The government subsidizing food is working out about as well as their other subsidy programs

Time Magazine has a rather sad analysis of the effect of government food subsidies on public health this week and it uncovers the reality of how so many people wind up shopping for and eating the foods which comprise a majority of their diet. It’s a subject which most of us likely don’t think about when we go to the grocery store, but Uncle Sam plays a huge role in determining which products survive in the competitive food sales market and what you wind up paying. Favored agricultural industry players receive benefits in a variety of ways while others are left to compete without such government favoritism. The major areas where Washington is getting involved are in some of the most commonly purchased items including grains, dairy and meat.

If you want to eat healthy in America, don’t expect government subsidies to help. The most federally subsidized foods are heavily processed, and diets rich in them may be having profound negative effects on health, suggests a new study published in JAMA Internal Medicine.

Researchers from the Centers for Disease Control and Prevention and other institutions looked at what 10,000 Americans reported eating in a single day, from 2001 to 2006. They then calculated how much of their diets were made up of food subsidized by the government, including corn, soybeans, wheat, rice, sorghum, dairy and livestock. While those may sound healthy, they’re typically not eaten in their whole-food form; rather, they’re turned into cattle feed or refined and converted into sweeteners (like high fructose corn syrup) and processed fatty foods.

“In the U.S. and many other places, an excess of subsidies in these areas ends up leading to a conversion into foods like refined grains and high calorie juices, soft drinks with corn sweeteners and high fat meats,” says Dr. Ed Gregg, chief of the CDC’s epidemiology and statistics branch in the diabetes division. “It’s basically the way that they’re used that ends up being detrimental.”

There’s more than a little vegan favoritism in the analysis of this study, with complaints about how much “fatty food” winds up in the diets of Americans, but the underlying message is still a valid one. The government picks winners and losers in the food game just as they do in every other industry where the regulatory state gets involved. The odd part is that the products being most heavily subsidized don’t match up with the government’s own recommendations about what you’re supposed to be eating.

The biggest example is corn, which readers who follow the energy and ethanol debate are clearly familiar with. But the corn we don’t wind up burning for fuel largely goes into corn syrup and artificial sweeteners, which are coincidentally among the least healthy options according to dietary scientists. Besides corn, subsidies of various sorts are employed in the production of soybeans, wheat, rice, sorghum, dairy and livestock. What they don’t seem to subsidize are fresh vegetables and fruits. Further, much of the subsidized meat products don’t wind up as delicious steaks or hamburgers on your plate, but rather processed meat products which are far less healthy. (And less appealing as far as I’m concerned.)

Dairy is a different matter. The government actually works to keep milk prices in some areas higher than they would be in a truly free market. That’s done to make sure dairy farmers can stay in business, but it also adds an artificial thumb on the scales of the economy. Further, the government treats milk sold for direct consumption differently than milk which goes into making cheese. John Stossel studied this at Reason a few years ago and found out what a byzantine system this truly is.

Under the agreement, [California] cheese processors must kick in an additional $110 million to a statewide pool of money used to pay dairy farmers, who are upset that they’ve been paid less than what farmers get in surrounding states. Rob Vandenheuvel of the state’s Milk Producers Council says, “Government has the responsibility to keep us in line with what the rest of the country is making, and they’re not doing it. It gives us no choice but to spend money on lawyers.”

Great. How many lawyers does it take to produce a gallon of milk?

The dairy farmers say some dairy farms lose money, which proves milk prices are too low. But cheesemakers say they can barely stay in business, proving milk prices are too high.

Why is any of this the legislature’s business? It shouldn’t be. Prices should be decided by buyers and sellers.

It’s not just that the government shouldn’t be subsidizing products in the first place – which they shouldn’t – but also the fact that they are so bad at this. Prices in a free market economy fluctuate with demand and that can happen in an instant. The market tends to be self-correcting that way. But for government regulators to take action and adjust prices you need months of hearings and studies and testimony and lobbyists forking over tons of cash to political campaigns before a vote can be held. By that time, the market forces which instigated the initial complaint about prices have completely shifted and the government is left chasing ghosts.

Now we learn that even when they do subsidize foods which people probably want and need to be able to afford, they’re dumping money into the least healthy options. The bottom line to this story is simple: government subsidies not only don’t work, but they frequently cause more harm than good. Let the free market run for a change and see what happens. Some of the initial adjustments would be painful, I’m sure, but in the end the system would work.


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