Shrinkflation Is Not A Joke, It's Inflation

"Remembering" (AI-e collaboration)

If I am a baker and the cost of flour goes up, and the taxes on my bakery building go up, and the wages of my employees go up, it seems apparent that my prices would have to go up. 

If I own a cookie factory, and my taxes go up plus my costs for raw materials, and wages go up to keep my employees, I have very few options in order to break even. Option One: raise my prices. Option Two: reduce the number of cookies in the package, or... Option Three: reduce the size of the cookies in the package. This latter is what the president mockingly calls Shrinkflation.

President Biden seems to get a kick out of deriding businesses that make their products smaller. Does he not understand that it's GOVERNMENT POLICIES that are causing this? A business has to make a profit in order to pay for the cost of doing business. When businesses fail to make money, they eventually go out of business. Why this is not obvious to most people is a mystery to me. 

So the president brags about his policies making life better while things keep getting worse and people living in the trenches, down on the streets, know it. 

President Biden wants to have the FDA punish companies that reduce the number of chips in a bag or the size of cookies in a package. Which means what? The prices for these products will have to go up. 

When I go through the grocery story lines and buy four items for twenty or twenty-five dollars, I see people fork over $200 for a couple bags of groceries. I'm not sure how they can do it. Eventually it will be $200 for one bag of groceries. In short, this is another form of "shrinkflation" in which grocery stories give us fewer goods for the same amount of cash. Should we punish the grocers also?

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Worth Reading (if able): Biden's Partisan State of Disunion

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As Ronald Reagan famously observed, the nine most terrifying words in the English language are, "I'm from the government and I'm here to help." 

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Flashback Friday: A 2009 Conversation with Twin Ports Writer/Editor/Publisher Ron Brochu

This is an interview I posted in 2009. While re-reading it recently it became apparent that the content here remains relevant, especially for the local writing and publishing scene. Ron is one of many local writers/publishers for whom I have high regard.

I'm still not sure how our paths first crossed, but it was our writing vocations for sure. What I do recall is that Ron Brochu was a journalist serious about his craft. Over the years we have met from time to time to compare notes on the writing life.

I'd like to imagine that all writers are like me, they respect anyone who writes and keeps writing even when it all feels so futile at times. Are we filling the world with too many words? Well, there are stories that still need to be told. And many that bear repeating to a new audience.

The original title for this blog entry was going to be "Journalism in the Internet Age and Other Adventures" because Ron has been in a perfect position to see the Internet's raw power as it has run roughshod over the newspaper industry. Take a minute and listen up.

EN: Can you briefly outline your career path as a writer?

Ron Brochu: It began at Denfeld High School and continued at UMD, where I became business manager, then entertainment editor and editor-in-chief at the campus newspaper.

I lived in Minneapolis after graduation, freelancing for the Southside Newspaper, then in 1978 took a trade magazine editing job at the former Harcourt Brace Jovanovich. During that time, I also freelanced for the Milwaukee Sentinel, Hermantown Star and Duluth Budgeteer. Using those bylines, I landed a part time reporting/photography job at the Superior Evening Telegram in 1984, where I eventually covered government and was assistant managing editor. Wayne Nelson recruited me to BusinessNorth in 1995, where I worked as managing editor but also learned pagination, graphics and a host of business software skills. Two years later, I moved to the Budgeteer News, where Murphy McGinnis Media moved us to a twice weekly, with dreams of becoming a daily. It became clear we lacked the resources to make that move, so I joined the competition when the Duluth News Tribune opened a Superior bureau in 1999. Worked there as a business writer for about two years, then moved to Duluth, where I covered education for a year before becoming city editor in charge of business, labor, health and environment reporters.

In 2005, the DNT sent me to the Telegram, which Knight Ridder had purchased two years earlier. My mission was to retrain and coach the newsroom staff until a permanent editor could be hired. I soon became that editor and remained in Superior until July 2008, when I was canned for exercising my right to free speech in a private e-mail to my bosses.

EN: Getting published is not that challenging for any determined writer producing sufficiently professional work. Getting paid for one’s writing seems a little more problematic. Why is this? Is it a supply and demand issue or something else?

RB: I think it’s more of a problem in Duluth than elsewhere. Compensation here is very low, likely because there are too many publications and they’re all strapped for cash.

As an HBJ editor, I was paying $250-$400 for trade magazine feature articles in 1978, and the Milwaukee Sentinel was paying me about $75 for features. At the same time, the Budgeteer was paying me $10 for each city council story. It hasn’t improved much since then. Last year, I was paying Telegram contributors anywhere from nothing to $50 for weekly columns – whatever they’d take. Contributors to the annual marketing supplement were getting up to $100 for feature stories, which still isn’t much.

EN: This (the overall economy) is just a very weak market. How has the publishing scene changed since the advent of the Internet?

RB: Print news publications have lost considerable advertising revenue. They’ve reacted by cutting staff and content, hurting their circulation revenue. Although many have developed a Web presence, few have developed innovative new products that generate sales comparable to advertising revenue. Newcomers have outsmarted print publishers on every front. A few examples include eBay, Craig’s List and Amazon.com. By having customers input orders, these web marketers have drastically reduced the cost of sales. Print publications, particularly newspapers, are strangled by high overhead.

Until they shed expensive labor and equipment costs, print will continue to struggle. The inexpensive Internet model is both a blessing and a curse. Although costs are virtually nonexistent, any idiot can launch a web page and pass off nonsense as truth. It’s extremely difficult to differentiate legitimate Internet journalism from rants and opinion.

EN: Sixties writers like Truman Capote and Tom Wolfe used fictional techniques to write about non-fiction themes. I remember a quote by Wolfe that the novel was dead due to reader interest in “reality” and “news.” He later wrote novels like Bonfire of the Vanities, and today bestseller novels continue to rake in millions. Do you think fiction will ever become obsolete?

RB: No. Even though truth can be stranger than fiction, it doesn’t flow as well. A good writer can always weave bits and pieces of truth into fiction that’s far more interesting. That’s not to say novels won’t go electronic, but they’ll definitely continue to exist.

EN: I spent a half hour trying to hook up my new HDTV box to a television set last night, and failed. Isn’t this move to digital television the craziest thing yet? Anything you’d like to add to what you have already written? What kind of feedback did you get to your story in the Reader.  

RB: For whatever reason, I don’t get much feedback to my Reader stories. The advantages of digital are overblown, in my opinion, at least for audio. I’m not a fan of unintelligible phone conversations, answering machines, MP3 recordings. We’re saving spectrum by cutting quality, then using the excess spectrum to broadcast more dumb sitcoms and even dumber reality shows. To me, the net gain is less than zero.

EN: As a former newspaper editor, what are the most shocking things you have seen that no one is talking about today?

RB: Governmental incompetence and waste top my personal list. Most of today’s reporters simply cover meetings and don’t take risks. For instance, they don’t dig into the early retirement benefit costs for police officers and firefighters. They haven’t revealed that Gary Doty has free lifetime medical benefits, even though they’re aware of it. They don’t write about the source of campaign contributions to Rep. Jim Oberstar or Rep. Dave Obey, and links between contributors and votes. In essence, they’re afraid to tackle beloved people and institutions. They’re as phony and incompetent as those they write about.
 

Mystified by America's Debt Crisis? Here's Why Some People Are More Than A Little Concerned

"Watching and Waiting"

Numbers, when they are large enough, become less real and truly challenging to wrap one's arms around. The larger the number, the more abstract it becomes as a concept. This may be why all these discussions about increasing the national debt fail to alarm so many people. Instead of discussing how much the country owes, politicians try to focus our attention on what we, the public, are going to get.

Look over here (at free college education) and don't look over there (at the price tag you will be saddled with in the long run.) 

If you go online to find out how much debt our country carries, you will find a variety of sites with numbers that don't entirely match. What you'll find, though, is the numbers are very, very large.

I remember when the pundits were in near hysterics when the 1981 proposed budget under Ronald Reagan crossed the one trillion dollar mark. Raising the debt ceiling a 2.5 trillion seemed easy-peasy last week with nary a peep.

Here are some numbers from Truth In Accounting.  

U.S. Published National Debt consists of:

• debt held by the public

• intragovernmental holdings, including debt held by Social Security and Medicare trust funds
  
  

OUR PUBLISHED DEBT IS now over 31 trillion...

but out REAL debt is 140 Trillion.

SINCE OUR GOVERNMENT is us, as in you and me, this debt shakes out to be $936,000 per taxpayer.

When the government states that they want to raise the debt ceiling so they can give us more good things, what they mean is that they want you to OWE MORE, because it is OUR Debt.

The website Trading Economics presents a slightly scarier picture. They not only present the status of government debt, but also private debt. Private debt is the total of all individual and business debt. Going a step further, they calculate the ratio of total indebtedness of both sectors, non-financial corporations and households and non-profit institutions serving households, in relation to GDP.

At this moment in time, according to this site, our cumulative debt is 235% greater than our current GDP.

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Well, to be frank, I don't know how accurate any of this is, and I'm not even sure anyone knows. What I do know is that these are all fairly large numbers. How big is a Trillion? This illustration will bend your mind a little, I believe.

What happens when nations fail to meet their debt obligations? Can they really just default the way individuals do by declaring bankruptcy? 

Thought Food: Ludwig von Mises

"Contemplation" -- ink on paper

According to the Brittanica, Ludwig von Mises (1881-1973) was an Austrian-American libertarian economist known for his contribution to liberalism in economic theory and his belief in the power of the consumer.  (EdNote: Liberalism had a very different meaning 100 years ago than it does today,) 

He is as relevant today as when he penned his ideas 50 to 100 years in the past. 

“He who is unfit to serve his fellow citizens wants to rule them.”
― Ludwig von Mises, Bureaucracy 

“Every socialist is a disguised dictator.”
― Ludwig von Mises

“Socialism is an alternative to capitalism as potassium cyanide is an alternative to water.”
― Ludwig von Mises, Human Action: A Treatise on Economics

“The worship of the state is the worship of force. There is no more dangerous menace to civilization than a government of incompetent, corrupt, or vile men. The worst evils which mankind ever had to endure were inflicted by bad governments. The state can be and has often been in the course of history the main source of mischief and disaster.”
― Ludwig von Mises

“It is vain to fight totalitarianism by adopting totalitarian methods. Freedom can only be won by men unconditionally committed to the principles of freedom. The first requisite for a better social order is the return to unrestricted freedom of thought and speech.”
― Ludwig Von Mises, Omnipotent Government  

“Every step which leads from capitalism toward planning is necessarily a step nearer to absolutism and dictatorship.”
― Ludwig von Mises, Omnipotent Government   

“The market system is the basis of our civilization. Its only alternative is the Führer principle.”
― Ludwig von Mises

“Doctrines which can stand the trial of logic and reason can do without persecuting skeptics.”
― Ludwig von Mises, Omnipotent Government 

“The issue is always the same: the government or the market. There is no third solution.”
― Ludwig von Mises, Planned Chaos  

“If one rejects laissez faire on account of mans fallibility and moral weakness, one must for the same reason also reject every kind of government action.”
― Ludwig von Mises, Planning for Freedom, and Sixteen Other Essays and Addresses

“The state is a human institution, not a superhuman being. He who says “state” means coercion and compulsion. He who says: There should be a law concerning this matter, means: The armed men of the government should force people to do what they do not want to do, or not to do what they like. He who says: This law should be better enforced, means: The police should force people to obey this law. He who says: The state is God, deifies arms and prisons. The worship of the state is the worship of force.”
― Ludwig von Mises, Omnipotent Government 

How Laws Encourage Or Restrict Economic Development

All over the world countries are reforming the ways they do things in order to encourage development. They have no interest in remaining stagnant economically. They have watched the West and seen what progress looks like and how stagnation occurs. A major area of reformation, as it turns out, has to do with government regulations. Do they incentivize growth or strangle it. Does the culture fertilize the spirit of entrepreneurship or kill it with toxic chemicals.

Historian Niall Ferguson discusses this in his book The Great Degeneration: How Institutions Decay and Economies Die.

Ferguson studied the volumes of data gathered by the World Bank to evaluate the nations in Africa that he might identify which countries in Africa ranked highest by the following measures:

1. The Quality of Public Administration
2. The Business Regulatory Environment
3. Property Rights and Rule Based Governments
4. Public Sector Management and Institutions
5. Transparency, Accountability and Corruption in the Public Sector

The top countries that rank highest in four or more of these categories were Burkina Faso, Ghana, Malawi and Rwanda.

According to Ferguson, another way of evaluating is to look at the IFC's "Doing Business" reports since 2006. Which countries have done the best at reducing the number of days it takes to complete the following six procedures:

1. Starting a Business
2. Getting a Construction Permit
3. Registering a Property
4. Paying Taxes
5. Importing Goods
6. Enforcing Contracts

The African winners, in order of achievement, were Nigeria, Gambia, Mauritius, Botswana and Burundi.

Paul Collier, a development economist, outlines several stages to making commerce happen. Foremost is the necessary step of reducing violence. Second, protect property rights. Third, impose institutional checks on government. Fourth, prevent corruption in the public sector.

When I look at this list, my first thought is how cities that don't deal with inner city violence are essentially undercutting their hope for a better economic future. As for property rights, to the degree that cities can utilize easy "eminent domain" to eliminate businesses, to that degree they are sending signals to other businesses to consider a flight to safety.

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There was a time when the United States set the benchmark as regards the Rule of Law. Now, Ferguson states, it's the lawyers who rule. This is not the same thing. It's worth noting that lawyers are over-represented in our U.S. Congress. You might even say we have a nationwide epidemic of lawyers.

Cronyism and corruption are excessive as well. There is so much that is rotten in the legislature and regulatory agencies and the legal system itself, how can they be reformed?

Ferguson's answer to this is that real reform must come from outside the public institutions, from the associations of civil society. In short, from us, the citizens. 

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I remember reading a story years ago about an albacore fish business that was started in Los Angeles (or the vicinity). In order to just get the business off the ground they had to get approvals and paperwork from 49 government entities. Once they had gotten going, yet another agency read about what they were doing and because they did not have this agency's stamp of approval had to pay a $25,000 fine. 

WE GET WHAT WE INCENTIVIZE.
Here in Duluth we have a shortage of affordable housing. One potential fix here might be to do a thorough self-analysis of every facet of local government that has to do with housing. How many rules and regulations are interfering with the ability of the city to provide affordable housing? How necessary are they? Can they all be listed and prioritized?  Who has the authority to address each one (or each of the most restrictive items. 

We always think more money is what we need. What things can be changed without needing money? 

The book has generated a lot of ideas. Rather than blaming or finding fault, we can work together and discover solutions. Let's not give up hope.

By Government Orders. A Poem by Paul McGlynn

Paul McGlynn

The other day a friend of mine shared a poem that his friend Paul McGlynn had written.

"Every day, I read poems by the great poets and the lesser known poets. I believe the world of poetry is my one, if not my only, place where I am halfway at peace and successful at this living thing," McGlynn replied when I asked if I could share his poem here.

I inquired as to whether he was a writer of other kinds of things. He replied that he is chiefly a poet.

"I have written for many years. I write exclusively poetry. I try to write every day and I work hard at the poems I write. Every now and then, I write something more easily and it seems to work. Such is the poem you liked. But that doesn't happen as often as I would want. I believe I write maybe one good poem for every 75 attempted. And that may be too generous."

I suspect that that might be a little too modest.

McGlynn, a career educator, has served as a teacher for 23 years and a director of charter schools for 9 years. Of this experience he stated, "I find education to be a worthy endeavor in life." He is currently Executive Director at Great Oaks Academy in the Twin Cities.


By Government Orders

"Man's Fate" -- Ed Newman

The
Sky will be shut down
Until it is fully secured from falling.

Something terrible is always near
Calling for you to fear it.

We bear the burden
Of trying to save you
From this dangerous world.

Your
Living is the problem.
You should distrust your own breathing.
We understand that
Better than you.

The plan is for us to guide you
So, you may exist
Safely.
You must understand
What we do

Is, of course, for your own good.
You need to be saved from you.
That is what we do.

Always,
The worst is yet to come,
This will always be true.
This is never going to change.

What you cannot see
Intends to hurt us all,
And if that be you,

Well, we can fix that, too.


Related Links
Are Children Today Being Raised "Too Safe To Succeed"?

A Minimum Wage Digression

It’s easy to lie with statistics, and even easier to lie without them. ~ Unknown

A regular feature of our local paper is an Opinion page standard in which an issue has pro and con points of view on a specific issue, whether dredging the bay or changing the drinking age. The segment usually has a grey pro/con moniker drawing attention to whatever debate is currently on the table. This morning the common pro/con badge was replaced by one that said con/con. Today’s topic dealt with the new minimum wage legislation that went into effect July 24, raising the minimum wage from $6.55 to $7.25. Will the minimum-wage increase benefit anyone?

James Sherk, the first columnist, presented the view that the higher wage will be bad for small businesses. Minimum wage means maximum trouble. He took the position that raising the minimum wage will damage the small business’ incentive to hire new employees, and it is the lesser skilled employees who are most vulnerable to layoffs should they be required during tough times.

According to Sherk the current hard times are an especially bad time for this law to kick in. The value of low paying jobs is not the money they provide, but rather the job experience they offer.

The opposing view was actually, as indicated by the caption con/con, an argument in agreement with the first columnist, except from the point of view of the damage it does to workers. Holly Sklar begins with an interesting stat, that minimum-wage workers are making over five thousand dollars less today than in 1968, despite the fact that the minimum wage has risen significantly.

Whereas Sherk argued that a minimum wage increase is a bad thing during hard times (10% unemployment) Ms. Sklar points out that the original legislation was conceived and put into play during even harder times, the 1938 Great Depression, when unemployment sat at twenty percent.

In point of fact, Sklar is not opposed to minimum wage legislation at all, simply this one which she feels is inadequate to the task it aspires to. Her desire, and the aim of her organization Let Justice Roll Living Wage Campaign, is to see a ten dollar an hour minimum wage in place by 2010.

But what’s the reality behind all these various stats and facts? Do higher wages help the poor or do they help the government by giving them more money to tax? Who benefits when higher wages result in a higher cost for goods? It may be simplistic but my guess is that we will only see more shuttered factories because in a global economy we are not going to see the same higher prices on imports from China.

I do not know all the facts on these matters but common sense says to me that if the government wants to control how much money people bring home, one way they can do this is by lowering taxes. Forcing businesses to pay more only makes businesses raise the prices for their goods and services. Common sense says as much. The loser, then, is the consumer who sees a reduction in his or her purchasing power.

In other words, it’s smoke and mirrors. What do you think?

Strange Numbers

In a Buster McNutt article titled Ring-Toning in the Holiday Season, Buster McNutt noted that American spent four billion dollars last year on their cell phone ring tones. Like, whoa! What if we had NOT been in a recession?

A second number immediately came to mind. Yesterday, the news wires were abuzz with the revelation that 73 people at the American Insurance Group (AIG) received bonuses of one million dollars or more. I heard this via a CNN feed, but only caught the headline.

AIG was, of course, the nation's largest insurance company who so desperately needed a bailout from our government in order to survive the housing collapse. And what I have subsequently learned is that the bonus money was actually a "retention bonus" to keep these folks on the payroll through thick and thin. (Nice incentive.) Even so, eleven jumped shipped but pocketed the money. Our tax dollars at work.

Does this make us angry? Or is our government so big and our fat cats so fat that we're numbed by it all.

A third set of numbers that comes to mind... the number of people living in slums worldwide with inadequate food and often unsafe water: one billion. Nearly 200 million in China alone. More than 35 million in Pakistan.

At this point, I don't even know what to say, except... if we could take all those ring tone dollars and send them to the real needy of this world, as opposed to those who feel they absolutely must express themselves with an ultra-personalized ring tone... I dunno. Or is that like telling your child to finish his plate because there are children starving in India?

As for those fat cats living the high life off government largess, our tax dollars at work, my prescription for you today is an 89 cent packet of Tums, and a two day break from reading the news. Take a deep breath, count to ten, and listen to some music.