When you rob Peter to pay Paul, what happens when Peter is REALLY angry and powerful?

We all love low prices.  If we can get something for nothing, all the better.  If something does not keep dropping in price, it becomes fodder for politicians to rail against the party in power as not doing enough to keep prices down.

We often - if not always - miss the point.

Prices are a relative indicator of priorities.  When we get caught up so much in the "something for nothing" game, we forget that what we pay for something determines the value and incentive someone else has to produce that good or service.  (Just try to find a high-quality, full-feature VCR these days.)  Typically, in theoretical economics, the price of a good or service depends only on the availability of the item (supply) and the desire of the public for it (demand).  When supply is high and demand low, prices drop, and vice versa when demand is high and supply low.  On paper, this works well at allocating consumable or finite resources (like food and time respectively), but in the real world, we manipulate prices in so many ways that disrupt the ideal marketplace, often with disastrous results.

One need look no further for an example of this than US food and agriculture policy for the last seventy years.  After the Depression, and the devastation of rural America during the Dust Bowl of the first half of last century, we made a social compact to support farming with crop insurance, infrastructure support, and - unfortunately - subsidies.  Let me quickly state that reducing the risk associated with farming, especially for independent and small farmers who should make up the entirety if not the majority of farming in this country, is a good thing.  However, the way we have subsidized it has had disastrous results for our health and our way of life.

The Union of Concerned Scientists just released a report (with a catchy video) detailing the cost to Americans in lives lost and medical cost escalation due to the skewed policies of farm subsidies and crop insurance in the US, and the behaviors that we have adopted readily because of the distortions in the market.  Because of the cost and availability of fruits and vegetables relative to subsidized crops such as corn and soybeans (and their byproducts), Americans eat less than half of the fruits and vegetables necessary to maintain health.  Meanwhile, overproduction of these "staple crops" results in the desire to find as many ways as possible to get the product into the marketplace.  Anytime a cheap, subsidized product can replace a more expensive, unsubsidized one, the market will make sure it happens.  Thus we have high-fructose corn syrup, soy lecithin, and cheap junk food from various forms of processed soy and corn finding their way into our food system.  (The fact that 90% of this soy and corn comes from genetically modified sources is a topic for another day.)  From the report:

In addition, policy makers should remedy flaws in current
farm policy that restrict the supply of domestically
grown fruits and vegetables in more overt ways.
Currently, farmers who receive subsidies to grow commodity
crops such as corn are prohibited under those
subsidy programs from planting any acreage with
fruits and vegetables, except under certain conditions.
The removal of such planting restrictions would be
an important step toward facilitating more competitive
market conditions for healthful foods. 

The federal crop insurance program is yet another example
of where farm policy reform is urgently needed.
The USDA-administered and -subsidized insurance
program is oriented toward farmers who grow a handful
of subsidized commodity crops, including corn,
soybeans, and cotton. Many fruit and vegetable farmers,
particularly those growing a variety of crops, do
not have access to adequate insurance. This omission
places these farmers at a disadvantage, as the
lack of crop insurance, particularly for those on smaller
farms, often translates into difficulty in obtaining
needed credit (O’Hara, 2012). Instead, a USDA-backed
insurance policy covering all the crop and livestock
revenue that a farm generates in a year (in contrast
to crop-specific insurance policies) should apply. The
new policy could provide risk management to diversified
fruit and vegetable farmers, thereby helping
them supply more local markets and consumers with fresh
and affordable produce.

Federal farm policy is not the only change needed, we must all make smarter choices as well.

The savings associated with major shifts in policy and behavior combined is huge.  The authors of the report calculate that the savings in medical care and treatment resulting from increasing fruit and vegetable intake by one more serving a day would be $5 billion a year today and $13 billion a year in 2030.  Increasing just to the recommended level of daily fruit and vegetable intake would mean a savings of $17 billion a year today and $54 billion a year in 2030.  That just represents the cost savings from increased cardiovascular disease relative to a baseline of healthy eaters.  The greater cost to society comes from the early deaths associated with this subsidized lifestyle of unhealthy eating.  Again, the report:

While these medical cost savings are significant,
they are dwarfed when compared with the value of
increased longevity that would result from a population-
wide dietary shift. Assuming, as above, that
premature deaths from heart disease and stroke are
proportional to the incidence rates of these diseases,
we estimate that a sustained daily per capita oneserving
increase in fruit and vegetable consumption
would prevent 30,301 premature deaths annually.
And if Americans ate fruits and vegetables at the
Guidelines’ recommended levels, we could save
127,261 lives each year.

The report acknowledges that setting a value for human life in an economy has its pitfalls.  We do not think of people's lives in terms of the value someone else would pay for them, but the report does look at the costs people will pay to reduce their risk of death.  Given that valuation, the report estimates the value of the saved lives from improved diet come in at around $11.4 trillion.

Yes.  With a "t".  Trillion.

This does not account for the value each person adds to the economy, nor the improved quality of life of both the saved lives and the rest of the Americans who eat a healthier diet.  This just values the cost savings from treating one range of diseases associated with unhealthy eating and the reduced risk of death for the lives saved.  With $11.4 trillion as a starting point, think of the impact if we made even some of the simple changes outlined in the report.

We can go on believing that a working economy will reflect our priorities and give us the right things at the lowest price, but the opposite is true.  We must strive to make sure our purchases in the economy reflect our values.  We must also make sure that our lawmakers reflect these values in the policy decisions they make, and that those decisions contribute to our quality of life - not damage it.  We can celebrate low prices for basic needs, and ignore the fact that the proliferation of low cost "staples" means higher costs and shorter lifespans in the future.

But nature has a way of ignoring our man-made economy and our political rhetoric.  If something is unhealthy, no amount of political speechmaking or low prices will make it not so.  It is up to each of us to make our economy reflect our values...and to make our economy save life instead of wasting it.