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An economic review of Food, Inc.
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Photo: Christian Cable
Food, Inc. is a recent documentary criticizing the industrial mass-production of food and the practices of the few corporations that dominate this market. It is full of powerful (albeit unoriginal) images of the conditions the animals within corporate mega-farms have to endure. It contains heart-wrenching stories of the health problems people have faced as a result of consuming this food. It criticizes the industry for its hypocrisy in hiring illegal immigrants, mistreating them, and sometimes having them deported as a means of firing them. In all these aspects, Food, Inc. does not accomplish anything new. Super Size Me, Fast Food Nation and everything in between have already done a decent job of exposing the dark underbelly of the fast food industry. The truly original point Food, Inc. contributes to the debate is that these problems cannot be avoided by simply eating less McDonalds. McDonalds’ success has transformed the entire food industry, and we cannot console ourselves by thinking that the burger meat we can buy at the supermarket is far better than a fast food patty. The other interesting aspect of the movie, for the purposes of this commentary, is that it makes certain claims that can be reviewed from an economic perspective. The most obvious point is that at the moment, 80% of the meat that can be bought within the United States is provided by only four quasi-monopolist meatpacking corporations. What this means is that each of these corporations has diminished incentive to concern themselves with the quality of their product, as they have fewer competitors. The concentration of power in the market even translates to greater lobbying power, and these same corporations use that lobbying power to block the passage of laws that would require them to reveal certain crucial details about their product - where it’s produced and whether the animal has been cloned or genetically engineered. At a certain point in the movie, a representative of meatpackers is seen arguing before a committee that documenting when meat has been cloned would scare consumers off, and that therefore, it should not be done. This, like the lack of competition in the meatpacking industry, is a well-known market failure. The more consumers know about the product they are buying, the better - and there is an obvious conflict of interest when the profit-making sellers of that product claim that certain information about it is better kept from the public, supposedly for the public’s own good. If Food, Inc. contains a central theme, it is the corn industry in the United States. According to the movie, at a certain point in our history, corn became a very productive crop that was cheap to harvest in large quantities. In addition to this, it was discovered that it was a miraculously versatile crop - it could be fed to livestock, and derivatives of it include thickeners, oils, and sweeteners (most famously, high fructose corn syrup) which are now used in most unhealthy, processed foods on the grocery store shelves. Due to this versatility of the crop, its production became heavily subsidized by the government. Whatever can be made from corn is now made from corn. The problem with this, from an economic standpoint, is that the subsidies have made corn-based products artificially cheap. With our tax dollars, we are ensuring that the most unhealthy food is also the cheapest. This is, no doubt, part of the reason that obesity especially affects poor people. Within the movie, there is a touching and ironic story that highlights exactly this: a poor family buys the cheapest fast food in order to afford the diabetes medication the father needs. The cycle of bad health and poverty perpetuates itself. Furthermore, the healthcare of the very poor is partially funded by our tax dollars. Taxpayers are first paying for a subsidy that makes poor people sicker, and then paying again to treat their diseases. To conclude, the basic lesson to be drawn from this movie is that one must be skeptical about a politician that promises not to interfere in the free market. It may be a great promise in theory, but some markets have already been interfered in long ago, and the status quo is a product of that meddling. Not interfering amounts to perpetuating the inefficiency.
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