DRI-276 for week of 3-10-13: Understanding Motivation in the Nutritional Regulation Debate

An Access Advertising EconBrief:

Understanding Motivation in the Nutritional Regulation Debate

What is the rationale for government to intervene in our lives – that is, to insert itself between us and the objects of our actions? It is either to prevent something bad from happening or to bring about something good that would otherwise not occur.

This would appear to be an obvious answer to a straightforward question. Yet by this simple standard recent declarations on nutrition by American authorities and government officials seem utterly incoherent.

To make any sense of their comments, we must ask ourselves: Who are they really talking to? What are their real motives, as opposed to their stated or apparent ones? And what is their underlying agenda?

That is where our understanding of economics comes in handy.

The First Lady’s “Business Case for Healthier Food Options”

In a widely publicized Wall Street Journal op-ed (2/28/2013), First Lady Michelle Obama made what she called “the business case for healthier food options.” Ms. Obama has seized upon the so-called “epidemic” of childhood obesity as her personal cause célèbre, much as Nancy Reagan urged kids to “just say no” to recreational drugs. “For years,” she recounts, the problem was viewed as “insurmountable” because “healthy food simply didn’t sell – the demand wasn’t there and higher profits were found elsewhere.”

No longer. “Today we are proving the conventional wisdom wrong… American companies are achieving greater and greater success by creating and selling healthy products.” Now, it seems, “what’s good for kids and good for family budgets can also be good for business.”

A herald of the dawn of a new age had better be able to point to sunlight on the horizon. Ms. Obama cites the example of Wal Mart, which has “cut the costs to its consumers of fruits and vegetables by $2.3 billion and reduced the amount of sugar in its products by 10%. It has also “launched a labeling program that helps customers spot healthy items on the shelf.” Sales of these products have increased.

Disney has “eliminate[d] ads for junk foods from its children’s programming and improve[d] the food served in [its] theme parks.” Walgreens is adding fruits and vegetables to (selected) stores. Restaurants “are cutting calories, fat and sodium from menus and offering healthier kids’ meals.”

The First Lady refers to an opinion-survey finding that “82% of consumers feel that it’s important for companies to offer healthy products that fit family budgets.” She cites a Hudson Institute study that finds over 70% of sales growth in consumer-packaged goods comes from “healthier foods.” Moreover, in recent years the Institute found a direct correlation between percentage of healthy food sold and rate of return.

Ms. Obama closes her piece on a ringing note of patriotic boilerplate. American businesses are at last heeding the call to arms – they are “stepping up to invest in building a healthier future for our kids.” The bandwagon is rolling like an avalanche down a mountain and everybody is hopping aboard. Teachers, mayors, faith leaders, parents, leaders from every sector – why, even “Republicans and Democrats are working together in Congress” to improve school lunches, for goodness sake!

In Mississippi, obesity rates have fallen by 13% at the elementary-school level. Childhood obesity has fallen measurably in California and in cities like New York City and Philadelphia. Of course, we have “a long way to go” since “the problem is nowhere near being solved,” but she “has never been more optimistic.”

Fact Check: Mirabile Dictu, Ms. Obama Seems Factually and Substantively Accurate

It is never safe to take politicians at their word. Ms. Obama does not hold elective office, but First Ladies have long been as politically saturated as their husbands. Thus a fact check of Ms. Obama’s contentions is in order.

Lo and behold, there are indications that not only the sum but the substance of her remarks is accurate. Quoting from the HealthDay newswire earlier last month (2/7/2013): “A leaner menu may lead to a fatter wallet for those involved in the restaurant industry, research suggests.” The Raymond Johnson Foundation surveyed 21 of the nation’s largest restaurant chains for a 5-year (2006-11) period. According to an analyst from the Hudson Institute, “those [businesses] that increased the amount of low-calorie options they served had greater increases in customer traffic and stronger gains in total servings than those that didn’t.”

The researchers developed their own categories for “low-calorie” servings of main courses, side dishes, desserts and drinks. During the survey period, new items that met the low-calorie criteria outperformed others in 17 of the 21 participating chains. The servings classified as low-calorie increased their percentage of total sales in all 21 chains.

Among the chains surveyed were McDonald’s, Wendy’s, Burger King, Taco Bell, Applebee’s, Olive Garden, Chili’s and Outback Steakhouse. Not surprisingly, the chains included in the study comprised 49% of the total revenue in the top 100 U.S. restaurant chains, or some $102 billion in annual sales.

Meanwhile, Back at the Regulatory Ranch…

A few days earlier (2/1/2013), the HealthDay newswire carried this story: “FDA Should Work to Cut Sugar Levels in Sodas, Experts Say.” The subheading was: “Petition by leading consumer-advocate group and academics urges artificial sweeteners be used instead.”

The “leading consumer-advocate group” was none other than the Center for Science in the Public Interest (CSPI), the left-wing group that can with justification be characterized as the nation’s leading scientific-scare-mongering activist organization. Draping the organization in the mantle of “nutrition experts and health agencies from a number of U.S. cities,” Director Michael Jacobson announced a petition urging the Food and Drug Administration (FDA) to set a “safe level” for high-fructose corn syrup (HFCS) and other sugars used to sweeten sodas and other drinks.

The petition claimed that 14 million Americans get over 1/3 of their daily calories from added sugars like these. They “are causing serious problems – obesity, diabetes and heart disease, among others,” according to Jacobson. But Jacobson’s statement accompanying the petition dialed down the relationship from causation to correlation, pointing out the “great deal of evidence linking sugar to [these] problems,” from which CSPI is now “concluding that much of the evidence centers on HFCS.”

Having first donned his scientist hat, Jacobson then doffed it for his lawyer hat by declaring that the FDA is legally obligated to act by – in effect – treating sugar as a toxic substance. Since the First Law of toxicology is “the dose makes the poison,” the FDA must determine the safe level of consumption for HFCS and other sugars in drinks. Then it should set “voluntary sugar targets” for manufacturers of other foods. Finally, Jacobson completes his expert-witness hat trick by posing as an expert on education. The FDA should “educate consumers” about the dangers of sugar, he concludes.

Just what, exactly, should manufacturers of America’s most popular drinks use to sweeten their products – assuming that they are permitted to go on producing them at all? “Artificial sweeteners” is CSPI’s papal verdict. Ironically, their blessing is exquisitely timed to coincide with a barrage of publicity suggesting that aspartame and alternative sweeteners are linked to diabetes and other adverse health outcomes. Yet here, Jacobson is mysteriously complacent. “The FDA considers all these sweeteners perfectly safe. We think the certain harm [from HFCS and sugars] greatly outweighs the speculative risk from artificial sweeteners.”

Jacobson’s position conclusively establishes CSPI as an irony-free zone. Two decades ago, CSPI waged a vocal public campaign to gain regulatory approval for Trans fats as the

“healthy alternative” to saturated fats in the American diet. Today, of course, Trans fats are so firmly fixed in the bad graces of regulators that food manufacturers take care to note their absence on ingredient lists whenever possible.

The Economics of the Current Nutrition Debate

It is no accident, as old-time Marxists were fond of saying, that economics is routinely omitted from the public debate about nutrition and regulation. (Indeed, Michael Jacobson went so far as to demand that “economic issues shouldn’t figure in this” at all.) Economic logic reveals that – even when the principals make statements that are factually accurate – their underlying logic is completely awry and their motives have no relationship to their public utterances.

First, consider Michelle Obama’s “business case” for “healthy foods.” To whom is she speaking? And why? After all, her remarks appear in the Bible of American business, The Wall Street Journal. On their face, they appear to be addressed to food manufacturers in an effort to persuade them to produce more “healthy foods.”

And this is completely crazy, is it not? After all, the livelihoods and happiness of food manufacturers depend on their producing foods that people like and want to buy. Their sales and profits provide a clear-cut index of consumer wants. Their gaze is fixed on sales 24/7. This truism can hardly be news to left-wing commentators like the Obama’s, since half the time the Left is criticizing business for producing the wrong things and the other half the Left excoriates business for its maniacal pursuit of profit and inordinate success in attaining it. If there is one thing business does not need to be reminded to do, it is to produce more goods that consumers want in order to earn higher profits.

Ms. Obama spends a thousand words in the Journal telling American business that healthy foods are now profitable. Does she really believe this was unknown to them before she spilled the beans in print? When these foods are the sales leaders for 17 of 21 leading restaurant chains over the last five reporting years? Who is she kidding?

No. Even the First Lady cannot be this obtuse. She cannot believe that food manufacturers are utterly ignorant of their own business, nor can she expect them to take her advice on how to run their business. They are the experts on the food business. Even if they needed advice, they would never solicit hers. She has openly disdained business; advising young people to forego careers in the business world.

No, Ms. Obama’s motive is not what it seems to be. She has another agenda.

The same thing is true of Michael Jacobson. In response to CSPI’s petition, the American Beverage Association released a statement pointing to the elephant in the room alongside CSPI and the self-appointed nutrition “experts.” 45% of all non-alcoholic beverages consumed in the U.S. today have zero calories. Average calories per beverage serving are down 23% since 1998. Calories from sugar in beverages are down 37% since 2000. In other words, the free market has beaten CSPI and its small army of would-be regulators to the punch.

If the FDA had set voluntary guidelines in 1998 for a changeover to artificial sweeteners, it would today hail the current state of the market as a great victory for regulation. (And then it would demand an increase in its budget on the grounds that much, so very much, remained to do in order to usher in soft-drink nirvana for American consumers.) But because our current status was achieved by free markets, without regulatory carrots or sticks, a crisis exists for the regulatory Left.

The obesity “epidemic” is not a crisis for the Left because it threatens the health of Americans. It is a crisis because it represents a wasting opportunity. Onetime Obama advisor Rahm Emmanuel gained fame by coining the slogan “Never let a crisis go to waste.” His point was that every crisis is a potential opportunity to expand the scope and power of the federal government. A political administration should seize that opportunity by creating more federal agencies, spending more money and enacting more regulations. Failure to do so sacrifices power – and power is all that matters in politics.

The history of the obesity and diabetes “epidemics” reveals why the Left is now sweating bullets on the issue of nutritional regulation.

The Real Cure for the Obesity “Epidemic” – and the Scramble to Get Back in Front of the V

Ms. Obama’s op-ed was not only right about the growing popularity of so-called healthy eating. She was also right about its previous lack of appeal to consumers. For many years, the Left hectored food producers to produce what consumers ought to eat instead of what they wanted to eat. And for years, consumers voted for tasty food over what the experts told them they ought to want.

The Left reacted to this by blaming the victim. Academics and public-health officials insisted that consumers were sluggards who refused to eat right and shunned exercise. In reality, consumers were only following the revised nutrition guidelines that advised them to make carbohydrates the chief source of energy and eschew fat in general and meat in particular. Weight loss was a mechanical process in which calories expended in energy exceeded those ingested in food. Counting calories was the necessary centerpiece of this process.

Food manufacturers did not refuse to produce low-calorie foods. But fat not only produces flavor in food, it also makes it filling – thus producing satiety. Food manufacturers discovered that cutting back on fat made foods tasteless and left consumers feeling hungry. They learned that by adding carbohydrates in the form of sugars, they could replace the taste with only a moderate increase in calories. (Simple carbohydrates are not calorie-dense.)

The problem with this program is that it did not work. Consumers would buy foods that replaced fat with simply carbohydrates but these did not promote weight loss. In this regard, it is vital to appreciate the difference between expertise in the marketplace – as represented by food manufacturers – and in academia. Food manufacturers are experts because they have to be. If they fail, they go out of business and are experts no longer. But academic experts on nutrition and weight loss did not actually have to aid customers in losing weight or reaching optimal nutrition. They only had to surmount the hurdle of peer review. Consequently, they were able to mislead two generations of consumers.

The damage wasn’t limited to obesity. The emphasis on carbohydrates also caused a ghastly upward spike in the incidence of late-onset, Type II diabetes. While the rush of insulin generated by the ingestion of carbohydrates was sufficient to prevent diabetic shock and coma, it did not prevent the damage caused by frequent, repetitive upward spikes in blood sugar. Because the insulin eventually returned blood sugar to normal and because standard medical practice has been to check blood glucose after a period of fasting, these spikes and the accompanying damage went undetected for many years. Eventually, the baby-boom generation began to suffer peripheral neuropathy and other symptoms of nerve damage resulting from Type II diabetes. The influx of television commercials offering treatments for this condition is an index of its prevalence.

It took a doctor on the fringes of scientific respectability named Robert Atkins to explain that the culprit in weight gain was not fat consumption per se. Instead, carbohydrates were at fault. When consumed undiluted, carbohydrates entered the bloodstream quickly and caused the body to release insulin to counteract the resulting upward spike in blood sugar. The insulin caused the body to store fat in the body’s cells rather than burning it as energy.

The key to weight loss was to make protein, rather than carbohydrates, the body’s leading energy source. Carbohydrates should be consumed only when their release into the bloodstream could be slowed by simultaneous consumption of fiber (as with whole apples), fat (as with butter), protein (as with meat) or acid (as with sourdough bread). Meat consumption is not problematic for weight gain or cholesterol accumulation because the body burns fat for energy.

The observed trend toward healthy eating is largely this revolution in blood sugar regulation, which modifies the original Atkins insight with a more precise scientific rationale developed by cardiologists like Arthur Agatston. The difficulty in finding unsweetened iced tea on store shelves – Rush Limbaugh was forced to add an unsweetened option to his lineup of sweet teas – is one indication of the power of this approach. The sudden ubiquity of broccoli, once the butt of standup comedy routines, is another. (Broccoli is high in fiber as well as phytonutrients.) The French fry was a mainstay of the 20th century American diet, but it now shares menu space with sweet-potato fries because sweet potatoes do not share the glycemic (blood-sugar related) drawbacks of white potatoes.

This is the healthy eating referred to by Ms. Obama and the Robert Johnson Foundation study. It endures where its predecessors failed because it works. People actually lose weight without having to count calories. They eat until they are full, so do not feel deprived and find it easy to put up with the loss of starches and desserts.

This approach was developed by the free marketplace, over the hysterical objections of the academic and regulatory nutrition authorities. The establishment labeled the Atkins diet dangerous and predicted it would kill its adherents. Instead, the descendants of Atkins’ program are killing off the nutritional competition. And this puts the Left wing in an untenable position today.

The late Nobel-prizewinning economist Milton Friedman compared political leaders to the leader in a V-formation of ducks. Every once in a while, Friedman said, the leader would look back and notice that he was flying alone. The ducks had deserted him, flying off in another direction. The leader was forced to scramble after them in order to get back in front of the V and resume his leadership position. In this case, the public realized that the government’s nutrition leadership was wrongheaded and disastrous. They left formation and flew off in pursuit of an approach that worked – the principles pioneered by Atkins and refined by newer, more scientific approaches like the SouthBeach diet.

Now the Left is scrambling to get back in front of the V. She knows that she needs to hurry. Ms. Obama doesn’t just want children to stop getting fat. She wants to be able to claim the credit for that result.

As it stands now, she can hardly claim credit for trends that began well before she even became First Lady. Her only hope is to associate herself in the public’s mind with the business trend away from the failed Establishment diet. That is why she chose the Wall Street Journal as the venue for her piece, because of its association with business. She knows her public will not actually read the op-ed. That is good; she wants them to hear about it through the filter of the mainstream media, which will spin its content in ways favorable to her. Her constituency will believe anything bad about business, so she will be seen as telling business what is good for them and for the public. And when the Administration eventually proposes rules telling food producers what they can and can’t produce and how to produce its output, she can then be seen as benign – somebody who is merely helping business to do what is good for it as well as everybody else. And she can claim credit for outcomes attained before those rules ever went into place. The public will have forgotten, if it ever knew, the real story.

Michael Jacobson’s back is against the wall because the blood-sugar revolution is threatening to abort the CSPI’s cherished goal of federal regulation of the American diet. If free markets are allowed to cure the obesity “epidemic” unaided by FDA regulation, it will dawn on the public that the FDA is the equivalent of Edmund Rostand’s character “Chantecler” in the eponymous allegorical play. Chantecler was a rooster who lived his life convinced that his own crowing was responsible for the rising of the sun at dawn, only to suffer cruel disillusionment after a bout with laryngitis.

Jacobson is desperate to achieve FDA regulation in time to claim credit for lobbying in its favor. He, too, is scrambling to get back in front of the V. If the free-market stampede away from sugar and carbohydrates goes on, soon he will not be able to claim the existence of a crisis as grounds for an FDA takeover of American nutrition. CSPI’s raison d’être will be exposed as intellectual pretense.

Jacobson cannot appeal to consumers directly because they are not about to accept his self-appointed expertise as a substitute for their own. After all, they are the experts on their own bodies, their own tastes and preferences – not Michael Jacobson and CSPI. He wants his views enacted as regulatory law because consumers won’t be able to veto their adoption and will then be stuck with them, like it or not.

How (Not) to Cure Social Problems

The most striking aspect of the nutritional debate is its utter clarity when explained as above. So-called “epidemics” of obesity and diabetes were caused by failures of regulation and academic expertise. They are now being eradicated by the free market. As the lawyers say, these facts are not in dispute. Ms. Obama herself is at pains to establish them, although she does not say so in these words.

The Left only wants nutritional regulation for reasons of naked opportunism. There is no case for regulation to prevent obesity and diabetes because it is too late for that. There is no case for regulation to cure them because that is already happening, to whatever extent possible. There is no case for regulation to prevent future incidence because the free market’s program for prevention is already well under way.

Of course, one could always argue that the free market is taking too long to do its work. The contention that markets work slowly while regulatory government works quickly and expeditiously seems grotesque on its face, which is probably why we don’t hear it advanced by Ms. Obama or Jacobson. Of course, we will continue to be browbeaten with news reports about obesity and diabetes. It takes time for blood-sugar levels to normalize. Nerve damage caused by diabetes, even the Type II kind, is probably irreversible.

But truth is like a cat. Once it escapes confinement, it is hard to get back in the sack.