The Economic Ignorance Of Fox's Business BlockAugust 17, 2013 2:03 PM EDT ››› SIMON MALOY
You probably don't spend your Saturday mornings watching Fox News, but if you do, you know that they have a two-hour block of business programming called, amusingly, "The Cost Of Freedom." It features primarily C-list Fox Hosts and D-list pundits extolling the virtues of an unfettered free market and sneeringly contemptuously at every non-military government program. The one prerequisite for appearing on Fox's business block is that you have no real understanding of how the economy works. This morning's edition of Cashin' In and its discussion of poverty and government safety net programs demonstrated quite ably that Fox's business pundits have really no idea what they're talking about.
It kicked off with panelist Jonathan Hoenig, a hedge fund manager who voices contempt for the non-wealthy, offering the starkly objectivist opinion that the government safety net is "destructive," and creates two classes of people: "victims," defined as "taxpayers" and "productive people;" and "parasites," defined as "recipients of the welfare."
That's obviously a very silly thing to say; people who receive government benefits also pay taxes and a great many of them are, in fact, "productive people" who often work more than one job. As for the notion that the safety net is "destructive," we'll get to that in a moment. First let's get to Hoenig's co-panelist, conservative columnist Star Parker, who argues that the reason poverty numbers started going up in 2008 was the minimum wage increase passed in 2007:
Let's see... what else could have happened on the economic front sometime around 2008 that might have pushed droves of Americans below the poverty level? Ah, right, the large-scale collapse of the economy. Between February and August 2008, the economy shed over 1.2 million jobs -- and that was before Lehman Brothers went bankrupt and the worldwide economy imploded. It's safe to say that had a bigger impact on poverty nationwide than a modest increase in the minimum wage.
But let's get back to the idea that the safety net, per Hoenig, is "destructive" as it pertains to poverty. As the economy was imploding in 2008, poverty rates did indeed start going up for most age groups... except seniors. The Washington Post, citing Census data, noted that "the poverty rate for seniors is at a record low: in 2009, it was at 8.9 percent, and it's remained essentially flat since then. Why? It seems that Social Security has provided a safety net that's weathered the recession: without this income, the poverty rate for Americans over 65 would have risen by 13.8 million."
For other age groups, the picture was not pretty, but it could have been far, far uglier: "Without unemployment insurance benefits, the poverty rate for other adults would have risen by 2.3 million and children by 900,000."
That's a real, tangible benefit of the safety net. It helped a lot of desperate families avoid falling poverty during the worst economic crash in almost a century. That is precisely the opposite of "destructive."