Now that we've had the weekend to contemplate "soda jerk" Mayor Michael Bloomberg's decree that 16 ounce soft drinks are illegal in the City of New York, let's consider how government intervention in food production and prices has done more than the Big Gulp to drive Americans' widening waistlines.
We'll begin with the prime culprit: corn subsidies.
Since 1994, the federal government has supported corn producers to the tune of $6 billion per year. Although federal agricultural subsidies began as temporary programs administered by the states during famine or war-time, corn growers became so accustomed to them they eventually became a mainstay.
Over the years, much of the subsidized corn ended up corroding our gas tanks as ethanol, but a lot more found its way into our stomachs as high fructose corn syrup (HFCS). At its peak in 1999, Americans consumed around 45 lbs. of HFCS yearly in everything from Coca-Cola to cereal.
By subsidizing corn production, government makes it less expensive than its alternatives. Subsidies not only distort the choices consumers make, but also distort the choices food manufacturers make when formulating processed food products.
We're not just talking corn chips. When it comes to sweeteners, the combination of cheap corn with highly-priced American cane sugar (also supported by taxpayer money) makes it easier for food companies to sweeten their products with HFCS instead of real sugar. Recent science suggests although HFCS is similar chemically to cane sugar, the fact that it is so processed means it is easier to digest, and therefore more fattening.
Although subsidies for corn ethanol production expired at the end of last year, the federal government still makes direct payments to farmers to produce the edible variety of corn. Recipients of this free money haven't just been mom and pop farms in Nebraska, but big multinational farming corporations such as Cargill, Monsanto, Archer Daniels Midland.
As the U.S. Senate begins work this week on a bill that would end direct subsidies to farmers, expect those companies to be on the front lines with cries that ending their gravy train will threaten "food security" and otherwise herald the end of the American farmer.
These cries won't be anything new. The Corn Refiners Association has sensed threats to its members' government checks for a few years. Not only did the lobbying group air widely-mocked commercials that challenged HFCS's souring reputation, but also, just last week, they failed to convince the FDA to allow them to market HFCS by a new name: "corn sugar."
But the FDA's decision could have gone as easily the other way. As government's role in food production and prices has expanded, special agricultural interest groups such as the Corn Refiners Association have captured the regulatory process. If you pay taxes, you've already paid partially for any product that includes corn, dairy, soy, and sugar. And as much as politicians toe the anti-smoking line, they continue to send our money to tobacco farmers every year, whether you smoke or not.
It's easy to see how this has happened. The more a government intervenes in anything, the more opportunities there emerge for special interests to benefit at public expense. $6 billion to corn producers isn't an outrageous sum of money in an era where the federal government is running trillion dollar deficits, so it's easy for lobbyists to nudge it into appropriations bills with barely a peep. The amount of energy special interest groups spend on keeping their benefits is gigantic compared to the few phone calls congressional offices get demanding an end to agricultural subsidies.
As if paying for the privilege of eating unhealthy foods weren't bad enough, there are other ways government intervention in food influences what we eat. Remember the food pyramid? It was recently replaced, but it used to recommend a grain-based, low-fat diet with lots of dairy, some meat, and a few fruits and vegetables for good measure. Today, however, food science shows low-fat isn't always the right way to go, and too many grains – such as corn – really pack on the pounds.
Government misleads eaters in other ways. Besides soft drinks, Mayor Bloomberg's other culinary mission has been to reduce his citizens' salt consumption. But new research suggests salt may not be the villain it appears. A column in Sunday's New York Times entitled 'Salt, We Misjudged You' raises questions about the common assumption that Americans consume too much of the stuff.
Confusing common wisdom even more, another recent piece in the New York Times suggests exercise may not be healthy for everyone, and may actually impact some people's health negatively.
Will there soon be a government program advocating that Americans should exercise only sparingly?
Probably not, but the point is government tends to respond well to special interest lobbying that cites favorable science as the justification for free money. That science may shift 180 degrees tomorrow, but, once implemented, government transfer programs are difficult to dismantle because they give relatively large sums of money to some by taking teeny-tiny amounts from everyone.
AMC Theaters and 7-11s don't stand to lose anything from Mayor Bloomberg's most recent quest against giant-sized soft drinks. In fact, because thirsty consumers now must buy two large drinks to fulfill their taste for 16 ounces of soda, resellers are poised to make even more money on a product that already has super-high profit margins.
Mayor Bloomberg's arbitrary decision to ban large soft drinks is yet another in a long string of government moves that mean well but create a cascade of unintended consequences. Rather than placing more limits on the food choices people can make, reformers should examine how public policies have helped to lead us into major problems such as obesity. Perhaps not every problem is a market failure, but may sometimes be a government failure that has incentivized bad behavior for everyone through the force of law.