I’ll start at the beginning.
Like any good tale involving government waste and abuse, it has its origins in the New Deal under that wonderful statist, Franklin Delano Roosevelt. In 1933, the first Agricultural Adjustment Act (AAA) was passed by Congress at the urging of FDR as a part of a host of legislative proposals right after he was inaugurated. The AAA was meant to help rural farmers, which made up a substantially larger portion of the population and work force than currently. In fact, the origins of the problem lay in increased productivity due to innovations in technology and previous government meddling in markets. During World War I (1914-1917 for the US), an obscure official named Herbert Hoover headed up the U.S. Food Administration, which was implemented to increase farm production in the United States in order to help support our (starving) European Allies during the “War to End All Wars” (ahhh-hahahahaha!!). Ahem. (For you young’uns and/or the historically ignorant, that was the wonderfully optimistic name given to World War I at the time).
Anyway, the U.S. Food Administration was charged with stabilizing wheat prices, but like every price-control ever tried in the history of for-fucking-ever, it inevitably failed because – as every Austrian-schooled economist knows – no single individual, nor collection of individuals, nor government cabal, can possibly know market prices and shifts quickly enough to react to those changes. And by the time they do, it’s too late. This is not a failure of capitalism, yet it gets blamed every time for the failings of bureaucrats.
From 1920-1930 farm productivity in the US increased as farmers switched from horses to engine-driven machines. For one example, prior to WWI (1914), farmers produced 690,000 bushels of wheat per year. At the end of WWI, that number had jumped to 945,000 bushels.
Farmers were still producing 800,000 bushels of wheat a year in 1930, and they were generally growing more crops of various kinds than they could sell. Because of the large U.S. crop and meat surpluses, prices for farm products fell dramatically.
Id. (Prior link, under “Agricultural Woes”).
Because the US government had established arbitrary – and frequently inflated – prices for wheat and other crops, when it became clear there was a food glut, due to (among other reasons) increased production from other countries around the world, the US had to impose high tariffs to keep the price of imported goods artificially high.
Efforts in Congress to protect U.S. farmers from foreign competition failed. As a result the farmers’ situation worsened throughout the 1920s. Farmers had to borrow to buy seed and equipment. Most took out loans against their land and homes. But food prices continued to fall, and by the late 1920s many U.S. farmers were hopelessly in debt. They began to miss payments on their loans, weakening their local banks. Between 1921 and 1929 an average of more than six hundred banks failed every year (compared to sixty-six a year between 1910 and 1919). Almost all of the failures were small rural banks. By 1929 farming families—roughly a quarter of the U.S. population—were desperately struggling.
Id.
Another website, dedicated to Iowa history, paints a compelling picture:
In 1920…the government ended its guarantees. Farm prices were allowed to drop back to natural prices—determined by supply and demand. In this case, there were big supplies. Farmers continued to produce at high levels and soon surpluses appeared. As a result, prices for crops and for land fell. Those who had borrowed money could not pay off their loans. Even if they sold their farms, the money they received sometimes was less than what they owed. When banks could not collect the money they borrowed, they could not repay the people who had deposited money in their bank accounts. Many Iowa banks closed, and depositors lost their money. Around the state, 167 banks closed in 1920. That number rose to 505 in 1921. For several more years the number of bank failures remained high.
And yet another site regarding the origins of the Depression points out this:
Between 1923 and 1929 worker output of manufactured goods increased by 32 percent. Assembly lines and new machinery boosted production. As manufacturers saw it, the more goods produced and sold, the more profit there was to be had. Homes in U.S. cities were being electrified, which created a market for new, timesaving electric appliances. Appeals to buy were everywhere. Advertisers touted their products, and movies teased Americans with images of movie stars living with luxuries all around. Although most Americans had little money left over after paying for necessities such as housing and food, they found a way to buy the new automobile, the electric washing machine, and the radio: It was called credit, or installment buying. A small first payment (down payment) was made; then the rest of the price was paid over time. This system worked well as long as the buyer had a job. Installment buying had never been used in America before the late 1920s. Previously, if the total cash price could not be paid up front, the purchase was not made.
I’ll just leave those bold items there to see if they ring any bells or set off any alarms.
But back to the beginning of the non-stop government subsidizing of the farm industry for one-hundred years. The AAA of 1933 was meant to – guess what? – artificially prop up the prices of wheat and other farm commodities. (Stop me if this sounds familiar). It also included a program to feed the hungry – the precursor to Food Stamps. These kinds of short-term policies are always done with the best of (short-term) intentions, but never with an understanding of the inevitable *pop* of the bubble and what that is likely to look like, so we stagger from one government-inflated bubble to the next, always wondering how we got there and blaming supposedly “free” markets for the failure of horribly shitty bureaucratic and statist policies.
Roll the clock forward and the AAA becomes a fixture of every budget since FDR’s. NPR did a piece on the debates surrounding the 2008 Farm Bill. Congress passed that version over then-President Bush’s veto. Bush noted that the bill was bloated and contained all manner of pork for various Senators – because it did. Now all of this might leave one scratching one’s head. Why do farmers still need subsidies, particularly when: (1) the entire basis for the country’s economy has shifted away from farming; (2) small farms have all but disappeared; (3) most of the subsidies, given how they’re structured, benefit large agri-businesses, like Monsanto and Archer-Daniels-Midland (ADM); and (4) we can import grains and other such commodities from nearby countries very cheaply, given the absence there of minimum wage laws and other government interference that doesn’t drive up the costs associated with farming?
The answer, of course, is found in that link regarding agri-business. The New Republic points out how Congress has ended its direct subsidy program because of how politically unpopular it was to pay farmers NOT to grow on their land, thus incentivizing non-work AND paying more to those who hold the most acreage (larger farms), rather than through any justified need.
There is an old joke that ADM harvests more in Washington, DC, than it ever does in Iowa or Nebraska. I was in Omaha for a conference by a small-government organization, at which the Boss was speaking. After a speech about the benefits of smaller government as it relates to CrossFit, during the Q & A, someone asked about the corn subsidies and the room got quiet. Greg made a joke about it and everyone laughed, but it was clear that it was a political third-rail.
And now is when we get to the heart of the matter…
Corn is subsidized more than just about anything in the United States. To wit:
A guaranteed source of income is attractive. That’s one of the reasons that, of the 300-million-plus acres planted with food (other than grass, hay and forage for animals) in this country, half are corn and soy. Another 50 million are wheat. Only 14 million are devoted to fruits and vegetables, from peas (1.2 million acres) to mangosteens (1 acre, which I’d dearly love to visit).
So what? You say.
In this country, what is corn primarily turned into? HFCS-55. For those not in the know, that is High Fructose Corn Syrup-55. Which means that it has a mixture of 55% fructose and 45% glucose, made thusly.
It is in virtually EVERYTHING you eat. And it is subsidized, which is why Coke and Pepsi can produce vast quantities of their product for pennies. The government is underwriting the costs of production to the tunes of billions. That’s why Coke is cheaper than water in developing nations. And there’s the problem that Coke and Pepsi use 2.7 liters of water to produce just 1.0 liter of product, thus causing droughts in some areas.
Now, that would be just one bad example, but we return to what I like to call, the Economic Cycle of Evil.
First, government underwrites the costs of production of Coca-Cola, Pepsi, and all of the shitty food that has HFCS in it. HFCS has been shown to be – because it is – awful for human beings (and a lot of poor lab rats). Dr. Richard Johnson, a nephrologist at the University of Colorado has done pioneering research on the effects of fructose on the human body. His book, The Fat Switch, while perhaps not the easiest read for a lay reader, provides all the scientific evidence one would need to reach the only conclusion that can be reached: HFCS sets off a cascade of biochemical reactions in the body that leads to fat storage. It is an evolutionary mechanism and human genome researchers have figured out exactly where the mutation occurred in our DNA – and when – that gives us some pretty compelling guesses as to the “why” of it. It’s how we survived periods of famine. Like bears hibernating for the winter, our bodies are hypersensitive to fructose in order to allow us to store food as fat, in response to the slightest uptick in fructose consumption. Unfortunately, in the current environment, with plentiful food, not only are we getting fat in record numbers, we’re also getting diabetes, non-alcoholic fatty liver disease, more cancers, kidney disease, hypertension, and even dementia and Alzheimer’s – all of which are increasingly being linked to excess sugar consumption. The terrible thing about all of this – and why soda is likely the biggest culprit – is that according to experiments, because our bodies are so sensitive to fructose, we can only consume limited quantities of it directly. I have the paper but can’t get it uploaded now, but my recollection is that the number was around 20g of fructose. That is, in an excellent experiment done by Dr. Johnson, people couldn’t consume much more than 20g of fructose directly without having digestive problems, like gas, some diarrhea, etc. HOWEVER, when fructose is combined with glucose – which is called sucrose, also known as table sugar – people can consume vastly higher quantities. Moreover, when that combination is consumed in liquid form, as in sodas – not only can we consume vastly higher quantities than our bodies can safely intake, we also seem to crave more.
Second, after government underwrites Coke and Pepsi’s production costs, people consume it in vast quantities and get sick. Now, why would people do that? Certainly, part of it has to fall to individual choices, however, even as libertarian-leaning as I am, it’s hard to fully blame people when Coke and Pepsi give hundreds of millions of dollars to health organizations, who simultaneously claim that this money won’t influence their public statements or research, yet studies show it does. Regardless, just ask yourself this simple question: why in the fuck is Coca Cola funding the Juvenile Diabetes Research Foundation? Is there anyone who can read who believes that Coca-Cola or Pepsi will somehow help with the epidemic of juvenile Type 2 diabetes? The influence of big soda on these organizations has been widely reported in the media and I’m proud that my company and our CEO have been at the forefront of exposing that fraud, like the Global Energy Balance Network and their ilk. Thus, the American (and world) consuming public is bombarded with messages about the health benefits of soda. Consider this: Coca Cola was sued over its advertising for Vitamin Water and part of its defense was not that its advertising was misleading, but that no one could seriously have believed Vitamin Water was healthy. I shit you not. Coca Cola settled the suit eventually.
Third, the overwhelming majority of consumers of Coca Cola’s and Pepsi’s products are the poor. And not just minorities. As Kevin Williamson detailed in a piece for National Review, the Appalachian spine of the country that runs from southern New York all the way south to northern Mississippi, is 98.5% white, and all are abysmally poor. What do they buy with their food stamps/EBT cards? Cases of soda.
I don’t think much of that overheard remark at the time, but it turns out that the local economy runs on black-market soda the way Baghdad ran on contraband crude during the days of sanctions. It works like this: Once a month, the debit-card accounts of those receiving what we still call food stamps are credited with a few hundred dollars — about $500 for a family of four, on average — which are immediately converted into a unit of exchange, in this case cases of soda. On the day when accounts are credited, local establishments accepting EBT cards — and all across the Big White Ghetto, “We Accept Food Stamps” is the new E pluribus unum – are swamped with locals using their public benefits to buy cases and cases — reports put the number at 30 to 40 cases for some buyers — of soda. Those cases of soda then either go on to another retailer, who buys them at 50 cents on the dollar, in effect laundering those $500 in monthly benefits into $250 in cash — a considerably worse rate than your typical organized-crime money launderer offers — or else they go into the local black-market economy, where they can be used as currency in such ventures as the dealing of unauthorized prescription painkillers…
www.nationalreview.com/article/367903/white-ghetto-kevin-d-williamson
This is right in the heart of where Lyndon Johnson announced his “War on Poverty” in 1964. I’ll leave it to the educated reader to figure out how much has been pissed away on that “War” and whether or not we’ve won that one. We might want to start being a little more cautious about the “Wars” we choose to fight, be it the one on Drugs, or Poverty, never mind the ones where we actually use the military.
Fourth, the overwhelming majority of cases of diabetes and related chronic diseases also hit the poor, not coincidentally, given their consumption of soda. That data is pointed out in the same hyperlink above at number three.
Fifth, we are now a country of socialized medicine, so the costs for diabetes treatments falls to all of us. And, boy, is it expensive. That’s to say nothing of how many amputations there are from diabetes. I mean, how do you properly calculate the costs associated with losing a foot because of diabetes?
The National Limb Loss Information Center reports that more than 133,000 amputations are performed nationally every year, with the majority of them because of diabetes-related complications like infection and peripheral arterial disease.
www.californiahealthline.org/insight/2013/treatment-trends-pushing-diabetic-amputations-down-list-of-options
The projections for 2050 are that there will be 100,000,000 (yes, that’s one-hundred million) people with diabetes in the United States by 2050. The CDC’s website has all kinds of data on diabetes. None of it is good. And let’s try to remember: I am talking about only ONE of the diseases to which we can attribute the influence of HFCS-55. This is to say nothing of the statistics on obesity, coronary artery disease, or the myriad of other conditions that all arise from hyper-insulinism in homo sapiens.
Now, here comes the kicker. And how this all relates to CrossFit, Inc. I have been assailed – as has the Boss and many of us at CF HQ – on many occasions about the proliferation of CrossFit gyms, concerns about quality control, blah blah blah. Oddly enough, we looked around to see who else was growing at a rate like us, as we occasionally do, out of curiosity more than anything else.
The only thing we could find that was close was…..wait for it…. kidney dialysis centers! There are approximately 7200 CrossFit Affiliates in the United States. There are about 6800 kidney dialysis centers. They’re EVERYWHERE. But they’re hidden. People go into these centers who have been “lucky” enough to make it to Stage 4 or 5 of diabetes – most patients will die of other complications long before that, generally.
Now, here’s the part that made me throw up a little in my mouth.
Who owns the majority of these kidney dialysis centers? Berkshire Hathaway. Yes, the company founded and owned by…the Oracle of Omaha – Warren Buffet. Buffet is the single largest shareholder of DaVita, a company that makes kidney dialysis machines and these dialysis centers. His only major competition is another company called Fresenius.
And what else is Berkshire Hathaway the single largest shareholder of? Why, Coca Cola, oddly enough.
I’m not suggesting there’s some giant conspiracy to kill people, with Buffet at the center of it. I’ve never met the man. I think he’s just investing in growth industries. Whether he’s aware of the relationship between Coca Cola and diabetes – or exactly what his or Berkshire Hathaway’s role is in lobbying for corn subsidies from the government, that’s beyond the scope of this. Maybe some investigative reporter with more time can dig into it.
I just know that our government (1) subsidizes the production of a product that it then (2) pays for people to buy with government subsidized money (SNAP/food stamps/EBT), and (3) that product has been indelibly linked to a host of chronic diseases, which the government then wants (4) everyone to pay for with government subsidized health insurance. It’s a wonderful, cradle-to-grave (literally) program.
And none of it will change until “We, the People” do something about it. Until we demand that it fucking stop or people will lose their jobs – or worse. We went to war over taxes and the Stamp Act, among other abuses by the British, and now we’re sliding into death, inexorably, and we’re paying for it with our dollars and our health, and still blaming capitalism for it. All while our benevolent overlords in Congress and the Oval Office continue to collect money from political donors, pass legislation favorable to those donors – like agri-business and others – and tell our children that pizza is a vegetable.
I’m out. Happy Thanksgiving.