately, the sanctions will cause the most pain for the ordinary Russians, who had nothing to do with the decision to invade Ukraine–but one of the ultimate political goals in any war is to crush the resolve of the enemy population so it will sue for peace. That’s what the allied fighters on the financial front are hoping to achieve.

Gas Prices

The other day we were out and about, and I noticed we were running low on gas. I stopped at a gas station to fill up and was shocked to see that gas prices were up to $3.39 a gallon. Admittedly, I don’t drive much since my commute became a walk, and it had been a while since I filled the tank. Still, $3.39 seemed like a pretty abrupt upward change in the price for unleaded regular.

Statistics show that there has been a rise in gas prices in Ohio, which have risen again since my visit to the pump last week. You can see charts with records of Ohio gas prices here and here. The data shows a recent surge in prices, with fuel costs up by more than 4 percent week to week and more than 38 percent over the past year–which obviously is not a good trend. At the same time, however, the data shows that the current price for gas is below historic highs, which touched $4.00 a gallon in 2008 and 2011 and came close in 2014. It seems to be human nature to forget the prior high-price periods and fondly remember only the low-price days.

Still, the current trend of price increases is alarming, and the volatile situation caused by Russia’s invasion of the Ukraine isn’t going to help reduce gasoline prices, either. At some point, a continuing spike in prices will cause new sources of gas to come on line–that’s how the law of supply and demand works–and it may prompt the Biden Administration to change policies that many believe have contributed to price increases. Until that happens, though, we’ll have to ride out the surge, and the burden is going to fall primarily on people who have long commutes and have to use their cars a lot.

A sudden jump in gas prices isn’t something that people typically budget for, so it will cause belt-tightening and grousing. And if the Ukraine situation provokes further increases and takes prices to new heights above the $4.00 a gallon level, that might just be something that people actually remember going forward.

Rail Yards And Front Porches

There’s a serious, new crime problem out in Los Angeles: As the Los Angeles Times recently reported, thieves have been breaking into cargo trains in the Los Angeles rail yard, stealing packages being shipped, breaking them open, and running off with the contents–leaving the railyard littered with shredded boxes, wrapping, and other packaging debris. The Times article describes the situation as a “wave of rail car thievery that officials say has been on the rise in recent months.” The Union Pacific railroad is reporting a significant increase in thefts and has brought in drones and additional security and is appealing to local law enforcement for help in policing the rail yards.

You may not have seen the reports on the rail thefts, but you might have unknowingly experienced them if you didn’t get a delivery of a product that you ordered on line. All of those packages that have been taken from rail cars and opened were being shipped to someone, and now they won’t be reaching their intended destination. Many goods being shipped in our internet economy are transported by rail, and if they are intercepted and stolen by thieves they aren’t going to make it to your front porch.

Why are the rail yard thefts spiking? The Times article quotes officials who say that the Los Angeles rail yard is a bottleneck, who note that a large homeless encampment is nearby, and who blame Union Pacific for not employing more security in the area. Others think there are deeper causes. The City Journal, in an article on the rail thefts, contends: “These recent rail thefts are an example of what happens when a progressive prosecutor—in this case Los Angeles County district attorney George Gascón—virtually eliminates nonviolent property crimes from a state’s penal codes by declining to prosecute such cases.” The City Journal article reports that Union Pacific has reached out to DA Gascon to ask him to reconsider his prosecution policies, and Gascon’s office has responded that it is working with law enforcement on the issue and says it has filed charges in some cases while not pursuing others due to lack of evidence.

Some people dismiss property theft crimes as minor and inconsequential and argue that police and prosecutors should focus on violent crimes rather than worrying about stolen and opened delivery packages. But not all of the packages being stolen and opened contain harmless consumer goods; among the items that have been stolen from the cargo trains are shipments of handguns and shotguns. And if criminals conclude that there is no risk in committing crimes, they have every incentive to expand their criminal activity. If a culture of lawlessness develops, it isn’t going to stop at the rail yard fence line.

Equally important, the security of every link in our fragile national supply chain is important: our ever-growing internet economy can’t work if thieves can brazenly steal packages destined for consumers from trains–or trucks, or other delivery methods–without fear of being caught or prosecuted. If Amazon and the countless other internet retailers can’t safely ship packages, the consequences in terms of jobs and economic activity could be immense. And if you are one of the many people who used internet shopping as a lifeline during the shutdown periods in the COVID pandemic, you should be concerned about that lifeline being snipped by unprosecuted crime.

In A State Of Constant Stimulation

As we approach the two-year anniversary of the initial governmental shutdown orders of 2020–and are still dealing with the various variants of COVID-19–some members of Congress are back to considering whether more “stimulus” efforts should be undertaken, and a two-year-old Change.org petition calling on the federal government to send out $2,000 monthly “stimulus” checks to all Americans has passed the 3 million signature mark.

The initiators of the petition contend that, even after two years of various “stimulus” payments, the $2,000 monthly checks are needed because of uncertainty about what could happen if the government orders a new round of closures, if schools require remote learning, or if other disruptive events occur. The article linked above quotes the initiators of the petition as saying that signers are trying to send a message: “‘We just need certainty. We need to have something we can plan on month after month.’”

In short, for some people what began as an effort to help individuals and businesses while the country dealt with the economic shock of the initial, purportedly short-term “flatten the curve” shutdowns, through “stimulus” checks, enhanced unemployment benefits, and readily available business loans, has morphed into a quest for guaranteed, federally funded monthly income that would apparently extend into the indefinite future. When you reach that point, it can’t reasonably be called a “stimulus” payment anymore–unless you accept that our economy now is in need to constant “stimulation,” like a Frankenstein’s monster that is forever being zapped with high-voltage electricity in order to keep going. And such a budget-busting monthly payment obviously would have significant inflationary effects and other long-term consequences for the economy generally and the labor market specifically.

An interesting point is that the primary stated reason for the requested monthly checks is the impact of governmental decisions, like closure orders and requirements for virtual schooling from home, on individuals and families. Perhaps the real lesson from the petition isn’t that some people would like to continue to get governmental checks–that’s really no surprise–it is that governmental entities need to think twice about consequences before issuing new sweeping and disruptive orders after two years of COVID edicts.

Kinks In The Supply Chain

We’ve been reading a lot about supply chain issues. Yesterday I had my first direct experience with the problem when I went to do grocery shopping for my holiday baking–as reflected in the above photo of yellow sprinkles and cream cheese.

Normally, I would buy Philadelphia Cream Cheese for my baking. It’s the brand that we had in the house when I was a kid, and I figure if it was good enough for Mom, it’s good enough for me. But yesterday our grocer had no original Philadelphia Cream Cheese. Instead, in the cream cheese cooler there was a little sign explaining that due to supply issues, they didn’t have some of the offerings you would normally find. There was a Philadelphia brand substitute, that promised one-third of the fat of normal cream cheese, but who wants to try a low-fat alternative in a Christmas cookie recipe? So I bought the Yoder’s cream cheese, which was only standard cream cheese that was available, and I am hoping that it measures up to Philadelphia standards.

The same thing was true in the baking aisle. To my surprise, there were no green and red sprinkles available, which are the sprinkles I typically buy for Christmas baking. The only sprinkles available were these yellow sprinkles, and the shelves for most of the other festive toppings, like chocolate sprinkles or tiny balls, were empty, too. So I opted for the yellow sprinkles, figuring yellow sprinkles are better than none at all.

I had similar experiences elsewhere in the store. It’s not like the shelves were barren; there was lots of stuff for sale. But if you were looking for specific things, like a particular brand of cream cheese, or flour, or sprinkles, you might encounter a void, and an explanatory sign, and have to find a substitute. It’s not what we are used to here in the land of plenty.

Of course, I can make do with yellow sprinkles, and a different brand of cream cheese or flour; Christmas cookies are not a life-or-death thing. But the little signs and the shortages made me wonder what else has been affected by the kinks in the supply chain–like necessary parts, or crucial medicines or ingredients for medicines, or other essential items and materials.

The supply chain problems are concerning. Let’s hope they get this issue figured out, and soon, so that we don’t experience some really significant disruptions.