What's on my mind: (6/10/02)

For those who care and those who don't

I read the most fascinating article this weekend on corn.

Let me backtrack just a bit. So in high school, San Jose State has this program called "Step To College" that allowed high school students to take classes there for very little money. It was on the order of $50 a class, something like that. Anyway, a lot of people from my high school took Calculus before senior year, so we'd take math classes at State. I took multivariable Calc, linear algebra, and an intro to macroeconomics class.

SN. I finished Calculus really early, and it was a source of pride at one time. I remember when it got crushed. I was talking to Bev Yang and somehow the topic came up, and I was getting ready to boast when she says she took Calc BC in junior high. Whoa. Stanford was good for me like that, just, anything I thought I was good at, there were people way better. Even Bust-A-Move. I'm glad I didn't go to Harvard, though. It's one thing to feel a healthy humility. It's another thing to feel small. But I'm digressing.

The macroecon class was kind of random. For no particular reason, a handful of us decided to take it, one three hour session a week. It was taught by this large, jovial guy. The funny thing about that was, Crichton's Disclosure had come out recently and one of the characters is married to a guy who's described as being a large jovial man who teaches economics at San Jose State.

Actually, the class was kind of bad, because it wasn't really a survey class. He was a hardcore free market guy and pretty much pushed just a single view on us the whole time. It was so long ago and I've taken no econ since then so I have no idea who's views he liked but I'm guessing Friedman? I dunno, something like that.

But we did read this really interesting book, one that was really influential to me. So influential that I forgot the name of the book or the authors. But it was good. Like the class, it was largely in favor of free markets, and basically went through a bunch of case studies showing cases where people intervened with free markets and showed how that didn't help things, it just screwed up things more. The lesson being, you should almost never intervene with a free market. There are just a few exceptions, including stuff like health or something like that and the environment. Although it did briefly discuss this fascinating idea of how you could still apply free market principles to the environment if there were some way to make the environment a commodity. But yeah, whatever.

I found the book extremely compelling, and ever since then, I've been a big big free market guy. Like I said, I've never taken an Econ class since then, so I freely admit I don't know much about it and might be totally wrong. But of what I know, that's where I stand.

Long intro. So anyway, the article on corn was basically talking about the effect of U.S. subsidies to corn farmers. Dunno if you know this, but the U.S. government provides massive (really massive) subsidies to farmers to produce food that the country doesn't really need. Seriously, the amount of money involved is staggering. I'm 100% against this. Because it's a purely political thing, to get votes from farming states. There's no way, no how, any economic justification for it. So basically, people in cities are paying people in farm areas to produce food that the country doesn't need. It's an outrage.

And I'm mostly against it because it messes with free market principles. I'm just generally against this. Another SN - I'm against governmental price caps on stuff like gas. What I find nonsensical, and this is just my opinion, but yeah, it's like the government or other people simultaneously push for cheap gas and conservation. But that makes no sense. People have no real incentive to conserve if gas is cheap. I really believe in letting the free market work. If gas is expensive, people will conserve more, buy more efficient cars, and all that. If not, they won't. So yeah, I just say choose what you want, cheap gas or conservation, and let free markets work. I'm not sure if I'm making sense, but yeah.

It's different when the free market isn't working properly, like maybe happened with the energy crisis thing (no idea), but yeah, in general, with healthy competition, I'm about free markets all the way. I'm against that gas and ethanol thing also. Just, that's purely political, and has nothing to do with the environment. If it's emissions that's the issue, make an emissions standard and let people choose to use ethanol. The ethanol thing was purely political. But I'm digressing again.

Geez that was boring. OK, here's the interesting part of the article. So, because there's so much corn (because of subsidies), there's a lot of cheap corn syrup, and that has a lot of really interesting implications. For example, in the 80s, both Coke and Pepsi changed their formulas. Coke went from 75% corn syrup and 25% sugar to just about all corn syrup. And this reformulation made the company a ton of money. And instead of making things cheaper, they instead offered more for the same price. So, the article says, cheap corn syrup made the Big Gulp possible.

It's not just with drinks. Super cheap corn syrup made a bunch of junk food possible. It's especially attractive because it gives products longer shelf life, gives food an attractive brown tint when baked (that sugar doesn't), and has a great "mouth feeling" when eaten. So, the amount and variety of junk food exploded as corn syrup got really cheap. And according to the article, this explosion in the variety of junk food parallels the rise in the obesity rate in the U.S.

And there are other implications. It's hard for other countries to compete with the U.S. because corn and corn syrup are so cheap (again, thanks to subsidies). So there's like little political wars over this. Like, Mexico won't let certain things be sold there unless they have a certain percentage of real sugar used. I think it's sodas. And Europe has a de facto boycott on U.S. corn, partly because of that genetic manipulation thing.

I dunno, I just found that interesting. That corn subsidies has had this indirect impact on obesity and political implications. I won't get into the health issues it brought up of high fructose corn syrup. But yeah, avoid junk food.

No real point to this entry, just something interesting I read.