April 17, 2006
Killer Coke? - Part II
Posted by Elizabeth Brown

As I mentioned in my earlier post on Coca-Cola, Coke and other soft drink manufacturers have been accused of contributing to America’s obesity problem, which contributes to health problems that result in thousands of deaths annually.  Several studies have been conducted showing a link between the availability of junk food in schools and the increase in obesity in children and adolescents.  For example, Patricia Anderson and Kristin Butcher in their paper, Reading, Writing, and Raisinets: Are School Finances Contributing to Children’s Obesity?, concluded, “A rough calculation suggests that the increase in availability of junk foods in schools can account for about one-fifth of the increase in average BMI among adolescents over the last decade.”

Nicholas Kristof in his April 11th column in the NY Times singled out sugary drinks as being especially problematic, particularly those made with high-fructose corn syrup. He proposed treating sugary drinks the way we treated cigarettes. He wants the United States to do the following:

  1. Ban sugary drinks from schools.
  2. Limit the amount of advertising of sugary drinks.
  3. Impose a tax of 5 cents per fluid ounce on sugary drinks.

While I agree that the availability of junk food at school probably should be restricted, I don’t think singling out soft drinks for limitations on advertising or special taxes is a good idea. While sugar can be addictive, it is not nearly as addictive or harmful as nicotine in cigarettes.  So I am not certain that this type of government paternalism is justifiable.

If the United States, however, does decide that it wants to decrease demand for sugary drinks and other sugary substances, I think that it should stop subsidizing corn and sugar beet producers before it starts imposing special taxes on products with sugar or high-fructose corn syrup in them. Between 1995 and 2004, the United States paid out $41.9 billion in corn subsidies.  American corn production soared during that period and reached a record 11.8 billion bushels in 2004.  Worldwide demand for American corn declined and resulted in a record corn mountain in Ralston, Iowa, which in 2005 was 60 ft high, spanned the length of a football field, and contained 2.7 billion bushels of corn.  A significant portion of this mountain was simply left to rot in Ralston because there was not enough demand for it to use as food or to convert it into ethanol for cars.

In addition to possibly helping decrease demand for sugary products, eliminating or reducing U.S. agricultural subsidies would be the best form of foreign aid that the United States could provide to developing countries.  When I was an international economist covering East Africa for the International Trade Administration in 1988-1990, the first Bush Administration was promoting “Trade, not Aid”.  It was widely acknowledged back then that eliminating agricultural subsidies and textile quotas would be the most beneficial thing that the U.S. and Europe could do to help developing countries grow their way out of poverty.  Nevertheless, everyone accepted the fact that neither the United States nor Europe had the political will to do this. Perhaps the American problem with obesity will help it find the will to live up to its promises to the WTO to cut its subsidies to American farmers.

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