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Put aside the externalities. The weight gain and the chronic diseases and the carbon pumped into the atmosphere. Bracket it, as my college political science professors used to say. There's a tendency to believe bad food is simply cheap. We make it like that because it saves us money. Sometimes, that's true. More often, it's not. Bad food is subsidized. Take high-fructose corn syrup. These days, the average American consumes almost 60 pounds of the stuff each year. Forty years ago, they consumed a pound or two of corn-based sweeteners. What happened? Well, high fructose corn syrup was invented. But that wasn't enough. It's not -- or at least, was not -- naturally cheaper than sugar. It's subsidized:
ADM began in the late 1970s to finance a lobbying effort to strictly limit the amount of foreign sugar that could be imported into the United States. In 1982, another Andreas friend, President Ronald Reagan, signed into law draconian sugar quotas that remain in effect to this day. (The free-market champion must have felt sheepish signing this blatantly interventionist act.) The domestic price of sugar immediately spiked, and food manufacturers -- including, crucially, soft-drink bottlers -- quickly began substituting HFCS for sugar.This of course, channeled more money to the corn industry, which sunk some of that cash into lobbying, and the result is the massive system of corn subsidies we now have, which make high fructose corn syrup even cheaper. Over the past 10 years, those subsidies have totaled $50 billion. Sugar is pricey because the government, on the one hand, pays corn producers to sell high fructose corn syrup for below market cost, and because it won't allow the importation of cheap sugar from other countries. In a freer market, it's possible that high fructose corn syrup would remain competitive, but it's advantage would not be decisive. Or take livestock production. Industrial livestock production (also known as Confined Animal Feeding Operations, or CAFOs) may be unimaginably cruel and inconceivably inhumane, but at least its cheap, right? Well, no:
The existence of cheap meat produced on vast, inhuman, toxic cities of cattle, poultry and pigs was not the result of some unfortunate but "innocent" market efficiency. This was not the Invisible Hand revealing the inevitable efficiency of this particular style of raising livestock. CAFOs exist because of massive taxpayer subsidies and wholesale regulatory negligence. Meat is cheap by historical standards only if you limit your gaze to the price on the supermarket label.The Union of Concerned Scientists tried to put a price tag on CAFOs in a study released in April. The figures are eye-popping. The study "found that from 1997 to 2005 taxpayer-subsidized grain prices saved CAFOs nearly $35 billion in animal feed" while since 2002 "CAFOs have received $100 million in annual pollution prevention payments." Wow. The study concludes that CAFOs would not be competitive without these props.Again, taxpayers are handing billions over to the meat and grain industries in order to convince livestock producers to sell their product at below market rates. We are funding this system. The system is not necessarily economically competitive on its lonesome. Then add the externalities back into the equation. The environmental damage. The carbon emitted into the atmosphere. The soil erosion, groundwater pollution, and public health costs. The land use. The sunken property values. This is an economy that exists atop government largess and the oversights of the market. It's possible, of course, that if you removed those enabling factors, the resulting equilibrium would be far from a utopia. But at least it would be honest, and we could see the economics of the situation for what they really are, and decide how to proceed on that basis. As it is, reformers must fight against not only the actual efficiencies of the system, but the perceived low cost of the product, which is really a product of government policy.
