Are U.S. Sugar Quotas Making Us Fat?

This week WebMD reported that we are “Drinking ourselves to obesity -- Americans now get nearly twice as many calories from beverages as they did in the 1960s.” This isn’t surprising. Obesity rates have ballooned to over 30% of the adult population – double what they were in the early 1980s. But what’s changed about our beverages?

High Fructose Corn Syrup
Around the same time these obesity rates began to rise, high fructose corn syrup (HFCS) started finding its way into many of our favorite food and drink products. Its critics call it the “Devil’s Candy” and it is thought of as one of the natural food movement’s evil-doers, along with MSG, Trans Fats, and Partially Hydrogenated Oil. HFCS sweetens obvious favorites like Coke, Pepsi, and Snapple iced tea, but it also lurks in unexpected places like Ritz crackers, Wonder bread, and Campbell’s tomato soup.

How Protectionism Brought Us HFCS
In the book, “Fat Land,” journalist Greg Critser makes the case that U.S. policies that aimed to stabilize food prices and support corn production in the 1970s led to a glut of corn and then HFCS. Anti free market trade legislation sought to protect domestic sugar producers from international markets, which in turn drove up the cost of sugar and made alternatives like corn-derived sweeteners very attractive to food and beverage makers. An article in the Economist summed up the situation well: "Outrageous import quotas keep the domestic price of sugar at double that of the world price."

This is clearly a case of protectionism for the benefit of powerful domestic producers and is simply bad policy. U.S. steel quotas illustrates the issue well. When the government protected the steel industry from foreign competition, the price of steel skyrocketed. Shielded by this false market mechanism, the steel business appeared healthy and employment grew. But trade restrictions neither create nor destroy jobs; they reallocate them. Employment in businesses using steel, like auto and appliance manufacturers, paid higher prices and lost their ability to compete in international markets. For the American consumer, the cost of a Chevy was now more expensive (or lower quality) due to the higher prices that General Motors had to pay for steel. A cheaper, higher quality Toyota suddenly became a very attractive option. Ultimately, output and employment shrank in the U.S. automobile business and offset any gains in the steel industry.

But how did bad trade policy drive American obesity rates?

No simple explanation
The answer is a bit tricky. Like everyone else, I’ve been hearing all the bad things about HFCS. The story goes like this:

1. Its introduction strongly correlates with obesity rates
2. The body processes the fructose differently than it does old-fashioned cane or beet sugar, which alters the way metabolic-regulating hormones function. It also forces the liver to deliver more fat into the bloodstream.

But according to an article in the NY Times,

“the name "high-fructose corn syrup" is something of a misnomer. It is high only in relation to regular corn syrup, not to sugar. The version of high-fructose corn syrup used in sodas and other sweetened drinks consists of 55 percent fructose and 45 percent glucose, very similar to white sugar, which is 50 percent fructose and 50 percent glucose. The form of high-fructose corn syrup used in other products like breads, jams and yogurt — 42 percent fructose and 58 percent glucose — is actually lower in fructose than white sugar.”

The hypothesis has been mistaken for sound science, as most scientists believe the idea that HFCS is bad for us is tenuous at best.

What about the strong correlation between obesity rates and HFCS?
HFCS is responsible, but indirectly. Around the same time sugar quotas made HFCS a very cheap alternative, consumer behavior began to undergo significant changes. Manufacturers were able to makes lots of sweet stuff on the cheap and Americans officially entered into its Super Size Me mentality. The same NY Times article reports:

“From 1980 to 2000, per-person consumption of sweetened soda rose by 40 percent, to 440 12-ounce cans a year, according to the Agriculture Department's Economic Research Service. During roughly the same period, the inflation-adjusted price of soda declined by about one-third, according to Bureau of Labor Statistics data.

“In 1983, for example, 7-Eleven rolled out its 44-ounce soda and, in 1988, the huge 64-ounce. And McDonald's began supersizing its drinks in the late 80's.”

Who knows?
So we’ve basically got a bunch of hypotheses, but it’s highly possible that the nutritional value (or lack thereof) of HFCS isn’t making us fat, but the overwhelming prevalence of cheap, over-sweetened food and beverage products that Americans consume on a yearly basis.

Our inability to control our appetite for sweets isn’t grounds for making U.S. trade policy, but it is certainly an example of the unintended consequences of barriers to the free market. The protection of one resource may tilt the balance towards another, often with poor results.