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The Big Macs are coming: nutrition regression in free markets. Daily Post 29 Oct 1998.

29/03/2012

Are we nuts when it comes to good nutrition?  Or are we being monkeyed around with by evil corporations out to make a fast buck?

Economists know free markets have enormous benefits for consumers, producers, and the economy as a whole.  Why then do free markets keep giving good nutrition the knockout punch everywhere you look.

Year after year, nutrition experts and organisations continue to warn the public that nutritionally, their eating and drinking habits (usually of traditional products) are changing for the worse, usually for introduced “western” or “modern” foods and drinks (see the 1995 Report on Fiji’s Nutrition Situation by the Fiji National Food and Nutrition Committee).

Dalo, roti, fish, bele, traditional snacks (such as beans, sao and bhuja), and bu (coconut water) are inexorably giving way to rice, noodles, potatoes, fatty mutton pieces, “modern” snacks (twisties, bongos) and fizzy drinks.

The experts point out the associated deterioration in community health, with lifestyle diseases on the rise, with children especially being affected by undernourishment and dental decay.  While the experts know of the resulting long term economic costs for the nation, they also admit that past nutritional planning has just failed.

Can anything be done?  Should anything be done?  There are two extreme views around.

One view is that we are seeing free choices by consumers, on “level playing fields”: these consumers know what is best for them, not nutrition “do-gooders”.  Why should any Government interfere with that free market choice?

The opposite view complains that there are “evil” capitalist corporations out there, concerned only about their big bucks, manipulating our simple consumers who are just too ignorant and powerless to resist the madness of free markets?

This article suggests that neither this simplistic model of free markets leading to utopia for consumers, nor that of evil corporate plotters fooling ignorant consumers through free markets, are useful, or even accurate.

Should We Monkey with Free Markets?

Of course, consumers’ needs and desires, can be, and are manipulated.  But do we critics who shudder at the thought of Big Macs and KFCs taking over the world, pay enough attention to the importance of convenience and quality to consumers?

Do our public policies for fostering traditional nutritious products, think about the basic fact of life in any competitive free market economy, that enterprises survive only if they can generate secure profits for investors?

Do we ensure that our traditional products battle on “level playing fields” when it comes to public funding of supporting infrastructure?  Similarly, do public policies ensure there is enough public funding for sports, which are happy hunting grounds for corporate advertising?

The unfortunate reality seems to be that nutritionally, when it comes to competition between traditional products and new introduced products, there are no “level playing fields”.

But then,Fiji(and developing countries everywhere) face the most difficult problem: how do you ensure a level playing field for traditional nutritious products, without losing the benefits of free market consumer choice?

Should Governments discourage or even ban certain products?  Should Government regulate advertising? Should Government pump in money for traditional products? Or should Government planners find some easy chairs, yawn about the freedom of choice, and leave it all to free markets?

Free Market Benefits

Economic policies everywhere are inexorably moving towards the freeing up of markets, not towards greater interference by government.

Basic economics states that one of the great advantages of free markets is that when every consumer is completely free to choose between all available goods (local and imported), of known “utility” (satisfaction), he buys just the right amounts of each, thereby maximising his satisfaction, for each dollar spent.

Thus the satisfaction from the last dollar spent on a fizzy drink (say Coca Cola) will be equal to the satisfaction derived from the last dollar spent on a drinking coconut.  Otherwise the consumer would rearrange his spending.

The theory suggests that if this free consumer choice is interfered with (by Government or nutritionist “do-gooders”), individual consumers and the economy would be worse off.

We can all look at the limited choice and shoddy quality of goods which citizens of centrally planned economies (likeRussiaorChina) had to suffer before the advent of free markets.  Just asFijiconsumers also had to suffer in the past, when protection of our local products kept out imports.

So why interfere with free markets?

The argument is no doubt valid for most instances of consumer choice inFiji.  However, there is also a large category of commodities, where the benefits of “free consumer choice” are not so clear-cut.

Look at the choice between Coca Cola and drinking coconuts (bu).

Coconuts versus Coca Cola

A drinking coconut (often with some coconut meat inside) costs from 30 to 60 cents.  A bottle of Coca Cola costs 60 cents (and much more, once upon a time, when there was less competition!).

A coconut is a tasty, natural nutritious product, with a whole range of vitamins, good for children (and adults).  Coca Cola is a concoction of water, sugar, gas, artificial flavours, usually available cold.  It has little nutritional value.

The nutritional value per dollar spent on the coconut is much greater than the value derived from the dollar spent on the fizzy drink.  Many will argue that a cold coconut drink tastes better.

Yet give a child (or an adult) a choice between buying a coconut in the market and a bottle of Coca Cola, most consumers will choose the fizzy drink, most times.

Just as consumers are increasingly choosing noodles over dalo, modern snacks over sao or fried beans, cucumber and lettuce over bele, a Big Mac over fish in lolo.

Of course some consumers can be fooled, but surely not all the time and not everywhere in the world.  We would only fool ourselves if we thought that.

Not By Bread Alone

We do not seem to pay enough attention to the reality that in the world’s free markets, consumption is determined not just by utility and satisfaction, but perceptions of satisfaction.

These perceptions are powerfully conditioned by advertising.  But, while advertising does get up to monkey business that affects consumer choice, advertising is not everything.

There are other critical consumer factors such as availability, quality, and convenience of the products.

Also vital are economic factors such as ease of production, distribution, innovation of products through research and development, and not forgetting the need for profitability of investment.

These free market factors and the environment set by Government (by default), virtually guarantee, that the coconut is going to lose out to Coca Cola, that traditional products like dalo will lose out to introduced products like instant noodles and rice.

Fiji will continue to lose nutritionally (and economically), unless action is taken on a broad front, to ensure that there are genuine “level playing fields” on which our traditional products can compete with the “modern” products, in a free market situation.

The next instalments elaborate on these ideas.

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