Corn

Ezra looks at the impact of subsidies on corn and, subsequently, public policy:

A couple notes. There’s an interesting chicken-and-the-egg issue here with corn subsidies. Our immense creativity in how we use corn is directly related to the fact that it’s been subsidized to the tune of $50 billion over the past 10 years. Since it’s artificially cheap, it’s artificially ubiquitous. We take corn to the lab to remake it into sweetener, take medicines from the lab to keep cows alive as we force them to feed on it (cows don’t digest corn naturally), pump money into ethanol when it’s not energy efficient, etc. As Donner says, ”
frankly, any ingredient that you do not recognize on the label of a processed food or beverage is probably made from corn. Xathan gum? A fermented sugar made from corn. Lecithin? Made from corn. Vanilla extract? Vanilla and corn syrup. Malt extract? Often made from corn, not barely. Dextrin? As Michael Pollan would say, corn, corn, corn.”

Those are some of the distortions upstream, at the producer level. Downstream, at the consumer level, meat is much cheaper, sweetened foods are much cheaper, ethanol seems like a good idea, and so on. And as you might imagine, pumping subsidies into cheaper red meat and sweetened sodas is not exactly the sort of thing you’d do if you were setting policy with public health, or future health costs, in mind.

Now, there’s 2 ways to look at this. One is the effect that individual priorities have on the way we view policy tradeoffs. Ezra’s principal interest is healthcare policy, and so he views these questions through that prism. So of course, he’s going to tend to think of the effect of cheap corn, or more accurately the products made with cheap corn, on health and healthcare. And there’s nothing wrong with that, it’s obviously a concern that should be had. But there’s an economic aspect that’s missed when you look at it in different ways.

Cheap food, corn especially, is almost vital to the US economy as we know it. The ability to spend less of our money on food than any other developed nation is one of the main reasons we have so much disposable income. Increase the price of food, and the money left over to consume other goods decreases, since “food” isn’t necessarily an expendable good. I can live without a leather couch, I can live without a 3rd bathroom in my house. I can even live without a car if the area I live in allows it. But I can’t live without food, no matter how hard I try. So, in this respect, corn subsidies are a fundamental part of the US economy, for better or worse. And all in all, $50 billion over 10 years isn’t really that much money.

Now, there are aspects of this that are bad, obviously. Cheap corn makes mass meat consumption cheaper than it otherwise would be and this, especially with beef, contributes massively to global climate change. And of course I’m not going to argue that something should be done to make that externality show up in the price of meat, in order to better reflect the whole cost of mass meat production, and curb global climate change. But that also has to be balanced out against the need for cheap food in general, and few things can be grown as cheaply as corn in this country. The trick is balancing these concerns. Where do we start? Well, I don’t know. I know it violates the blogger’s code to admit this, but I don’t have the answer to every question. Ending the tariffs and restrictions on real sugarcane so that it can compete with corn syrup would be a nice place to start, as would some sort effort to reflect the carbon impact of meat production in the cost of meat while still maintaining a generally low cost of food. That’s not just a “moral concern,” it’s a political one as well. If people associate cap and trade or healthcare policy proposals with increases in the cost of their groceries, then those policies are going to be incredibly hard to implement in Washington.

But admittedly, I don’t really have any good answer on how to balance all of these concerns most effectively in the short term, so I’ll turn that over to people smarter than I. Of course, I reserve the right to criticize them later. After all, I can’t totally abandon the blogger’s code, now can I?