The Corporation and the Value of Nothing

by Kakofonous

Both The Corporation, a 2003 film, and The Value of Nothing, a 2009 book which deals with many of the same issues as the film, talk a lot about externalities. Essentially, an externality is a result of economic activity that has non-economic consequences. More simply, to paraphrase one of the film's contributors, externalities are what businesses don't want to deal with. The Value of Nothing provides a statistic (that author Raj Patel reiterated on The Colbert Report in January) that captures the general idea of externalities in modern life: if the average hamburger took into account the effects it has on our health and the environment, it would cost around $200, instead of a few bucks. However, corporations like McDonald's and Burger King can conveniently (for them) ignore those costs and give us cheap, terrible food priced a few orders of magnitude less than the price Patel says could cover those externalities.

I thought bringing this up would be appropriate, considering Eyck's recent posts about the relationship between federal subsidies and the obesity epidemic. Since the corn subsidized by the Farm Bill is poured into sodas and feedlot operations, creating empty calories and a host of environmental issues, it doesn't make a whole lot of sense to do health care reform without also confronting the US government's complicity in the crisis at its base: what we put into our bodies. It is a travesty that taxpayer dollars are directed to produce corn, most of which is not edible by humans without first being processed into high fructose corn syrup or fed to cattle and other livestock, rather than into urban farms or other local solutions that can make the best food cheap and widely available. In a nutshell: federal food policy makes McDonald's, not farmers' markets, a dominant source of food. This hurts local economies, the nation's health, and the environment.

Thus, it seems to me that Fareed Zakaria (in the article that Eyck cited recently) may be missing something big in his cursory discussion of government subsidies. I agree with him that US agricultural subsidies are "so egregious and market-distorting [that] one doesn't really know where to begin," but in more ways than he realizes, or at least mentions in the piece. It's not only that the government loses money by providing massive subsidies to agriculture that could be directed elsewhere (education? research funding? infrastructure development?); it's increasing health care spending as well, by failing to see the link between the insane amounts of sugar and fat we put in our bodies (thanks to corn subsidies) and an obesity crisis.

Of course, we can continue to ignore the root problem by introducing measures like the "sin taxes", which would increase the price of sodas and candy, major repositories of the gigantic corn surpluses we rack up year after year, until it becomes impossible to purchase such items. However, we will be doing ourselves a disservice to continue such policies in the long term. Until we convert the vast swathes of land currently devoted to overproduction of corn and meat into human-friendly, "real food" operations, public health policy will be crippled.