Revenue Needs, Ag Policy, and Taxes

Mr. Kristof has again hit on the food aspects of agricultural policy in the New York Times. Today, he makes some keen observations on Governor Paterson's proposal to raise revenue with "an 18 percent sales tax on soft drinks and other nondiet sugary beverages."

The state's use of taxation authority to stem problems brought about by certain types of food consumption raises interesting questions about the role of consumers and the notion of consumer sovereignty that has been largely ignored in agricultural policy. The articles I cited last week provide a good introduction to this topic. In some areas, increased knowledge about the products being consumed and their effects (on the consumer or on the public through the production system) is an insufficient driver of change. Thus, as with smoking, Mr. Kristof notes that revenue needs were the gateway into executing a beneficial policy from a public health standpoint through taxation, in much the same way that a soda tax may be a viable means of improving public health today.

Interestingly, the notion of food democracy is built upon a very strong premise of consumer sovereignty. That is, it would appear somewhat incoherent to think about food democracy as generating policy that rejects consumer sovereignty. But the matter is surely complicated by our representative form of governance, the revenue needs we have on a public level, or both. Unfounded paternalism is likely to emerge as the rallying cry for those who strongly believe in consumer sovereignty. But I doubt that cry will come from those who favor food democracy. Rather, I suspect we should further refine the notion of food democracy with a model of a representative food democracy that has revenue needs and, at times, should be paternalistic.

Mr. Kristof also notes, "Part of the solution must come from reforming agriculture so that we stop subsidizing corn that ends up as high fructose corn syrup inside soft drinks. Unfortunately, Mr. Obama on Wednesday chose Tom Vilsack, the former governor of Iowa who has longstanding ties to agribusiness interests, as agriculture secretary — his weakest selection so far." His opinion of Governor Vilsack aside, I wonder what the political viability of such a tax means for the future of subsidized agriculture when considered in light of the market liberalism underlying international trade. If public support for such a tax emerges, then it would seem to me that public outcry against our current methods of subsiding production should emerge. Perhaps subsidies should not be decoupled from the product produced if consumer choices--demand--is not the sole basis upon which production choices should be made. This should raise in many readers' heads questions about international trade. That is, I do not think our international trade regimes have questioned consumer sovereignty. That is, they would not allow subsidies focused on food production with less harmful consumer effects--justified by consumers' failure to adequately rationalize the costs of consuming that food into purchasing decisions. If that is true, then the market liberalism that dominates international trade may itself prohibit ag subsidies that would further the same ends as the policies implemented through state taxation. Of course, skewing demand through tax policy is not the same as subsidizing certain crops, or is it? And, in any event, removing corn subsidies for reasons related to public health does not necessarily mean that alternative subsidies should be provided to the production of more healthy food. But I could spin a strong argument that they should based on a food security rationale and bolstered by the inherent uncertainty of production and the prospect of shortage, if not a cheap-and-healthy-food mantra.