Monday, December 9, 2013

Absurd Protectionism in the Sugar Industry is Great!

The Washington Post recently had a horrifying report on the domestic sugar industry, which through political influence has managed to establish itself as a resilient rent-seeking coalition. Government protection via price controls, import quotas, and loan guarantees raises prices, enriching manufacturers while hurting consumers and impoverishing foreign producers. It all sounds pretty terrible--your classic public choice dilemma, right?

While it's true that this regulatory kludge makes almost everyone worse-off by economic standards (real income, productivity, growth), I can't help but see a paternalistic silver lining to the status quo. The state of nutrition science is increasingly converging on the idea that sugar is astonishingly damaging to individual health and is a primary driver of the epidemic of metabolic syndrome and its associated ailments (obesity, diabetes, Alzheimer's). While I haven't studied the elasticity of consumer demand for sugar, typically when you make something more expensive, you get less of it (though not always!).

The social and economic benefits of consuming less sugar are probably huge, and certainly under-appreciated. Having a healthy and vigorous citizenry is a virtue in and of itself, but also enhances the capacity of people to pursue and realize their own goals. A simple tax on sugar would be vastly more socially and economically optimal, but given the current sluggishness of our legislative branch, I'll take what we can get.

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