A commenter over at Megan McArdle’s blog defended Goldman Sachs’ (GS) taking advantage of government programs by arguing that they’re just taking advantage of programs available to them — just like corn growers taking advantage of subsidies.
He was quickly shot down by another commenter, saying that Goldman Sachs had significant power over government policy, while the farm grower was a mere, innocent benficiary.
Except of course this is totally false.
Farmers have excellent political clout, and courtesy of Iowa’s first-in-the-nation status, they’ve hijacked the entire system of electing a President. For John McCain to run in 2008, Mr. Straight Talk Express needed to reverse his position on ethanol and other ag subsidies. It’s just how the game is played.
Ok, ok. But they’re just farmers, right? And they didn’t require a huge bailout in order to avoid collapsing the entire system, so they’ve got that going for them. But while the financial system flamed out spectacularly last fall, the agriculture industry has been waging a quieter war on America.
First, farmers collected over $175 billion in subsidies over the last 12 years according to the Environmental Working Group’s Farm Subsidy Database. That’s not ginormous, it’s just really, really big. But the costs go beyond that.
As overabundant corn (and corn syrup, and everything else corn) is a major contributor to obesity, we need to include that too. One study from the National Institute of Health estimated that the increased health costs due to obesity were more than $90 billion per year. Over that same 12-year period, we’d guess obesity-related healthcare costs are around $1trillion.
What’s more, this $1trillion hasn’t eliminated obesity. When we have a financial crisis — say a systemically important bank winds up with more debt than assets — at least we know that the money spent will extinguish the problem (for now). Obesity just sticks around, causing ongoing problems and damaging the lives of the obese.
Granted, we can put it all on ag subsidies and powerful farmers, so let’s just lop off 75% of that, and say the total bill is $250 billion. That’s still a huge cost that’s not being considered as a cost of the subsidy.
Other areas you’d want to explore include the cost of ethanol subsidies, and the opportunity cost of having gone down the worst possible avenue towards energy stability, rather than focusing on something that could possibly work.
But here’s the thing. All this stuff, as we noted above, is a silent war on America. Sure, there’s outrage from time to time, but it’s slow and it’s not event-related. And as Nassim Taleb would tell you, our focus on events cloud our judgment.
We remember Lehman and the day that the AIG bonus story came out. We remember yesterday’s Goldman Sachs earnings. We don’t remember how our friends got fatter and fatter over the years, slurping soda and corn syrup-laden wheat bread.
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