Skip to comments.Did Congress kill the Twinkie? The tariff tale behind the Hostess demise.(+video)
Posted on 11/19/2012 8:12:59 PM PST by grundleEdited on 11/19/2012 8:17:46 PM PST by Admin Moderator. [history]
Since 1934, Congress has supported sugar trade tariffs. In a sign of the power of the sugar lobby, Hostess picked unions, not the lobby, to fight when it had to cut costs to stay in business.
Its the end of a lunchbox era as baked icons such as Twinkies, Hostess CupCakes, and Wonder bread face extinction amid a contentious labor dispute, which ended Friday in the declared liquidation of Hostess Brands Inc., the Texas-based confectioner.
So far, Big Labor has gotten the brunt of criticism for the demise of Hostess, since the Bakery, Confectionery, Tobacco Workers ,and Grain Millers union refused, despite warnings from fellow union heads, to return from strike at some 20 facilities nationwide. That forced CEO Gregory Rayburn to declare, after two rounds of bankruptcy proceedings, that its over.
Yet as the political recriminations echo amid news of 18,500 lost jobs in an already sluggish economy, some economists suggest that Americans shift their blame from Big Labor to the role Congress might have played in writing the Twinkies obituary.
And that, economists say, may come down to one sweet little word: sugar. Since 1934, Congress has supported tariffs that benefit primarily a few handful of powerful Florida families while forcing US confectioners to pay nearly twice the global market price for sugar. One telling event: When Hostess had to cut costs to stay in business, it picked unions, not the sugar lobby, to fight.
These large sugar growers ... are a notoriously powerful lobbying interest in Washington, writes Chris Edwards of the Cato Institute in a 2007 report. Federal supply restrictions have given them monopoly power, and they protect that power by becoming important supporters of presidents, governors, and many members of Congress.
Such power has been good for business in the important swing state of Florida, but it has punished manufacturers who rely on sugar in other parts of the United States, the Commerce Department said in a 2006 report on the impact of sugar prices.
Nope. It was still the unions. next question?
IMHO Unions should be considered a business and as such must abide by all laws and regulations including the anti- monopoly laws.
Why Unions are not considered just another employment agency puzzles me.
“Did Congress Kill the Twinkie?
Nope. It was still the unions. next question? “
Right, but The Congress “helped.” They always make a bad thing worse! The breadth and depth of governmental corruption is just stunning!
Congress merely hamstrung the Twinkie. The Union killed it.
Prescott Bush’s fault.
Well, there’s a Ding Dong in charge of the Senate, a Twinkie in charge of the House, and a Ho Ho as House minority leader.
I agree that regardless of the price of sugar, the unions unwillingness to compromise was, in the end, responsible for Hostess’ decision to shut it down. OTOH, there were other cost increases that also contributed to the demise of Hostess, some of which could probably have been prevented or at least decreased.
IMO, it’s way past time for Congress to take a look at how much the regulations they pass and tariffs drive up the cost of a product and then determine who their proposed plan of action will really benefit. Of course, this is expecting them to approach their task from a business perspective so I’m not holding out much hope for any of this happening.
Don’t forget the unintended effects of all those corn subsidies too....
The fact remains that a tariff is a tax and that means money flowing into the federal coffers where politicians get to dole it out. It is this doling out money process (power) that corrupts Congress. The best thing this country could do is throw out the Tax Code and replace it with a flat tax. (Note I did not say Fair Tax.) Friedman suggested 17% on personal income would put us at the inflection point of the Laffer Curve...good enough for me. Now everybody has something in the game and your tax bill is known. No diverting of resources for political gain.
Uh, Little Debbie and Tastykake don’t use sugar?
Never underestimate Congress’ ability to make a bad situaton worse.
Sugar? Hostess is out of business because of the price of sugar? That is a stupid statement.
Nope. They both did.
Creating artificially high prices with the absolute power of government, for a primary ingredient in a product, is a tough hurdle to overcome and remain competitive.
Manufacturer says high cost of sugar in U.S. prompted exit.
Several hundred workers at the Lifesavers candy plant in Holland, Michigan are losing their jobs, as the company moves production to Canada.
But they do consider it from the business perspective, theirs and not ours.
It could have survived as a smaller business by keeping costs low, but the unions preferred 0% employment...
Look for the union label, and that’s why Twinkies aren’t on the table.
Who are these a few, powerful Florida families? Can someone name them?
Sprague, Oxnard, Fanjul
Sugar Families Plan Merger Of Flo-Sun and Savannah - New York Times - July 16, 1997
See too, The Sugar Barons: Family, Corruption, Empire, and War in the West Indies, a book that chronicles the "sugar revolution" that began in the mid 1600's. And see Controversial Florida sugar family contributed to Scott Brown and Democrats alike, which focuses on the Fanjul brothers.
“The unions delivered the final coup de grace, but hostess was on the way down...”
As I understand it, the company had been in bankrupsy twice before this. The union finished off the wounded company.
It’s getting out: