Friday, July 01, 2011

EDITORIAL >> Politicizing ice cream

We won’t have Yarnell’s Premium Ice Cream to savor any more because the venerable Searcy creamery announced Thursday that it was closing immediately. Far too few people will mourn the loss of Yarnell’s deluxe ice cream, which is the big reason the company closed, but you would never guess by the lamentations from politicians and parties.

Yarnell’s closing came right on the heels of big layoffs at two other old Arkansas industries, which seems to have triggered the idea that there was political advantage to be had from the loss of so many jobs at old Arkansas plants.

Yarnell’s closing threw 200 people out of work. Rheem Corp., the old air-conditioning manufacturer at Fort Smith, said it was laying off 250 workers and moving the jobs to a Rheem plant in Mexico, which has a minimum wage only about 11 percent of the U.S. minimum wage. Simmons Foods, the poultry processor, laid off 223 workers at Springdale. Their work will be done at a plant at nearby Decatur at lower cost and greater profitability. Poultry executives said the high price of corn and chicken feed forced the economies. If prices go down sharply, they may hire the Springdale workers back and resume production, but probably not.

Within 24 hours of Yarnell’s announcement, the Republican Party of Arkansas and several of its state and federal lawmakers blamed it all on the Democrats, or on government, which happens at the moment to be under the control of Democrats in both Little Rock and Washington. If they were not, Democrats most probably would be the accusers.

U.S. Rep. Tim Griffin said the government should be creating a climate for job growth in the private sector. Let us guess how he would have it do that. Cut corporate income taxes and taxes on capital gains and investment profits. That is the Republican solution to everything. But what about the free market? Could it do anything? Business taxes and taxes on high incomes are near their lowest in 80 years, but those reductions seemed to depress the private economy, not stimulate it. Taxes as a share of the total economy are lower in the United States than in all but two developed nations. State Rep. David Sanders, the new Republican lawmaker from Little Rock’s southwest, denounced state and local governments for letting the industries go under.

But none of the businesses themselves blamed either the state or national governments.

Let’s consider Yarnell’s, whose demise caused the political breast-beating. Government had, indeed, come to the aid of the company back in the Mike Huckabee years. The company went under owing the state government some $3.5 million for loans advanced directly or indirectly by the state Economic Development Commission and the Arkansas Development Finance Authority during the 1990s or early in the past decade when a governor friendly to Republican-leaning businesses was in power. That is the kind of government meddling in the free market that many, though not all, Republicans like.

The company’s announcement said the national consumption of ice cream had been plummeting for a decade and its profits were squeezed by the rising cost of ingredients and fuel. Who knows why the country’s appetite for ice cream has atrophied—dietary concerns, the flattened disposable income of the middle class, which has seen increasing national wealth go entirely to owners, executives and investors, or something else?—but government was not to blame. Yarnell’s, of course, did not mention an even bigger factor: a resourceful competitor. Since Texas-based Blue Bell moved into North Little Rock 15 years ago with a superior marketing strategy, it has usurped much of the local-brand loyalty of Yarnell’s and much of its market share. Blue Bell is doing very well, thank you, despite the diminishing demand for frozen dairy products.

Yarnell’s tried to find buyers or new lenders. A number of investors looked seriously but concluded that they could not turn the creamery around.

We loved Yarnell’s and bought it out of a sense of loyalty even if in shrinking quantities owing to a growing concern for the waistline, but we will get along somehow with Blue Bell and feel only a slightly diminished sense of loyalty. Blue Bell ice cream is churned only a few miles south of us near the end of Highway 161, the old Jacksonville road.

But it is harder to be philosophical about the loss of 700 jobs in one week in three communities, none of which is apt to offer opportunities for many of them anytime soon. Seven hundred more families in severe distress, with all that this entails. Many of them will sooner or later join the legions who are dependent on government in some measure, for nutrition, medical care or extended-unemployment assistance.

So government is already doing something, although of a defensive nature, to prevent distress from becoming tragedy. But Griffin and his allies have a point, even if they are the wrong ones to make it. Should government have a role in creating opportunities for the 700 and all the rest who have been unemployed or underemployed for so long? Republicans always maintain, until times like this, that the market, not government, should create jobs and needs only to be left alone to do it.

Implicit in the partisan speeches is that the market is not able to do it. U.S. corporations generally are flourishing and are sitting on $2 trillion in cash that could be used to expand and hire. But they don’t because there is no demand. Efforts by the national government to prompt that demand, through traditional stimulus measures or new ones like renewable energy and green technology, were squelched by the same Republicans, often with significant help from Democrats, like Arkansas’ own.

We have no suggestions and we wait for ideas from the government critics about what our democratic institutions might do to help the dispossessed, including these 700, recapture their lives besides again reducing taxes upon the rich and those profitable corporations that still pay taxes. Alas, we expect to wait in vain.