Greed is not Good: How Economic Gluttony Ruins Our Health

None: The following post is part of the Ordinary Times Food Symposium.  All symposium posts can be found here; an explanation of the symposium here.

by Robert Greer

By now, educated people generally agree that the government is screwing the pooch on food policy. We give subsidies to corn and soy which generally end up either in highly-processed, sugary foods, or are fed to fatty and unnaturally-fed livestock. Meanwhile, we basically ignore fruits and vegetables, which everybody — aside from a few, uh, “meat enthusiasts” — agrees are good for you. “The status quo is f***ed up!” is a rallying cry that can attract both Berkeley professors and Reason editors alike, and so it’s tempting to conclude that if we want a sensible good health policy, we should more or less let the market run its course. That is a very, very bad idea.

In a passage well-known to economists and their students, Adam Smith once wrote that “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” While this is indeed an adequate description of the state of affairs in a free market, it does little to say whether a free market in food is actually ideal. In fact, sophisticated markets for food have had a clear negative effect on our food’s nutritive value.

Following Adam Smith’s footsteps, it’s instructive to examine the state of butchery and baking today, after they’ve been thoroughly shaped by market forces (I’ll leave out brewers — I apologize in advance for not addressing arguments that Budweiser is good for you). Since the 1500s, the average mineral content of our grains has fallen by somewhere between 20-40%, as farmers have selected grain varieties with higher productivity and profitability. The very act of processing grain into flour removes nutrients from an already nutrient-thin product. One of the largest players in the bread market, Subway, until recently put in its bread the same kind of polymer that make yoga mats so pliably puffy. But probably the worst part of the grain story is that a huge portion of our grains are now being converted into sugars (“corn syrup” or “corn sugars”) that can be added to make mass-produced “foods”, which would otherwise taste like the sawdust they are, more palatable. We get our grains in the form of processed sugar, because processed sugar sells.

Butchers don’t avoid the chopping block, either, because industrial farming has considerably reduced the healthfulness of our animal products considerably. While it isn’t clear that meat is an unalloyed health good in the first place, it appears that the meat of animals raised on grass is higher in omega-3s and therefore better for health than meats without it. Because grain-fed meat is typically much cheaper to produce than pastured meat (at least in North America), and because consumers can’t always the difference, the butcher’s self-interest has predictably led to a less-healthy food environment. Consumers’ tastebuds, which are very good judges of the healthfulness of foods that are still in their natural state, are often misled large part because food processors have other ways of enhancing the flavor: With meat, processors do this by injecting chicken cuts with brine to make them larger and more flavorful, though less healthy, or by adding pink dye to simulate the color of a wild-caught fish. In meat markets, as in other food markets, asymmetries of information and other market failures abound. In food markets, the price mechanism is unreliable.

Profits = Processing

Although it’s true that the government is undeniably to blame for a lot of these problems (for instance, the USDA gives higher grades to beef that has “marbled fat,” which means the animals were grain-fed and thus have less nutritious meat), a pure market-based solution would fare little better. This is because the relationship between the profitability of a food and the unhealthfulness of it is remarkably strong and consistent, and would be the case even without government meddling.

In the mass-market food industry, it’s not the produce that’s profitable, but rather the processing.   Unprocessed foodstuffs (such as raw peaches, fresh mint, etc.) are often difficult to distinguish from competitors’, meaning that the opportunity for monopolistic competition in food (and therefore, for profits) is generally low. Unprocessed foods also tend to have shorter shelf lives, meaning that opportunities to manipulate supply are less frequent, leaving behind another prime opportunity for profit.

In response to the relative unprofitability of simple crops, food industrialists have developed varieties of produce and emphasized crops that are more easily converted into market commodities. (The reason market tomatoes often taste like cardboard, and have fewer bioavailable nutrients than heirloom varieties, is that these tomatoes were bred to be able to withstand mechanical harvesting, and to last longer in transit to far-flung markets — and these tomatoes are still among the healthiest choices at a typical supermarket!) Even more troublesome, processed foods can even be engineered to be “craveable” in ways natural foods are not (“craveable” in this sense is perhaps the food industry’s euphemism for “addictive”).   Food companies have entire departments dedicated to just this kind of manipulation — and nearly invariably, the tweaking makes the food less healthy.

The inherent profitability of processed food means that over time, food companies have been pressured to make more use of processing it to expand their bottom lines. This is highly regrettable, because industrial processing almost always reduces many of the health benefits foods (if it doesn’t render them positively poisonous). Our digestive systems evolved to deal with the foods we eat in their unprocessed states: Eating foods that have been molested by industrial grinders and blades and ovens means that our food is not being presented to our digestive systems in ways they recognize, and the predictable result is that our systems go haywire. If you eat a whole orange, you’re being perfectly healthy (which is no surprise, because your digestive system and the orange evolved in tandem) — but macerate an orange with a blender, freeze the resulting stew, and reconstitute it in your morning orange juice, and you’ve made your breakfast into a (relatively profitable) diabetes-bomb.

The highest-profiting category of food products, soda, is a prime exemplar of this phenomenon. As the end result of a highly industrialized process, soda is entirely devoid of nutritional benefit, and consumption of it is linked strongly to diabetes, one of the largest drivers of public health expenditures. Candy is another “foodstuff” that more closely resembles a chemical concoction than something that actually belongs in a human body, and has similarly high profit margins. The lowest-profiting foods? You guessed it: fresh produce.

Another way of pointing out the problem is that the butchers and bakers of Adam Smith’s time have been replaced by huge companies that are no longer directly accountable to the communities in which they market their goods. In the 18th century, a butcher may have thought it absurd to inject brine into his chickens instead of simply feeding them a healthier diet. His customers were his neighbors, and even if they didn’t discover the problems with his meat because they live near his farm, he might still feel a responsibility for the people he saw every day. But today, the social links in the meat market are so attenuated that these self-regulating mechanisms no longer serve as natural checks on what is now a purely transactive market.

What’s worse, the food companies that provide our nutrition often have little choice but to make our food less healthy. As lawyer and public health advocate Michele Simon has pointed out, American food companies in certain jurisdictions are required to be profitable for their shareholders, lest they face derivative lawsuits. If the profitability of a food is clearly associated with its bad health effects (as appears to be the case), then existing caselaw effectively becomes a perverse mandate that companies must sell food that is unhealthy.

Markets are not a complete solution bad food environments

Market-oriented criticisms of government are always awkward, because markets cannot exist without some kind of government support. Even minarchists would want the government to protect the property rights of the food company owners or landholders — and these minimal intrusions still systematically lead to bad outcomes. Yes, the government is subsidizing sugar and fatty livestock to the tune of about $10 billion a year, and that is indeed a travesty we have to fight hard to end. But the profit motive is ravaging our food system all by itself, even before factoring in the ways government regulation is making it worse. That $10 billion in government subsidies? It’s dwarfed by the profits of the largest processed-food companies: In 2013, Coca-Cola alone banked nearly that figure in total profits. If we want to truly combat the health problems and budgetary woes associated with processed food, we’ll have to recognize how much of our troubles are caused by the very same markets that some people hope to save us.

Robert (robert.a.greer@gmail.com) is a public interest lawyer in New York City and a recent graduate of the law school of the University of Chicago.

(Picture: Gluttony, Hieronymus Bosch, via Wiki Commons)