I. Introduction

It is no secret that the United States as a nation is not the healthiest country in the world. Our obesity rates are among the world’s highest, and heart disease is by far our number one killer.
This has led to the common misconception that Americans are inherently unhealthy people, or that the relative prosperity of our nation has led our people to become gluttonous.
The reality is that human beings are economical creatures who constantly deal with scarcity, or the fact that their wants are greater than their resources. Thus, they will buy the cheapest, most desirable food that they can.

The true source of these problems, then, can be found in farm subsidies, specifically corn subsidies. On the purely economic side of the spectrum, this government action misallocates scarce resources that would be more efficiently used or stored in a free market. However, farm subsidies unfortunately have a much more insidious effect than a simple misallocation of resources.

II. History

The farm bill, which is a massive set of laws and regulations about how our food is produced and priced, has for years provided massive subsidies to grow wheat, soybeans, cotton and above all corn far above the levels which would be dictated in a free market.

The farm bill has been in existence since the years of the Great Depression, when the Agricultural Act of 1938 mandated price supports for corn, cotton and wheat. Franklin D. Roosevelt and his National Planning Board mistakenly saw falling prices for crops as a primary symptom of the Great Depression, when in reality these price falls not only were a secondary feature of the depression due to people’s desire to hold onto more of their money rather than spend it, but also were in fact beneficial to the overall recovery of the general economy, as these goods had been overproduced and overpriced, and thus the price fall was simply the market’s way of trying to repair the past resource misallocation.

III. Impact

A. Economic

The opportunity cost for farmers who might choose to grow healthy foods is enormous under this system. The amount of farm income from subsidies has been estimated to be around 40 percent. This means that if a farmer was to rotate crops or grow something like spinach or wheat instead of corn, he would be sacrificing 40 percent of his income. Thus the individual farmer makes the rational choice to maximize the potential revenue from his capital, and grows corn. However, the collective effect is that when corn is overgrown, other foods are undergrown. The savings that Americans supposedly see due to these subsidies are actually simply reflected in higher prices for less produced, healthier foods, not to mention the dead weight loss which results from the taxes necessary to raise the money for the subsidies.

When something is made cheaper via a subsidy, it will necessarily be employed in a great deal more uses than it would without the subsidy. This has most certainly been the case with corn. Take a look at just about any processed food label in a grocery store, and you almost certainly will find “high fructose corn syrup” as an ingredient. Corn has been made so cheap that food suppliers use it for anything and everything possible. Besides the mass production of high fructose corn syrup, this also directs corn towards the feeding of livestock like chickens and cows, animals that do not normally ingest corn as a part of a healthy diet.

B. Health

The data on the impact of these subsidies is alarming. In 2008, Chronicle research, in connection with the Centers for Disease Control and the American Obesity Association, plotted the relationship between the ingestion of high fructose corn syrup and obesity in the United States. The positive correlation between the two shows a quadrupling of the number of obese Americans since 1976 coinciding with a parallel rise in the rate of consumption of high fructose corn syrup.

This subsidy of corn also makes meat cheaper and easier to produce than ever before, though it is produced in an extremely unhealthy manner. Corn is not a natural food for the digestive system of cattle, and thus cows have to be given antibiotics to counterattack the ill effects of the food, and these antibiotics survive into the beef. But, the cheapness and high calorie nature of the food allow farmers to feed a massive amount of animals. The result is that the average American eats far too much meat in an average day due to its artificially low price, and the quality of this meat is usually low to average due to the unnatural nature of its production.

In the food market, the United States government is subsidizing obesity, so it should be no surprise that the United States has the world’s highest obesity rate. The deteriorating health of Americans is reflected in the high costs of healthcare, and should be considered during the current debate. This indirect nature of corn’s damaging effects can also be applied in the area of sustainability, since corn requires massive amounts of pesticides and petroleum for production in comparison with other crops.

IV. Pro-subsidy argument

The common argument from pro-subsidy economists is that under the concept of economies of scale, the government is making it possible to mass produce meat, make each unit cheaper, and thus provide more people with affordable food. However, the astute economist looks at the entire situation, and takes in expenses such as the extra fertilizers and pesticides needed for corn, the immense amount of fossil fuels needed to grow it (it takes the equivalent of half a gallon of gasoline to grow a bushel of corn) and the high prices of other foods that are being supplied below free market demand rates. In short, marginal costs are not in the least matching up with marginal benefits as they would in a competitive free market, leading to mass inefficiency, and this mass inefficiency is paid for in the end, even if the cost is not as obviously visible as the benefit.