Girl Scout cookies and monetary policy

Boxes of thin mints and Samoas conjure up warm memories for most New Mexicans, in addition to tasting great. The educational opportunity afforded to young girls, parents and we cookie purchasers, cannot be lost.

Girl Scout cookie sales began in 1917. The Federal Reserve had been founded Dec. 23, 1913. Originally, Girl Scouts purchased their own ingredients, made the cookies themselves and marketed them directly for 25 to 35 cents per dozen.  Those were the days, when our children were directly involved in the process.  Think about it. There was no overhead, no hierarchy of administration to maintain. The profit from cookie sale production and labor was directly realized by the young girls doing the work. Today, cookie sales are a major operation, with royalties going to Girl Scouts of the USA from two large baking contracts, and fees to cover administrative costs of state and local council governance involving massive cookie shipments with ordering quotas and delivery rules. Obviously, local troops end up with some funds – 10 percent to 15 percent – from this endeavor, but we must look further inside the box.

Tom Mullins

When troop members take preorders of cookies, they take on the responsibility of acquiring cookie inventory without prepayment. What if they cannot deliver the cookies? What if customers change their minds or, heaven forbid, forget to pay? Will they be stuck with the excess inventory? No business today can operate profitably on this model.

With the price of a gallon of gasoline nearly equal to the price of a box of cookies, the fuel costs of transporting and distributing cookies becomes a consideration, not only for troop leaders, but for parents as well. New safety guidelines request that an adult be present when taking orders and delivering cookies. In fact, to participate in supervising a cookie sale booth, volunteers now have to pay a fee and pass a background check. So it is not just your child’s time, it is yours as well.  How many cookies are in a box? It varies, of course. The number of cookies per box has continually declined over the past 20 years. In fact, the size of each cookie has been reduced, but that information is difficult to confirm. Like the hidden inflation tax on all grocery items, the cost per cookie or cost per ounce of an item is skyrocketing. Just take a stroll down the meat department aisle at the grocery if you don’t believe me. Inflation is the tax our leaders don’t want you to think about. It is where you pay more and receive less. Have another thin mint, while we discuss one more economic driver of inflation. If your daughter, not counting yourself of course, were paid minimum wage for her time, would cookie sales be an economic proposition? The president has proposed an increase in the national minimum wage from $ 7.25 an hour to $ 9 an hour. Wouldn’t simple economics tell us that currently each Girl Scout would need to sell 19 boxes – at $ 3.75/box – of cookies per hour just to cover her time? Even under the president’s proposal, Girl Scouts would have to become more efficient to stay in the cookie business. With every new rule, regulation or requirement, the cost of doing business goes up. A minimum wage increase will drive up the price we ultimately pay for cookies.

I understand the criticism that Girl Scout cookie sales are not supposed to be about economics. But in reality, shouldn’t they be? We do an injustice to our children and neighbors by not discussing the economic realities we face as a nation or the economic realities faced by small businesses. Unlimited money printing by the Federal Reserve is a fragile activity. Fragility means that in attempting to rescue or stimulate our nation’s industry and promote jobs, well-intentioned leaders have actually made us more susceptible to hyperinflation of the dollar. Like the ever growing bureaucratic involvement in cookie sales, Federal Reserve actions will negatively affect the value of our currency. Not only do young girls learn arithmetic skills and life skills through selling cookies, but parents and cookie lovers can learn valuable economic lessons about our precious paper currency. Ponder these hidden economic messages while you savor another bite.

 

Tom Mullins is a Farmington resident, Professional Petroleum Engineer, Board Member of the Rio Grande Foundation and former candidate for New Mexico’s 3rd Congressional District.  tom.mullins@synergyoperating.com