Sweet, Sweet Protectionism

If you're a frequenter of Costco, you may have seen cases of Coca Cola in the classic 12oz bottle for sale. If so, you may have also seen an ugly black-and-white sticker on those bottles.

That sticker is a telltale that you are being offered "Mexican Coke."

No, that's not a subterfuge intended to transport the product of Latin American coca plantations to suburban households. It's genuine, according-to-Hoyle, Coca Cola, but made in Mexico.

Why would anyone stock Mexican Coke when the domestic stuff is available? Because Mexican Coca Cola is made with cane sugar and domestic Coca Cola is made with high-fructose corn syrup (HFCS).

Why is domestic Coca Cola made with high fructose corn syrup, while Mexico's (really, the whole world's) Coca Cola is made with cane sugar?

Because... you guessed it, government. Our pals in the government use a combination of tariffs and loans to restrict the importation of sugar and to prop up domestic sugar growers. The USDA, through such mechanisms, maintains a minimum price for sugar.

Similar "pals" subsidize domestic corn production, to the tune of about $119B across the past thirty years. Among the many things made from corn is, you guessed it, HFCS.

If you were the Coca Cola Bottling Company in the US... or PepsiCo, or any of a long list of sweetened beverage manufacturers, the economics would certainly motivate you to switch from cane sugar to HFCS.

The current scientific consensus is that there's no difference between these two forms of sugar as far as human health is concerned. The "natural" food influencers and peddlers of hype have, however, elevated it above the earlier devil "white sugar" in their outrage engines.

Meanwhile, Europe's control freaks have gone the opposite route, restricting HFCS... to prop up cane sugar use.

Who’s to say which is preferable? Should be each of us, no?

Consumer choice and market forces are, unfortunately, of little priority or interest on either side of the Atlantic.

Yes, if you want a soda (or pop or Coke) made with cane sugar, you can find it. I rarely drink such any more, but I am quite fond of Boylan orange soda. It is, of course, more expensive and harder to find than the big companies' stuff.

Which is the lesson here.

We see concentrated benefit, for the sugar and corn industries, derived from diffuse harm. We all pay extra for sugar, we all pay into the corn subsidies, and we all lose the benefits of level-playing-field competition.

This is a very common and very unfortunate result of the perverse incentives that come with big, expansive government, and it's why the progressive dream of the Best-and-Brightest running society is perpetually doomed to destructive failure. The sugar and corn industries have a much greater interest in securing and maintaining largesse and protectionism than you and I have in demanding level playing fields and careful use of our tax dollars.

But, it's not just progressives that embrace this sort of unbalancing and excess. In Florida, hardly a hotbed of leftism and where half the nation's cane sugar is produced, good luck getting anywhere in politics beyond county dog catcher without toeing the sugar industry's line.

The only remedy to this is to minimize the size of government. Make government so small and so limited in power that the ability to "rent-seek" withers to nothingness.

Yes, that's pure fantasy. Getting there would require that you and I and tens of millions of voters get on board with demanding drastic cuts, with voting out even the members of "our" teams, preferably in primaries, and with steadfastly avoiding the "yes, but..." mindset when we see our favored programs on the chopping block.

Again, yes, that's pure fantasy, and it's why libertarians are always sitting back seat to Democrat and Republicans.

It's also why so many in the Party Currently In Power are excusing or even cheering the economic protectionism that's high on Trump's agenda. If his tariffs were tactical levers in pursuit of freer trade and balanced reciprocal trade agreements, that'd be one thing. As I recently blogged, it is indeed possible that's the real goal. But, the telltales are much greater that he believes tariffs are a Great Thing unto themselves. Our wallets will certainly disagree.