Follow up on last post

Real quick - came across this today:

http://online.wsj.com/article/SB124208505896608647.html

Apparently we're considering a soda tax. Funny we were just talking about it, and glad that last post generated some interest. I'll try to make the blogging more consistent...

A Musing on Business and Government

Ok, so this is really just a late at night, random musing. Here goes. I'm thinking about some of the inherent clashes between business and government, and how they rear their head in every day life. Specifically, I went to a movie tonight and saw a pretty good Coke commercial - a thirsty boy wandering through dry streets where everything looks like a coke until, finally, he finds a store and buys one.

Coke. Warm and fuzzy polar bear, bringing warm and fuzzy thoughts. Sponsors of all things athletic. All in all, a very positive brand.

And they're killing people. Definitely giving them diabetes, probably, in part, causing the rampant heart disease and cancer in our country. Makes sense, as our bodies weren't really designed for intense sugar shocks and so don't handle a lifetime of them terribly well. This line of thinking applies to McDonald's and countless other products of brands we "cherish" in our society, not even necessarily food/drink-related (haha, this is not a nutrition/organic rant, though I certainly feel the pull to go that way. :) 

I'm also not trying to argue that they should mend their ways. That would be anti-capitalistic, socialist, and a whole lot more labels that we Americans seem to find unsavory (although, is it so bad to strive for a society where corporations think about the bigger picture?). 

No, my sights are merely set on justice. If someone wants to kill themselves with soda or cigarettes, they should be able to. The difference between those two things is that cigarettes have a warning label, and soda doesn't. There is a cost to Coke's product that isn't covered in the price tag, a risk that a Coke consumer takes, willingly or unwillingly. If people knew, really knew, how bad soda is for you, they wouldn't drink it nearly as often as they do. As it stands today, it usually takes a loved one getting diabetes to remind us of this fact.

So how to right this wrong? Throw a warning label on, right?

And that's how I got to musing on business and government. As I'm sure you've realized, the government isn't throwing a label on soda anytime soon. The killer profits these companies make go not only towards making warm and fuzzy commercials (so we think they're warm and fuzzy companies), but also to lobbying the hell out of the government and making sure, among other things, labels don't get put on soda.

But the problem runs deeper. If there is a cost that's not on the price tag, who's paying it? Well, the consumer for one - they have to live with these diseases. But who pays for their treatment? Sure, insurance companies and the private sector, to some degree, but with corn subsidies making soda is cheaper than water, the diseases from drinking (way) too much soda are disproportionately skewed to those with lower incomes, who probably don't have insurance and might end up hitting the emergency room or other public health facilities. Yes, there is some assuming and hand waving going on, but it's not a stretch to say that, in the long run, we, the people, end up paying the health costs for some consumers of these companies' products.

So what can we do? Ideally, we'd say we need better leaders, people who ensure the lobbyists don't get in the way of the government serving the people. But let's be honest - that's not reality, and companies with power are always going to lobby and do shady things.

So, after kicking around a couple approaches in my head (morality, government theory, haha neither of which I know much of), I think I want to approach this from a standpoint of economics - essentially, how would we change the current incentive structure to straighten out this situation. Today, the sole interest of the company is to make money and continue making money, driving it to lobby to keep their cash flows unaffected (at the expense of the health and pockets of the nation). We can change this one of two ways - we can either add a monetary incentive for the soda company to consider these societal costs (i.e. give them a subsidy for putting the warning label on their product and perhaps for diversifying to more healthy options) or change the structure of business such that there is a way to incorporate the considering of societal costs into the overall running of the business (an extreme example - the government will shut you down if your product screws people).

To compound issues, down each path lies an unspeakable evil (as we see it) - socialism in the former sense (govt controlling the business landscape) and nationalization in the latter (direct govt control of business). Despite my sarcasm, those who blanket condemn socialism and nationalization of business do have one point (albeit overused) - the consolidation of power that results leaves the system open for corruption - absolute power corrupts, and absolute power corrupts absolutely. In this case, the corruption could just move to those people who decide what harms society (for example, what is "healthy").

And yet the status quo is clearly flawed. What to do? Is today's situation merely the least of all evils? What type of system can we design to rid us of the Coke and McDonald's problem?

I haven't the foggiest, but the one thing that stands out to me is the importance of transparency and information. Perhaps all we can do is strive for a system where things are in the open as much as possible, and where the availability (and, for lack of a better word, in-your-face-ness) of information takes precedence over corporate concerns.

A system that encourages warning labels on Coke cans (and Big Macs:)