Monday 25 October 2010

Subsidies Don’t Help, They Hinder…

Sadhbh Walshe (film-maker) tackles the thorny issue of the diet of the US welfare recipients:
New York Mayor Michael Bloomberg is in the spotlight again for his efforts to reduce the city's soda consumption by banning food stamp recipients from using their benefits to purchase sugary drinks.
I’ve no real desire, despite my loathing for the food fascists, to quibble with this. If other people are paying for your food, then they get to tell you what to eat.

Don’t like it? Get a job and earn your own money, then eat what you like.
But while the plan might help trim a few waistlines, as a means of addressing the considerable nutritional challenges facing this group, it's more than a little deficient.
The answer, it seems, is that healthy food is too expensive in comparison:
…I can afford a healthier option. The problem is that many people not only cannot afford to choose what is better for them, but that quite often, the choice is not even available.
This is often advanced as a problem in the UK, that ‘healthy food’ is too expensive, and it’s disproved time and time again.

But it seems that this really is a problem in the States, where subsidies distort the food markets.
This should not be all that surprising. If you stroll through any well-to-do neighbourhood in the city, chances are you'll pass a horde of organic food stores overflowing with nutritious (and very expensive) delights. By contrast, in a poor neighbourhood, you'll most likely encounter fast food outlets and, if there is a food store, it will sell a lot of processed crap. Such is the nutrition gap that exists between the haves and the have-nots in the city, and it will take more than a few gallons of soda to bridge it.
Unusually, their costs seem very, very high for fruit and vegetables:
On a recent shopping expedition (in my local C-town not some fancy organic joint), I paid $7 for a bag of apples, $5 for four oranges and $2 for one red pepper. Just those few items would eat up almost half one person's weekly food stamp allotment.
And the reason? Government, of course!
The really frustrating part is that the reason that junk food and soda are so inexpensive (and therefore widely consumed) is that these products are subsidised by the federal government. All these foods contain high-fructose corn syrup, made from corn, which is a subsidised crop.
So government interference in the market distorts pricing and has an effect on food choices of the poor.

What, I wonder, would fix this?
How much more sense would it make to subsidise the production of fruit and vegetables in low-income neighbourhoods, instead of Big Macs and 20-ounce Cokes and the like?

Somehow, I didn’t expect the answer to be ‘another subsidy’. I should have known better, shouldn’t I?
That way, instead of imposing virtue on the poor, we could offer them a choice – and then try to move past the assumption that they might make a bad one.
But what if they continue to make that bad choice?

Will the progressives shrug and say ‘Oh, well, we tried, that’s free will..’?

Because I don’t think so, somehow…


Anonymous said...

It is amazing how those people, even if they can see the distortion brought by subsidies, or any other governement interference for that matter, cannot see past it and will always want more of the same regardless.

Its the old joke: I broke my arm, I took some aspirin. As it was not getting better, I took more aspirin. Eventually, it got infected, so more aspirin was necessary. In the end, gangrene set in, and it had to be cut off. I know what I should have done, I should have taken more aspirin.

Mark Wadsworth said...

Golden Rule 1: subsidies don't make things cheaper, they make them more expensive.

Golden Rule 2: taxes make things more expensive (exception being taxes on things in fixed supply, such as land and any other monopoly rights etc).

Maths: raising taxes to pay for subsidies is a vicious death spiral.

JuliaM said...

"I know what I should have done, I should have taken more aspirin."

Heh! Indeed...

"Maths: raising taxes to pay for subsidies is a vicious death spiral."

And yet it seems we are incapable of learning that lesson.