Who Gets a Piece of the Pie?

It seems that all we hear about is the stimulus money. Where is it going? Who is benefiting from it (since it’s clearly not taxpayers)? And when will this stimulus start to stimulate the economy? Bill Bonner explores in the DR’s Highlight of the Week, below…

An article in [Wednesday’s] International Herald Tribune tells the story of one area in Tennessee that has gotten stimulus money.

“The cash that salvaged a county,” says the headline. Perry County, southwest of Nashville, must be one of those places you don’t want to stop when you’re driving across the country. With 25% unemployment and no significant industry, it sounds dreadful – at least from an economic point of view. It might be a nice place to live – if you don’t have to work for a living.

So the county honchos figured the county needed a little stimulus. They managed to lay their hands on cash being passed out by the feds. It doesn’t seem to bother anyone that the money belongs to someone else. Nor does the fact that it is now being frittered away in a bunch of make-work projects that nobody wanted to pay for even when they had some money. Nor that the stimulus-assisted businesses of Perry County now have an unfair advantage over their honest competitors in other parts of the state.

The Armstrong Pie Company, for example, used taxpayers’ money to expand: “New workers [hired with stimulus money] have helped the company triple its pie production and expand its reach through central Tennessee.”

A quick question: what happened to the pie companies that lost market share to Armstrong? And another: how is the economy any better off by stimulating one pie company to make more pies at the expense of other pie companies? And a final one: even if total pie consumption goes up – a larger pie! – where’s the benefit?

The whole thing is a scam!

The above is just an excerpt from Bill’s standout essay from this week. You can read it in its entirety here.

We are going to be briefer than usual this week because we are still playing catch-up after last week’s AF Investment Symposium. It was so nice to get to meet and talk to so many of our dear readers – thanks to all who stopped by our writing area to say hello!

The Daily Reckoning