Saturday, November 03, 2007

Subsidizing Calories

Rob Hotakainen reports for McClatchy Newspapers that most of the money that goes towards farm subsidies goes for the foods that are not good for us.

What perplexes my logic is trying to figure out why on earth we would subsidize a product, or commodity, that we purchase the most of. You want to complain about subsidizing, or giving tax breaks to oil companies, then what about subsidizing our calorie consumption?

One of the possibilities that come to mind of why we would subsidize something that so many people purchase is for the need to smooth out price shocks that may come within the industry. The only real problem with that is when the industry that is being subsidized makes continuous profits.

Republican Senator Pat Roberts is right though – I never thought I would say that – the real fault of obesity lies within the person making the choice. To argue about farm subsidies in terms of how it could make people obese is really sort of a stretch. Especially when there are much better arguments for reducing or eliminating subsidies.

Tim Harford mentioned something just last week regarding our choices and how the government or firms intervene in our lives.

For example, in many places of work, you have to opt out of the 401k savings plan. That is to say, you are automatically enrolled. What have we seen since? People like it. They are doing something good for themselves – saving money for future retirement - that would otherwise not have been done because the choice was pre-made for them.

Harford used other examples, including smoking in England, and the possibilities of the English government providing more incentives for people to quit. Of course, couldn’t we think about that similarly in the US with what we eat?

I guess the argument could go both ways. Maybe we could subsidize more nutritional foods, and then have people pay higher (less subsidized) prices for other fatty foods. I believe Tim Harford called this paternal libertarianism – he was not advocating it, but simply educating his readers on the term for what we are seeing. Essentially, there is still a strong prevalence for choice, but just that the choice is priced for the ideal of common good.

In the end though, I still have to ask why we subsidize all those foods? Where is the evidence of price shocks? Oh well, why buy the cow when the milk is subsidized?
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