Tuesday, March 9, 2010

How Dumb is Our Food Policy?

An editorial in the NY Times today endorses the proposal in Albany of a tax of 1 cent per oz on sugary sodas. A similar tax idea was dropped recently in Colorado. Clearly, something this sensible can never be passed in a nation racing to stupidity as fast as ours.

One of the things all economists know is that if you want less of something, tax the hell out of it. In a nation with an obesity problem and health care costs out of control, it not only makes sense to tax sodas as we do cigarettes, but to add a lot of other foods to that tax list as well. If I were dictator, we would be paying for our health care system by taxing foods based on how bad they are for you. We already tax alcohol and cigarettes because they are bad for us, so what is the big deal with taxing soda? That would result in less usage of sugary soda, which could reduce obesity and diabetes. The only problem with the New York proposal is that the tax is probably not big enough to substantially reduce soda sales.

I am not a nutritionist, but I am guessing that two sodas a day are probably worse for you than 2 glasses of wine. (Anyone know the answer to that?).

Another thing economists know is that if you want more of something, subsidize it. So, it makes sense for the government to subsidize things that are good for us like renewable energy and education. What doesn't make sense is to subsidize, instead of tax, things that are bad for us. So we can only be described as complete morons for tolerating the subsidies shown in the chart above, which came from THIS story in the NY Times Economix blog. That's right, the food people say we should eat lots of fresh fruit and veggies, but we instead subsidize meat and cheese. As a result, you can see the comparative costs of healthy foods versus unhealthy have moved in the wrong direction.

And if you're not convinced yet that we are a nation of morons, then listen to the interview on Fresh Air from NPR with David Walker, who had been warning us, to no avail, of impending national financial doom. He makes great sense.....which explains why no one in Washington is listening.

Hey, I'm an Economics teacher. It's my job to bum you out!

No comments: