There’s hardly an ingredient in that candy bar you just unwrapped that the government didn’t have a strong, distorting hand in producing — the peanuts, the sugar, the milk, to name a few. U.S. sugar companies, for example, benefit from a series of overlapping trade protections that the last "reform" farm bill left untouched. If you’re drinking a soda while reading this editorial, you’re probably consuming large amounts of high-fructose corn syrup. Corn farmers are unfairly coddled, too. This supposed economic policy, with its roots in a time when large numbers of impoverished farmers were perpetually one bad harvest away from ruin, is now socialized agriculture that largely benefits wealthy agribusinesses at the expense of taxpayers and consumers.
Getting rid of these supports is the right thing to do economically. But what about public health? The distress, diminished quality of life and premature deaths associated with obesity, diabetes and other related ailments demand a government response. Eliminating the subsidies for corn would raise the price of corn syrup, which might help. Eliminating the sugar program, though, would lower the price of that ready substitute for corn syrup. Obviously, the government shouldn’t stop there.
An effective anti-obesity policy would include taxes on certain bad-for-you foods, which would tend to discourage unhealthy habits without objectionable restrictions on consumer choice. This is preferable to current sugar policy, which nudges prices up but channels the difference to companies that haven’t earned it, in part because the federal Treasury would benefit from the tax revenue.
Some public-health advocates favor new taxes on products such as sugary drinks, which account for a large chunk of Americans’ consumption of refined sugars. Several states and cities are considering the idea. But a recent working paper from the National Bureau of Economic Research highlights that going after just one class — sugary drinks — might encourage people to replace those drinks with candy bars rather than cut back on refined sugars altogether. The researchers from Cornell and Stanford found that applying a 20 per cent tax to soda would reduce calorie consumption by about 4 percent, the equivalent of about 16 cans a month, and decrease people’s satisfaction with their diet by about 2.5 per cent. But they also found that a general tax applied to refined sugars at the ingredient stage would reduce calorie consumption by nearly 19 percent, with the same hit in satisfaction and with sizable effects on salt and fat intake.
In other words, people will eat more apples when all products with refined sugars are more expensive.