Money for health care : taxing soda.

[slinkerton]

A health policy report by the New England Journal of Medicine recently came out discussing the health and economic benefits of taxing soda:
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First the article reviews the literature that supports how sugar-sweetened beverages are contributory to obesity, insulin resistance and type 2 diabetes, and coronary heart disease.

The authors propose a tax of 1 cent per ounce of beverage, which would increase the cost of a 20 oz. soda by 15-20%. If a consumer who drinks a conventional soft drink every day switches to a water, they consume about 200 fewer calories each day, which has obvious health benefit.

They estimate that a national tax of 1 cent per ounce on sugar-sweetened beverages would raise $14.9 billion in the first year alone, and could be used for childhood nutrition programs, obesity-prevention programs, or health care for the uninsured.

But the most interesting, and perhaps the most helpful part of the article comes from its discussion of the "economic rationale" for taxing soda:

Economists agree that government intervention in a market is warranted when there are "market failures" that result in less-than-optimal production and consumption. Several market failures exist with respect to sugar-sweetened beverages. First, because many persons do not fully appreciate the links between consumption of these beverages and health consequences, they make consumption decisions with imperfect information. These decisions are likely to be further distorted by the extensive marketing campaigns that advertise the benefits of consumption. A second failure results from time-inconsistent preferences (i.e., decisions that provide short-term gratification but long-term harm). This problem is exacerbated in the case of children and adolescents, who place a higher value on present satisfaction while more heavily discounting future consequences. Finally, financial "externalities" exist in the market for sugar-sweetened beverages in that consumers do not bear the full costs of their consumption decisions. Because of the contribution of the consumption of sugar-sweetened beverages to obesity, as well as the health consequences that are independent of weight, the consumption of sugar-sweetened beverages generates excess health care costs. Medical costs for overweight and obesity alone are estimated to be $147 billion — or 9.1% of U.S. health care expenditures — with half these costs paid for publicly through the Medicare and Medicaid programs.


Ok. Kids love soda. Overweight kids become obese adults which cost the health care system a lot of money. In this case, the government would be intervening in a market in order to change people's behaviors (reduce consumption), increase health awareness, and offset the health care cost caused by an unhealthy product.

So what do you think:
Is this a reasonable course of action that would actually improve health outcomes, or do people love their soda too much, like they love their tobacco?

What do you think of the concept of ' government intervention in market failures'? It seems to me that under this idea, any food shown to be contributory to chronic disease could be justifiably taxed, and the physician authors of this article are actually asking government to help place more responsibility on reducing health care costs on the patients themselves.

[karenann33]

I loathe soda's and frankenfoods even though I consume more than my share. I personally would be all for taxing the heck out of soda, candy and junk food. Set a formula like anything that is more than 15 grams of sugar per ounce gets taxed.

Do I think this would improve health outcomes? Did raising the price of tobacco stop people from smoking? I know my MIL quit once a carton got up to a certain price. It was too late though as she was later diagnosed with pancreatic cancer.

[timetraveler]

A health policy report by the New England Journal of Medicine recently came out discussing the health and economic benefits of taxing soda:
To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

First the article reviews the literature that supports how sugar-sweetened beverages are contributory to obesity, insulin resistance and type 2 diabetes, and coronary heart disease.

The authors propose a tax of 1 cent per ounce of beverage, which would increase the cost of a 20 oz. soda by 15-20%. If a consumer who drinks a conventional soft drink every day switches to a water, they consume about 200 fewer calories each day, which has obvious health benefit.

They estimate that a national tax of 1 cent per ounce on sugar-sweetened beverages would raise $14.9 billion in the first year alone, and could be used for childhood nutrition programs, obesity-prevention programs, or health care for the uninsured.

But the most interesting, and perhaps the most helpful part of the article comes from its discussion of the "economic rationale" for taxing soda:

Economists agree that government intervention in a market is warranted when there are "market failures" that result in less-than-optimal production and consumption. Several market failures exist with respect to sugar-sweetened beverages. First, because many persons do not fully appreciate the links between consumption of these beverages and health consequences, they make consumption decisions with imperfect information. These decisions are likely to be further distorted by the extensive marketing campaigns that advertise the benefits of consumption. A second failure results from time-inconsistent preferences (i.e., decisions that provide short-term gratification but long-term harm). This problem is exacerbated in the case of children and adolescents, who place a higher value on present satisfaction while more heavily discounting future consequences. Finally, financial "externalities" exist in the market for sugar-sweetened beverages in that consumers do not bear the full costs of their consumption decisions. Because of the contribution of the consumption of sugar-sweetened beverages to obesity, as well as the health consequences that are independent of weight, the consumption of sugar-sweetened beverages generates excess health care costs. Medical costs for overweight and obesity alone are estimated to be $147 billion — or 9.1% of U.S. health care expenditures — with half these costs paid for publicly through the Medicare and Medicaid programs.


Ok. Kids love soda. Overweight kids become obese adults which cost the health care system a lot of money. In this case, the government would be intervening in a market in order to change people's behaviors (reduce consumption), increase health awareness, and offset the health care cost caused by an unhealthy product.

So what do you think:
Is this a reasonable course of action that would actually improve health outcomes, or do people love their soda too much, like they love their tobacco?

What do you think of the concept of ' government intervention in market failures'? It seems to me that under this idea, any food shown to be contributory to chronic disease could be justifiably taxed, and the physician authors of this article are actually asking government to help place more responsibility on reducing health care costs on the patients themselves.

If we can tax alcohol and tabacco we can tax soda. As far as I'm concerned there should be n age limit on soda just like there is on beer and tabacco. It's an addictive drug that is being marketed to children, and its as bad for our health as beer and tabacco if not worse.

And I don't see it as socialist to do this, if its fair to tell children they can't drink alcohol, and smoke cigs, if it s fair to tax that, its the same argument to tax soda. Soda is the tabacco of our generation.

[hubcap]

I think we should let people make their own decisions without government interference.

[lurk]

I think we should let people make their own decisions without government interference.
You're wrong! You need a nanny to keep you on the straight and narrow. After all it's not possible that you know what's best for you.

In other news ... Today's Wall Street Journal quoted Energy Secretary Dr Steven Chu as saying “The American public…just like your teenage kids, aren’t acting in a way that they should act,”

[Warrior]

Seriously? Another 30 or 40 cents for a drink is going to stop someone from drinking it? I find that hard to believe.

If it is really that bad, why not outlaw it all together? Probably because just like smoking and alcohol, we really don't care about "health outcomes", we just want an excuse to raise taxes. If someone wants to raise the tax on drinks and direct that money to health care, just say so. Don't wrap it up into some stupid concern about health outcomes. You can find a link betwen just anout anything and some type negative impact to health.

I find the justification based on market failures less than compelling. What is the optimal level of production and consumption? If obesity costs were 9.05%, would that be okay? Also, who can reasonably claim to not know that drinking sugar water will have adverse effects on them? I have never mentioned it to my 4 year olds and they told me it wasn't good for them. There is imperfect information in every purchase, that doesn't qualify as a reason to "intervene".

Obviously, my opinion of government intervention isn't too high. This isn't just a food thing. Exercising is bad, too, because there is a higher rate of heart attacks and death immediately following exercise than from sitting on the couch and eating chips. Better tax all those health nuts who get out and burn off 3X the calories they take in from soft drinks.

[Aronnax]

I think we should let people make their own decisions without government interference.

There's a country out there just like that, it's called Somalia.

[jesse]

While in principle it can be seen a proactive government to begin a tax regime where they target certain items, say soft drinks or even junk food itself, this could go very wrong. First and foremost, it is not the task of government to dictate consumption morality in a market place, let the consumers themselves handle that bit.

Instead of passing this problem off to government, how about we look at something more tangible, like telling parents to keep an eye on what goes into their childrens' mouths when they eat and drink. I understand it is not possible to monitor one's children all hours of the day thus it would be much preferrable to have parents sit down and educate them on what is healthy and unhealthy eating. Some parents can't tell and they should be provided information, better yet, make it dead simple abc 123 styled to drive the point home. The best of the bunch will lead by example instead of nagging on and on to their kids and families and relatives about eating right and exercising.

Point two, people should be taught to carry and take responsibility for their own actions. Yes you are hurting your health by not exercising and by eating hot air drizzled in fat, wrapped in a bun but those are your decisions, you get to shoulder the responsibility.

[Lucid]

I think we should let people make their own decisions without government interference.

People are still free to consume soda. And to smoke cigarettes. And to drink alcohol. They just have to pay a slightly higher price to do so.

[slinkerton]

Seriously? Another 30 or 40 cents for a drink is going to stop someone from drinking it? I find that hard to believe.
I think you're absolutely right. Even coming out and saying that a bottle of soda has 20% tax won't stop most people from drinking it, and the profit from this tax rests on this very fact.

If someone wants to raise the tax on drinks and direct that money to health care, just say so. Don't wrap it up into some stupid concern about health outcomes. You can find a link betwen just anout anything and some type negative impact to health.
It is true that the improvements in health outcomes from soda itself are minimal: obesity and diabetes are complex diseases that develop from a lifetime of multifactorial, chronic processes. Though I don't think the authors are hiding the fact that the main argument for the tax is its revenue-generating potential.

The Economist had a succinct point for a similar kind of criticism:
Critics have denounced the new measure as a “sin tax”. The American Beverage Association, with an outrage only a notch or two below that which sparked the Boston Tea Party, has called Mr Paterson’s tax an unjust “money grab”. The beverage industry is fearful that the new tax will do to fizzy drinks what similar taxes did to smoking: push prices so high that it discourages consumers. (see article here (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.))

I find the justification based on market failures less than compelling. What is the optimal level of production and consumption? If obesity costs were 9.05%, would that be okay? Also, who can reasonably claim to not know that drinking sugar water will have adverse effects on them? I have never mentioned it to my 4 year olds and they told me it wasn't good for them. There is imperfect information in every purchase, that doesn't qualify as a reason to "intervene".
As someone who works in health care, it's never safe to assume that the general public understands what you assume to be common knowledge, even to 4-year-olds. While I agree that being fully informed about a product is as much the responsibility of the consumer as that of the manufacturer, the market failure argument holds up, for me at least, when it states that consumers do not bear the full consequence of their consumption decisions, especially when those decisions can result in the need for long-term care of diabetes, for example, which everyone ends up paying for. The most widely effective way of changing someone's consumption of something is changing the price and forcing them to reevaluate a purchase. It's the same thing with cigarettes.

[Warrior]

While in principle it can be seen a proactive government to begin a tax regime where they target certain items, say soft drinks or even junk food itself, this could go very wrong. First and foremost, it is not the task of government to dictate consumption morality in a market place, let the consumers themselves handle that bit.

Instead of passing this problem off to government, how about we look at something more tangible, like telling parents to keep an eye on what goes into their childrens' mouths when they eat and drink. I understand it is not possible to monitor one's children all hours of the day thus it would be much preferrable to have parents sit down and educate them on what is healthy and unhealthy eating. Some parents can't tell and they should be provided information, better yet, make it dead simple abc 123 styled to drive the point home. The best of the bunch will lead by example instead of nagging on and on to their kids and families and relatives about eating right and exercising.

Point two, people should be taught to carry and take responsibility for their own actions. Yes you are hurting your health by not exercising and by eating hot air drizzled in fat, wrapped in a bun but those are your decisions, you get to shoulder the responsibility.

I agree. I'll add something I posted on another thread recently. While this might (I stress might) seem like an attractive option on the surface, the second and third order effects may be completely undesireable. Take cigarettes as an example. Increasing the tax on them prompted a complete shadow industry in NC (my home state) and maybe others whos only function is to smuggle cigarettes up the I-95 corridor to the northeast where they can be sold (illegally) without taxes. I'm not saying that would necessarily happen with soft drinks, but my point is that the government almost never considers the full ramifications of interventions like this. There is a bright, shining $14.9B (in the first year alone!!!) up for grabs and nothing else seems to matter.

[LaoTzu]

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High Fructose Corn Syrup is the devil. A main delivery device is in soda, and sugared beverages account for 9% of the average American's caloric intake.

A quick glance at the graph shows that the incline of obesity nearly mirrors that of HFCS's increased use in US foods.

As for letting people make their own choices, that's cool and all; but taxing them more heavily is not the same as denying them choice.

PS: It's about 10 bucks for a pack of smokes here in Canada...

[RBM]

HFCS is most certainly a money maker for some, and a money loser for others.

The tax approach is the most realistic ( versus I think we should let people make their own decisions without government interference. ) and allows none of the industries to do anything different - the farmers keep access to a viable market, as do the food processors.

I'd like to see the same approach of a tax on gasoline.

[lurk]

I find it interesting that most of the overweight people I know drink diet soda and use artificial sweeteners. I would be interested to see how well those graphs correlate with fast food revenue.

[Warrior]

I think you're absolutely right. Even coming out and saying that a bottle of soda has 20% tax won't stop most people from drinking it, and the profit from this tax rests on this very fact.


It is true that the improvements in health outcomes from soda itself are minimal: obesity and diabetes are complex diseases that develop from a lifetime of multifactorial, chronic processes. Though I don't think the authors are hiding the fact that the main argument for the tax is its revenue-generating potential.

Agreed. I just wish people would stop dressing it up like they are concerned about my health.


As someone who works in health care, it's never safe to assume that the general public understands what you assume to be common knowledge, even to 4-year-olds.

Okay, your point here is well taken. :)

While I agree that being fully informed about a product is as much the responsibility of the consumer as that of the manufacturer, the market failure argument holds up, for me at least, when it states that consumers do not bear the full consequence of their consumption decisions, especially when those decisions can result in the need for long-term care of diabetes, for example, which everyone ends up paying for. The most widely effective way of changing someone's consumption of something is changing the price and forcing them to reevaluate a purchase. It's the same thing with cigarettes.

I think you are saying "person drinks soft drinks, person gets dreaded disease, we all pay through higher insurance premiums (or something similar)". I'll concede this may be the case, but taxing soft drinks doesn't solve anything. We're all still paying, we just pay through higher soft drink prices instead of higher insurance premiums.

There really is no end to the general line of reasoning here. After soft drinks, we'll discover that TVs contrinute to health care costs because people mount them wrong and they fall on their heads. We can't assume people understand gravity, after all. Then what? A health care tax on TVs? Before you know it, we'll just have a national "stupid tax" on everyone.

I'm all in favor of solutions that allow people to bear more of the consequences of their actions. If the solution is we deny health care to people that drink soft drinks, I'd probably go for that, although I don't think it is the best solution. I'd like to see more free market solutions instead of government intervention. For example, if I can show I don't drink soft drinks, maybe I qualify for lower insurance premiums, much like I qualify for lower premiums because I don't smoke.





Warrior added to this post, 11 minutes and 39 seconds later...



I'd like to see the same approach of a tax on gasoline.

We already have that in my state. About 40% of the price of a gallon of gas is tax (from various levels of government). Theoretically this goes to pay for rodd maintenance. There is also a special tax on bicycles to cover road maintenance, since bikes don't use gas. The local city government is also considering extending this tax to skate boards, in-line skates, and similar items.

I'm actually not opposed to this, although no one has shown me that 40% is not excessive. The difference is that road maintenance is one of the proper functions of government (in my opinion) and this tax is levied on those that make use of that resource. If I were to get some disease from drinking soft drinks, I think the propoer solution is to make me pay for that, not to make everyone who doesn't get a disease from it pay.

[RBM]

OT Re: gas tax

Robert Rapier (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.) has a well considered and articulate approach.

[hubcap]

People are still free to consume soda. And to smoke cigarettes. And to drink alcohol. They just have to pay a slightly higher price to do so.

So a little coercion is OK?

[aku chi]

Economists agree that government intervention in a market is warranted when there are "market failures" that result in less-than-optimal production and consumption.
Agreed. Although economists do not agree that any kind of government intervention in a market with failures will improve allocative efficiency.

Several market failures exist with respect to sugar-sweetened beverages. First, because many persons do not fully appreciate the links between consumption of these beverages and health consequences, they make consumption decisions with imperfect information. These decisions are likely to be further distorted by the extensive marketing campaigns that advertise the benefits of consumption.
This is a misuse of the phrase imperfect information. Markets are said to possess imperfect information when perfect information is not available to the buyers or sellers (i.e. There is information asymmetry between the buyers and sellers). A market isn't considered to have imperfect information because some buyers or sellers lack perfect information, that would qualify every market. The important economic factor is that the same information is available to buyers and sellers. I have no reason to believe this is not the case in the soft drink market.

A second failure results from time-inconsistent preferences (i.e., decisions that provide short-term gratification but long-term harm). This problem is exacerbated in the case of children and adolescents, who place a higher value on present satisfaction while more heavily discounting future consequences.
This is a valid market failure, albeit a minor one. However, it applies to every market with time-sensitive benefits or costs (almost all markets) and much more to other markets.

Finally, financial "externalities" exist in the market for sugar-sweetened beverages in that consumers do not bear the full costs of their consumption decisions. Because of the contribution of the consumption of sugar-sweetened beverages to obesity, as well as the health consequences that are independent of weight, the consumption of sugar-sweetened beverages generates excess health care costs. Medical costs for overweight and obesity alone are estimated to be $147 billion — or 9.1% of U.S. health care expenditures — with half these costs paid for publicly through the Medicare and Medicaid programs.

This is another misapplied economic concept. First, let me clarify that there are no direct externalities in soft drink consumption that I am aware of. I have never been affected by somebody else drinking pop. If we assume, as we must to progress the argument, that drinking soft drinks is causually linked with obesity and diabetes, we can consider possible secondary externalities. What are they? I am also not directly affected (except in very minor ways) by other people being obese or diabetic. So we must consider the secondary effects of such health 'problems' (the tertiary effects of soft drink consumption, if you follow). The next (reasonable) assumption is that obesity and diabeties are causually linked with higher health care demand. Now we can claim that if the costs of health care are borne by external parties, health care for obese and diabetic individuals (and by complex or convoluted extention, soft drink consumption) contains a negative externality. Health care costs will be borne by external parties (like tax payers) in the ever-popular government involved health care markets.

Did you catch that. The proposed solution to the externalities created by government intervention in one market (health care) is more government regulation in a completely different market. If reducing the externalities distantly related to soft drink consumption was the government's goal, they would have two more attractive options. Firstly, they could extricate themselves from the health care market and make people fully account for their own health care costs. (Ideally, but the existence of health insurance would, unfortunately, produce similar moral hazards if not externalities.) If that is undesirable, they could simply tax poor health conditions directly. After all, it isn't the soft drinks but the obesity and diabeties that are actually costly. If it seems unfair to tax intrinsic health conditions, the government could merely tax acquired health conditions and accomplish the same intended effect.

Of course, the government is not involving itself in the soft drink market to increase allocative efficiency. They would like to increase tax revenue, or, more pessimistically, control its citizens for power's sake. I find the economic support for this tax unconvincing.

[Lucid]

So a little coercion is OK?

Coercion (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.) (pronounced /koʊˈɜrʒən/ or /koʊˈɜrʃən/) is the practice of forcing another party to behave in an involuntary manner (whether through action or inaction) by use of threats, intimidation, trickery, or some other form of pressure or force.

I don't think paying an extra 20 cents for a soda really qualifies as coercion. I think you're being a little bit melodramatic in this case. :p

[hubcap]

Coercion (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.) (pronounced /koʊˈɜrʒən/ or /koʊˈɜrʃən/) is the practice of forcing another party to behave in an involuntary manner (whether through action or inaction) by use of threats, intimidation, trickery, or some other form of pressure or force.

I don't think paying an extra 20 cents for a soda really qualifies as coercion. I think you're being a little bit melodramatic in this case. :p
Well, it's philosophical. The entire point of the tax is to force people to change their behavior..........assuming that would be a positive thing...........using the guise of we are going to take the money and spend it on healthcare, which is mostly B.S. It's simply an excuse to expand the federal bureaucracy.

[Lucid]

Well, it's philosophical. The entire point of the tax is to force people to change their behavior.....

Why would the government want anyone to change their behavior? Then they'd stop making money from the tax. And no one is being 'forced' to stop drinking soda at all. Which is my point. You're making a lot of statements that don't apply to the situation at all.

.....assuming that would be a positive thing...........using the guise of we are going to take the money and spend it on healthcare, which is mostly B.S.

Please cite sources on why the government will not be spending the money taxed from soda on health care.

It's simply an excuse to expand the federal bureaucracy.

By implementing a Special Tax on Soda Department? No, I think this tax will simply be handled by the bureaucracy that handles the sales tax already on soda and the sin tax already on things like alcohol and cigarettes.

[Warrior]

OT Re: gas tax

Robert Rapier (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.) has a well considered and articulate approach.

Some things here I will agree with, some not so much. I'm not opposed to development of alternative fuels. To me, that is a national security issue. I'd like to see the US become independent for energy needs. (Of course I would also like to see more of our fossil fuel resources utilized, too.) Like the author, I'm not oppsed to all taxes. There are legitimate functions of government that need to be paid for.

However, he failed to address issue number one. You want to get something done, first we cut something out before we raise taxes. What we cut is going to be a big issue. Entitlement programs, salaries for government workers, basic science research in other areas, etc.? The principle is, unless it is shown that there are no other places for the funding to come from, raising taxes is not up for discussion. There wasn't even an attempt to lay out the budget. If the sacrifice is going to be as small as the author claims, then cuts in other programs shouldn't be a problem.

Assuming we pass that hurdle, then a gas tax is, in my opinion, not the way to go. First, its a national security issue that impacts all Americans, not just those that drive. The new tax must encompass everyone. Second, I don't think some of the other points will hold. For example, raising gas prices in my city caused public transportation to go from about 5% utilization to a little over 6%. Hardly the soaring increase in usage claimed. Raising the price of gas may, in a sense, make other technologies competitive, but only because the market has been distorted. These new technologies need to stand on their own to make them effective. Finally, I see no indication in my area that city planning was impacted in any way (good or bad) based on gas prices spikes in the last couple years.

[Profit]

Instead of a tax how about the government just eliminate corn subsides. Let the market drive up the price of soda and junk food.

[Night Runner]

We can speculate all we want, but that tax will never be implemented on the national scale - soda companies are just too powerful. All they have to do is bribe a few influential senators...

Besides, this is just a bandaid solution. People don't want to face the true cause of obesity (stupidity and laziness), so they keep inventing more and more excuses. :rolleyes:





Night Runner added to this post, 1 minutes and 11 seconds later...

Instead of a tax how about the government just eliminate corn subsides. Let the market drive up the price of soda and junk food.

Never gonna happen - the farming lobby is too big and rich...

[Warrior]

Please cite sources on why the government will not be spending the money taxed from soda on health care.

I don't know of any source for why, but I guess it would be the same ones that explain why social security $$$ pay for things other than social security and that explain why over 50% of the gas tax revenue collected by my state doesn't go for the purpose of repairing roads as it is suppose to.

Having served in an elected position in city government before, I can say that the rule at various levels of government is: "if you pass a tax for any purpose, it will never go away and that money is available for anything we need".

[Profit]

Never gonna happen - the farming lobby is too big and rich...

(big sigh)......when you're right you're right.

[hubcap]

Why would the government want anyone to change their behavior? Then they'd stop making money from the tax. And no one is being 'forced' to stop drinking soda at all. Which is my point. You're making a lot of statements that don't apply to the situation at all.

Please cite sources on why the government will not be spending the money taxed from soda on health care.

By implementing a Special Tax on Soda Department? No, I think this tax will simply be handled by the bureaucracy that handles the sales tax already on soda and the sin tax already on things like alcohol and cigarettes.
Are you at all familiar with the lawsuit which the "big evil tobacco companies" lost to the government? The one which the government said if they won they were going to use the money to mitigate the healthcare costs of tobacco use?

[Causa Mortis]

People are still free to consume soda. And to smoke cigarettes. And to drink alcohol. They just have to pay a slightly higher price to do so.

A tax on soda would just correct for the externality of obesity and require the market to bear all the costs associated with production and consumption of the good.

[Lucid]

Are you at all familiar with the lawsuit which the "big evil tobacco companies" lost to the government? The one which the government said if they won they were going to use the money to mitigate the healthcare costs of tobacco use?

And they aren't?

Also, why are you saying that the tobacco companies evil?

A tax on soda would just correct for the externality of obesity and require the market to bear all the costs associated with production and consumption of the good.

Yeah. I'm not sure why that's a bad thing according to some. To use a very common argument for this subforum: Why should I have to pay for the health care costs that arise from obese people drinking sugar? If a person chooses to drink sugar, they should pay a little extra for the inevitable cost to society it will create. :smug:

[hubcap]

And they aren't?No, not really.

Also, why are you saying that the tobacco companies evil?
Well, that was sarcasm. That's the way the tobacco companies were portrayed.



Yeah. I'm not sure why that's a bad thing according to some. To use a very common argument for this subforum: Why should I have to pay for the health care costs that arise from obese people drinking sugar? If a person chooses to drink sugar, they should pay a little extra for the inevitable cost to society it will create. :smug:

Why should those of us who are not obese have to pay more for our soda?

[aku chi]

A tax on soda would just correct for the externality of obesity and require the market to bear all the costs associated with production and consumption of the good.

Yeah. I'm not sure why that's a bad thing according to some. To use a very common argument for this subforum: Why should I have to pay for the health care costs that arise from obese people drinking sugar? If a person chooses to drink sugar, they should pay a little extra for the inevitable cost to society it will create. :smug:

At the risk of sounding conceited, did you two read my post?

The externality is not native to the the soft drink market, it is created by government intervention in the health care market. The most logical solution is to remove the government influence in health care. Then, no external party will have to pay for others' health care (including those 'caused' by consuming soft drinks). The next best solution is to penalize obesity directly. Increasing taxes on soft drinks is a convoluted and not comprehensive solution. (If you would like to respond, I would prefer it if you responded to my previous post. This paragraph is but a summary of my point.)

BTW, I support Profit's suggesting to remove farming subsidies though I wonder how much this would affect the price of soft drinks in the UK.

[Aronnax]

Yeah. I'm not sure why that's a bad thing according to some. To use a very common argument for this subforum: Why should I have to pay for the health care costs that arise from obese people drinking sugar? If a person chooses to drink sugar, they should pay a little extra for the inevitable cost to society it will create. :smug:

The canned argument would be "the market should/will fix it, Government solutions are inherently bad."

This disregards how people evaluate cost/risk and how the market goes about correcting the problem. The perfection of the free market and the inescapable inefficiency of Government are akin to religious faith. It doesn't matter how clearly you present an argument, the former is always good and the latter is always bad.

[Causa Mortis]

Why should those of us who are not obese have to pay more for our soda?

Well to a normal person, I'd say that soda consumption is contributing to the obesity crisis in much the same way that CO2 production is contributing to global warming. No individual soda or driver is making a significant difference, but the actions that are pretty harmless on a micro level are causing major macro level problems. Hence the need for taxation to correct for externalities.

To a blind egoist however, there is no answer.

[Lucid]

No, not really.

Could you elaborate?

Well, that was sarcasm. That's the way the tobacco companies were portrayed.

Since I was not portraying them in any way I wonder at the relevance to the conversation.

Why should those of us who are not obese have to pay more for our soda?

For the same reasons that I, a smoker who does not have cancer and a drinker who does not suffer from liver disease, have to pay more for my unhealthy indulgences. If I consume enough of these products the health issues associated with them will become a burden on the society I live in. The less soda I drink the less likely I am to be obese (or suffer from other issues caused by consumption of large amounts of sugar water) and the less I pay for that burden. The more I drink, the more I pay, etc.

The canned argument would be "the market should/will fix it, Government solutions are inherently bad."

This disregards how people evaluate cost/risk and how the market goes about correcting the problem. The perfection of the free market and the inescapable inefficiency of Government are akin to religious faith. It doesn't matter how clearly you present an argument, the former is always good and the latter is always bad.

Yes, and like religious faith it seems that it takes the same kind of suspension of disbelief and those who don't agree with the "always" arguments are seen as being in favor of government control over everything all the time world without end.

The truth of the matter, I think, is that the government is good for some things and the private industry is good for some things. There's plenty of room for disagreement about which things each is good at, but government is just a tool - no different from a hammer or a screw driver or a gun or fire. Being afraid of it is no different from being afraid of a hammer or a screw driver or a gun or fire. Healthy respect and constant vigilance are definitely needed, as the government is by no means harmless or benevolent, but it is controllable and it is usable.

If people wish to smoke or to drink soda despite what they already know to be serious health risks and issues, what on earth makes anyone think that 20 cents extra in taxes will be enough to discourage them?

If the market corrected itself, we wouldn't have an obesity problem.

The externality is not native to the the soft drink market, it is created by government intervention in the health care market. The most logical solution is to remove the government influence in health care. Then, no external party will have to pay for others' health care (including those 'caused' by consuming soft drinks). The next best solution is to penalize obesity directly. Increasing taxes on soft drinks is a convoluted and not comprehensive solution. (If you would like to respond, I would prefer it if you responded to my previous post. This paragraph is but a summary of my point.)

So that when people go to the ER with a serious condition that requires expensive emergency treatment and then cannot pay their bills the hospital just doesn't get paid? Or we allow ERs to deny care to the sick and dying if they have no way to pay for treatment? And in addition to both those options, the number of bankruptcies as a result of medical bills increases by quite a lot. How is that the kind of society anyone would want to live in?

BTW, I support Profit's suggesting to remove farming subsidies though I wonder how much this would affect the price of soft drinks in the UK.

Actually I agree.

[aku chi]

So that when people go to the ER with a serious condition that requires expensive emergency treatment and then cannot pay their bills the hospital just doesn't get paid? Or we allow ERs to deny care to the sick and dying if they have no way to pay for treatment? And in addition to both those options, the number of bankruptcies as a result of medical bills increases by quite a lot. How is that the kind of society anyone would want to live in?
Emergency care is almost completely unrelated to the health care costs associated with obesity and especially diabetes.

Your last question is presented in a rhetorical manner but if were instead phrased, "Would anybody like to live in a society where (emergency) medical treatment could be denied to people who cannot afford it?", my answer would be yes. Ayn Rand would certainly like to live in such a society and I would consider it superior to many other society's health care systems. It would certainly be tricky logistically. I suppose the best way might be to allow emergency health care for all identifiable citizens and charge them after the fact. If they become bankrupt as a result, so be it (they should have allocated more money for personal health care).

But this is mostly irrelevant. The problem of externalities is in the health care market, not the soft drink market. As such, the economic rationale for the tax is misapplied. This was my chief point. (Again, my first post addressed this issue in more detail. Please read it if you haven't.)

[Causa Mortis]

Emergency care is almost completely unrelated to the health care costs associated with obesity and especially diabetes.

Your last question is presented in a rhetorical manner but if were instead phrased, "Would anybody like to live in a society where (emergency) medical treatment could be denied to people who cannot afford it?", my answer would be yes. Ayn Rand would certainly like to live in such a society and I would consider it superior to many other society's health care systems. It would certainly be tricky logistically. I suppose the best way might be to allow emergency health care for all identifiable citizens and charge them after the fact. If they become bankrupt as a result, so be it (they should have allocated more money for personal health care).

But this is mostly irrelevant. The problem of externalities is in the health care market, not the soft drink market. As such, the economic rationale for the tax is misapplied. This was my chief point. (Again, my first post addressed this issue in more detail. Please read it if you haven't.)

This is a fair point, but given that government is increasingly intervening in health care markets to homogenize premiums among large risk classes, your best bet is to tackle behaviors likely to cause obesity rather than obesity itself.

[Lucid]

Emergency care is almost completely unrelated to the health care costs associated with obesity and especially diabetes.

Heart disease doesn't put people in the ER?

Your last question is presented in a rhetorical manner but if were instead phrased, "Would anybody like to live in a society where (emergency) medical treatment could be denied to people who cannot afford it?", my answer would be yes. Ayn Rand would certainly like to live in such a society and I would consider it superior to many other society's health care systems. It would certainly be tricky logistically. I suppose the best way might be to allow emergency health care for all identifiable citizens and charge them after the fact. If they become bankrupt as a result, so be it

I'm not sure you understand. The problem isn't with what happens to individuals and oh how sad they had to go bankrupt. The problem is that a society in which more people are bankrupt is a society with some serious economic problems. A capitalistic society relies on consumers to keep it going. As we've seen from the current recession, when more people take bankruptcy and can't feed the system the economy tanks as a result.

(they should have allocated more money for personal health care).

With all due respect, this strikes me as a very naive statement. That sounds harsh and I'm sorry for that, but this kind of statement is just totally unrelated to reality. The majority of Americans live just about paycheck to paycheck. Saving for retirement, for your kids to go to college and paying bills is already so much of a strain on most of the middle class (not to mention the lower class) that it's pretty prohibitive. Health care costs are so high that there's no way to adequately allocate more money for personal health care, as you say.

But this is mostly irrelevant. The problem of externalities is in the health care market, not the soft drink market. As such, the economic rationale for the tax is misapplied.

The only reason anyone cares about whether others in a society are obese or not is because of the health care costs. Not the soft drink costs.

This was my chief point. (Again, my first post addressed this issue in more detail. Please read it if you haven't.)

You specifically asked that I respond to your post. If there's another point you want me to respond to, you can repeat it.

[aku chi]

This is a fair point, but given that government is increasingly intervening in health care markets to homogenize premiums among large risk classes, your best bet is to tackle behaviors likely to cause obesity rather than obesity itself.

I disagree. Even if you consider government intervention in the health care market as unchangeable, there are far more direct and 'better' ways to 'solve' the problem of external health care costs borne by individuals as a result of obesity and diabetes. Since the government is intervening in the health care market they could reward healthier individuals in some way to provide some direct incentives to avoid obesity and diabeties if possible.

The alternative, increasing taxes in every industry that has a suggested link to an unhealthy lifestyle is bad precedent. The government doesn't have perfect omniscience concerning the health effects of various goods and services and the optimal Pigovian tax amount to compensate for externalities. Even if they did, governments are inflexible. Suppose that soft drinks became significantly healthier over time. The tax would undoubtedly remain and corrupt the (now successful) market. Perhaps most importantly, lobbyists would provide perverse incentives for politicians to tax certain industries at the expense of the others and destroy any possibility of a consistent or efficient solution. Not to mention the dubious merit of Pigovian taxes in producing allocative efficiency (Coase would suggest other solutions).

Heart disease doesn't put people in the ER?
Is soft drink consumption causually linked with heart disease? Or is this another layer of indirection vaugely correlated with soft drink consumption?

I'm not sure you understand. The problem isn't with what happens to individuals and oh how sad they had to go bankrupt. The problem is that a society in which more people are bankrupt is a society with some serious economic problems. A capitalistic society relies on consumers to keep it going. As we've seen from the current recession, when more people take bankruptcy and can't feed the system the economy tanks as a result.
I think they are both legitimate problems. I think both problems could be comprehensibly solved with a direct welfare system of some sort if desired. We don't need several programs attempting to accomplish the same thing, this further corrupts otherwise efficient markets with externalities and moral hazards (the latter of which, unfortunately, exists in non-public insurance markets).

With all due respect, this strikes me as a very naive statement. That sounds harsh and I'm sorry for that, but this kind of statement is just totally unrelated to reality. The majority of Americans live just about paycheck to paycheck. Saving for retirement, for your kids to go to college and paying bills is already so much of a strain on most of the middle class (not to mention the lower class) that it's pretty prohibitive. Health care costs are so high that there's no way to adequately allocate more money for personal health care, as you say.
And yet somehow life existed in the American society of the 1920s despite lower real incomes and no state safety net worth mentioning. There are certainly tradeoffs to be had with state saftey nets and I am not advocating a complete abolition of public welfare but it is incorrect to claim that they are neccessary for a prosperous society.

The only reason anyone cares about whether others in a society are obese or not is because of the health care costs. Not the soft drink costs.
Exactly, that is my point. The soft drink market doesn't contain externalities or other allocative inefficiencies independently. The problems can be found elsewhere: the health care market. My point is that the solution should logically be in the health care market, not the soft drink market. This could come in a variety of ways, a couple of which I've proposed.

You specifically asked that I respond to your post. If there's another point you want me to respond to, you can repeat it.

It's actually this (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.) ignored post to which I was most interested in responses. I suspect it was overlooked by accident.

[mtene]

This sounds more like a case of I'm better than you because I don't drink soda. So lets raise taxes, just not my taxes. For everyone who wants to see taxes go up, you should lead by example.

If studies down the road later show that soda isn't really bad for your health, are those tax revenues going to be refunded?

[Paul Siraisi]

Very reasonable.

It would be even better if income taxes went down as a result.





Paul Siraisi added to this post, 1 minutes and 59 seconds later...

We can speculate all we want, but that tax will never be implemented on the national scale - soda companies are just too powerful. All they have to do is bribe a few influential senators...

Besides, this is just a bandaid solution. People don't want to face the true cause of obesity (stupidity and laziness), so they keep inventing more and more excuses. :rolleyes:





Night Runner added to this post, 1 minutes and 11 seconds later...



Never gonna happen - the farming lobby is too big and rich...

The insurance industry is about to be made an enemy (they won't be able to drop the food industry's prey any more). There is hope.

[yoginimama]

Aku chi: “And yet somehow life existed in the American society of the 1920s despite lower real incomes and no state safety net worth mentioning. There are certainly tradeoffs to be had with state saftey nets and I am not advocating a complete abolition of public welfare but it is incorrect to claim that they are neccessary for a prosperous society."

First of all, the 1920s strikes me as a really bad example, since its excesses led to the Great Depression and ushered in the New Deal. The 1920s is an object lesson in why modern, late-capitalist societies *do* need lots of regulation, financial oversight, social safety nets, etc.--not why they don't.

Second of all, it sounds like you’re saying “Some people will live shorter, sicker lives, but who cares as long as capitalism is thriving.”

It’s very easy to play with people’s lives in theory, on a forum. Easy and cheap. Some people on this board are very upset at the idea of “spending other people’s money.” Me, I’m upset at the idea of spending other people’s *lives*.

For example:

(aku chi) "Your last question is presented in a rhetorical manner but if were instead phrased, 'Would anybody like to live in a society where (emergency) medical treatment could be denied to people who cannot afford it?', my answer would be yes."

I find this attitude to be disgusting.

These are mothers, sons and daughters you’re talking about. Babies and sisters and friends. I think the idea that people should die preventable deaths to save some tax money or to support some ridiculous notion of negative liberty is evil.

[jesse]

I loathe soda's and frankenfoods even though I consume more than my share. I personally would be all for taxing the heck out of soda, candy and junk food. Set a formula like anything that is more than 15 grams of sugar per ounce gets taxed.

Do I think this would improve health outcomes? Did raising the price of tobacco stop people from smoking? I know my MIL quit once a carton got up to a certain price. It was too late though as she was later diagnosed with pancreatic cancer.

Taxing an item to death may alter official statistics, but let's say for discussion purposes a consumption tax of 100% were levied on all candy, soda and junk food, this would close many businesses unless they adapt to the new conditions either by focusing on "healthy living" or by doing something completely different. In the worst case, due to the sin tax being applied on the items it is quite possible a black market will emerge who will supply the goods under the table for much less and pay zip in taxes.

I hardly doubt adding these items to the sin tax are going to change behavior.

I agree. I'll add something I posted on another thread recently. While this might (I stress might) seem like an attractive option on the surface, the second and third order effects may be completely undesireable. Take cigarettes as an example. Increasing the tax on them prompted a complete shadow industry in NC (my home state) and maybe others whos only function is to smuggle cigarettes up the I-95 corridor to the northeast where they can be sold (illegally) without taxes. I'm not saying that would necessarily happen with soft drinks, but my point is that the government almost never considers the full ramifications of interventions like this. There is a bright, shining $14.9B (in the first year alone!!!) up for grabs and nothing else seems to matter.

Exactly.
When people find taxation unfair and alter their wants, they will start looking for alternatives and ways around it and your example is a fine one in this regard.

Aku chi: “And yet somehow life existed in the American society of the 1920s despite lower real incomes and no state safety net worth mentioning. There are certainly tradeoffs to be had with state saftey nets and I am not advocating a complete abolition of public welfare but it is incorrect to claim that they are neccessary for a prosperous society."

First of all, the 1920s strikes me as a really bad example, since its excesses led to the Great Depression and ushered in the New Deal. The 1920s is an object lesson in why modern, late-capitalist societies *do* need lots of regulation, financial oversight, social safety nets, etc.--not why they don't.

I comprehend your desire to watch over people and make sure they are alright. I would think many want a "nanny" around but many does not mean absolutely everyone. It is silly imposing a single set of values on everyone not to mention an insult toward an ethical and independent individual.

Post WWI up to the late 1920s were boom years because the world wanted to shake off the remnants of war and start living again. Growth was there and this did indeed blind many people to foolishly get loans they could not pay otherwise but they expected to hit the jackpot on the stock exchange, thus making them able to repay the loan quickly when this happened.

Especially in the 1920s there was little need for welfare because of the significant growth in terms jobs and opportunities and without having something to lean in made it a necessity to work in order to get ahead.

In general when more and more government regulation is imposed by force into an economy, it will not fix things but make things harder to get going because regulation usually makes the impression that everything will remain the same. This is not the case because an economy is like life itself, unpredictable and dynamic.

Second of all, it sounds like you’re saying “Some people will live shorter, sicker lives, but who cares as long as capitalism is thriving.”

It’s very easy to play with people’s lives in theory, on a forum. Easy and cheap. Some people on this board are very upset at the idea of “spending other people’s money.” Me, I’m upset at the idea of spending other people’s *lives*.

For example:

(aku chi) "Your last question is presented in a rhetorical manner but if were instead phrased, 'Would anybody like to live in a society where (emergency) medical treatment could be denied to people who cannot afford it?', my answer would be yes."

I find this attitude to be disgusting.

These are mothers, sons and daughters you’re talking about. Babies and sisters and friends. I think the idea that people should die preventable deaths to save some tax money or to support some ridiculous notion of negative liberty is evil.

Some people remain healthy for much of their lives, some are genetically disposed to a variety of conditions which shorten and reduce their quality of life, some will have fatal accidents among other things. This has zilch to do with capitalism.

Mind you there is a big difference between being forced and coerced to cough up your money for someone else versus giving it voluntarily when someone would be in need of it.

The world cannot be made into a sanitized and child-proofed place no matter how much and how hard is pushed to achieve it. This is only my opinion but a safe world would be very boring and take the joy out of life. Additionally this all has the hidden print of having the collective shoulder the responsibility of one individual who was stupid enough to start smoking and eating junk food on a daily basis.

I know this will be viewed as utterly cruel but what's the point in kicking a dead horse let's say when a life-long smoker is finally diagnosed to have terminal cancer which has spread to multiple organs? Yes they should receive pain treatment but it is a waste of resources trying to achieve the impossible.

[Lucid]

I disagree. Even if you consider government intervention in the health care market as unchangeable, there are far more direct and 'better' ways to 'solve' the problem of external health care costs borne by individuals as a result of obesity and diabetes. Since the government is intervening in the health care market they could reward healthier individuals in some way to provide some direct incentives to avoid obesity and diabeties if possible.

[quote]The alternative, increasing taxes in every industry that has a suggested link to an unhealthy lifestyle is bad precedent.

We (society) have to pay for our lifestyle choices somehow.

The government doesn't have perfect omniscience concerning the health effects of various goods and services and the optimal Pigovian tax amount to compensate for externalities.

No one does, but we do the best we can.

Even if they did, governments are inflexible.

I disagree. If I recall correctly, our government is a dynamic and ever changing entity.

Suppose that soft drinks became significantly healthier over time. The tax would undoubtedly remain and corrupt the (now successful) market.

This strikes me as a stretch. I don't think such a thing is undoubtable in the least. You're making some hefty assumptions here.

Perhaps most importantly, lobbyists would provide perverse incentives for politicians to tax certain industries at the expense of the others and destroy any possibility of a consistent or efficient solution. Not to mention the dubious merit of Pigovian taxes in producing allocative efficiency (Coase would suggest other solutions).

They already do.

Is soft drink consumption causually linked with heart disease? Or is this another layer of indirection vaugely correlated with soft drink consumption?

Heart problems are associated with obesity. Obesity is associated with soda. It's also associated with other things, but soda is a widely consumed product.

I think they are both legitimate problems. I think both problems could be comprehensibly solved with a direct welfare system of some sort if desired. We don't need several programs attempting to accomplish the same thing, this further corrupts otherwise efficient markets with externalities and moral hazards (the latter of which, unfortunately, exists in non-public insurance markets).

So are you upset about it because the government is doing it? Why is it bad if the government does it but acceptable if private industry does it?
I think the most workable solutions will come from several different sources. The problem is so large that it makes the most sense to spread the necessary contributions out over a larger portion of society than concentrating all of it on one tiny demographic. Especially since all of society will benefit from the solution.

And yet somehow life existed in the American society of the 1920s despite lower real incomes and no state safety net worth mentioning. There are certainly tradeoffs to be had with state saftey nets and I am not advocating a complete abolition of public welfare but it is incorrect to claim that they are neccessary for a prosperous society.

Society in the 1920s was so different from how it is today that you're comparing apples to pineapples. Saying that the things they did then would work today is like saying that it's possible to jump to mars.

Exactly, that is my point. The soft drink market doesn't contain externalities or other allocative inefficiencies independently. The problems can be found elsewhere: the health care market. My point is that the solution should logically be in the health care market, not the soft drink market. This could come in a variety of ways, a couple of which I've proposed.

Why? It's .20. This is probably the most efficient way to do it.

This sounds more like a case of I'm better than you because I don't drink soda. So lets raise taxes, just not my taxes. For everyone who wants to see taxes go up, you should lead by example.

I drink soda. Not large quantities of it, but one or two in a week. And I'm happy to pay more for it.

If studies down the road later show that soda isn't really bad for your health, are those tax revenues going to be refunded?

What many people don't understand about taxes is that you are paying for things which benefit you. So 'refunded' isn't even an operable concept in this sense. If you buy a car you don't get to keep the car and get a refund.

Essentially, I think a lot of you are getting your panties all wadded up over a pretty small tax that you are not forced to pay and which will not force you to change your lifestyle or your consumption and I think you're doing so despite the obvious (not to mention huge) benefits such a tax would go to fund.

I understand that there's a knee-jerk reaction to the word "tax" which is "bad!!!" but I think we should rise above such things and look at things logically. It's not a big deal and it will do a lot of good.

[Warrior]

This strikes me as a stretch. I don't think such a thing is undoubtable in the least. You're making some hefty assumptions here.

Not really. I bet you, like most of us, are still paying a tax on your phone bill that was started to pay for the Spanish American War. It started as a sin tax on those rich people who could afford to pay it. Now everyone pays it. I bet your phone company even charges you a fee for collecting it for the government.



What many people don't understand about taxes is that you are paying for things which benefit you. So 'refunded' isn't even an operable concept in this sense. If you buy a car you don't get to keep the car and get a refund.

In this case, I will gladly forgoe the benefits if I don't have to pay the tax. I can take much better care of myself with my money than the government can.

[Lucid]

Not really. I bet you, like most of us, are still paying a tax on your phone bill that was started to pay for the Spanish American War. It started as a sin tax on those rich people who could afford to pay it. Now everyone pays it. I bet your phone company even charges you a fee for collecting it for the government.

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In this case, I will gladly forgoe the benefits if I don't have to pay the tax. I can take much better care of myself with my money than the government can.

The thing is that like the military, you benefit from it indirectly. Even if you never use any of the government health care stuff, whatever they might turn out to be. It's amazing to me that such a large portion of our society thinks we all exist in a vacuum.

[Hamburglar]

In this case, I will gladly forgoe the benefits if I don't have to pay the tax. I can take much better care of myself with my money than the government can.

is that $'s or SpaceBuck$ - don't pay tax and you probably will have to get out.

[aku chi]

We (society) have to pay for our lifestyle choices somehow.
Indeed. And I proposed two alternative (and in my opinion, superior) solutions. My preferred solution to to let individuals "pay" for their lifestyle choices directly. If I become obese as a result of comsuming too many soft drinks (and a host of others reasons) then I should pay for the health problems that result. Such a system holds people perfectly responsible for their own actions and results in optimal behavior (with some incorrect but minor economic assumptions). Unfortunately, adding an insurance system that covers all medical care produces moral hazards and leads to inefficiently high consumption of goods and actions that result in health problems. There aren't, however, any externalities in this scenario. This is, in general, the situation in the US. Adding government intervention in the health care market does not eliminate the moral hazards but adds externalities by disconnecting the payment from the treatment.

The second solution, if government intervention in the health care market is taken as constant (UK style), is to change the incentives on health treatment for obesity directly as opposed to obtrusely and indirectly through the myriad of potential 'causes' of obesity. This can be done by rewarding health or punishing (acquired) medical risks.

No one does, but we do the best we can.
The best isn't good enough. No one entity, no matter how clever, can artificially establish a perfect incentive structure to optimize resource allocation. However, in many cases the market, a collection of buyers and sellers primarily interested in their own self interest, can reach an equilibrium that optimizes resource allocation (exceptions certainly apply in other markets but not the soft drink market). Have some faith inthe invisible hand. It doesn't work in all markets but it florishes in markets with simple private goods like soft drinks.

I disagree. If I recall correctly, our government is a dynamic and ever changing entity.
Government cannot adapt as efficiently as the market; this is common sense.

This strikes me as a stretch. I don't think such a thing is undoubtable in the least. You're making some hefty assumptions here.
I would be interested to learn of instances where a market-specific tax was repealed once its initial intent was irrelevant or invalid. I am skeptical that many exist. It is much easier to make laws than repeal them.

They already do.
Lobbyists cannot affect the markets except through the political system. Deny them the precedent that taxing particular industries to 'fix' allocative inefficiency caused by government intervention in other markets is a legitimate purpose of the legislature.

So are you upset about it because the government is doing it? Why is it bad if the government does it but acceptable if private industry does it?
I think the most workable solutions will come from several different sources. The problem is so large that it makes the most sense to spread the necessary contributions out over a larger portion of society than concentrating all of it on one tiny demographic. Especially since all of society will benefit from the solution.
I'm confused by this response. I was making the mostly off-topic comment that I would prefer that state welfare efforts be focused instead of dispersed to a multitude of programs and government intervention.

Society in the 1920s was so different from how it is today that you're comparing apples to pineapples. Saying that the things they did then would work today is like saying that it's possible to jump to mars.
How was 1920s USA society fundamentally different from today? Suggestions:
1) Individuals in 1920s USA were better able to make rational long-term financial plans. If so, why?
2) State social nets can only be increased or maintained. A decrease is not practical due to citizen expectations. If so, isn't that depressing? Maybe a revolution would help.
3) Some other reason?
I find some merit in suggestion 2. It depresses me but I am optimistic that a revolution could simplify the government's role.

Why? It's .20. This is probably the most efficient way to do it.
If you're still convinced that instituting arbitrary Pigovian Taxes on a multitude of industries that are vaugely related to health risks to solve an externality problem in a completely different government-influenced industry (Health Care) is probably the most efficient way to 'fix' the externality problem, I have failed to convince you with my argument; I can say no more. (Sorry for the run-on sentence.)

[jesse]

Indeed. And I proposed two alternative (and in my opinion, superior) solutions. My preferred solution to to let individuals "pay" for their lifestyle choices directly. If I become obese as a result of comsuming too many soft drinks (and a host of others reasons) then I should pay for the health problems that result. Such a system holds people perfectly responsible for their own actions and results in optimal behavior (with some incorrect but minor economic assumptions). Unfortunately, adding an insurance system that covers all medical care produces moral hazards and leads to inefficiently high consumption of goods and actions that result in health problems. There aren't, however, any externalities in this scenario. This is, in general, the situation in the US. Adding government intervention in the health care market does not eliminate the moral hazards but adds externalities by disconnecting the payment from the treatment.

Yes, an able and adult individual should be taking responsibility for their actions instead of becoming a victim because of their refusal to be responsible adults.

The second solution, if government intervention in the health care market is taken as constant (UK style), is to change the incentives on health treatment for obesity directly as opposed to obtrusely and indirectly through the myriad of potential 'causes' of obesity. This can be done by rewarding health or punishing (acquired) medical risks.

Once again this relates to allowing yourself to become the victim for failing to take personal responsibility for one's actions. Especially in this case, there is no incentive for being responsible because citizens in the UK already cough up a large percentage of their incomes through tax into propping NHS up. It's not a healthy set of mind to think I can do anything and not have to worry because NHS (or whatever your favorite government health care system of choice is) will pick up the tab and fix everything on my behalf.

The best isn't good enough. No one entity, no matter how clever, can artificially establish a perfect incentive structure to optimize resource allocation. However, in many cases the market, a collection of buyers and sellers primarily interested in their own self interest, can reach an equilibrium that optimizes resource allocation (exceptions certainly apply in other markets but not the soft drink market). Have some faith inthe invisible hand. It doesn't work in all markets but it florishes in markets with simple private goods like soft drinks.

Government cannot adapt as efficiently as the market; this is common sense.

The more barriers and hoops to jump in and out of are exactly what will make it harder and increase the time taken to react to new conditions. This is especially true with government due to the numerous committees and other red tape which has to be meticulously checked step by step, a very time consuming process which is highly unlikely to produce the desired results no matter how much good the lawmakers believe it will do.

When the so-called invisible hand is tied down and restrained, it cannot perform its magic of reaching economic equilibriums, it's as simple as that. Think of it like trying to win a fist fight except due to some rules, one opponent has essentially nothing weighing them down while YOU have to have one hand tied behind your back while hopping on one foot. You might be able to win the match but you are inhibited and tied down against the opponent.

[eri]

The tax-on-sodas idea is stupid because it's based on the kind of reasoning that says "sugar makes people fat. Obesity causes causes health problems. Soda contains a lot of sugar. Therefore reducing how much soda people drink will make them have fewer health problems."

Does anyone see the blatantly obvious problems here? Yes, there are many obese people who drink a lot of soda. But I personally have known plenty of very skinny people who drink a lot of soda (not diet, either).

Are they planning to tax ALL forms of sugar? Because if they're not, then it really doesn't make sense.

If the government puts a "sin tax" on soda, what's next? Logically it should not stop there (although government is never very logical). Who is making these decisions?

Once we put a tax on everything in sight that has too high of a sugar content, do we start on the stuff with a high fat content next? Or do we start a tax on meat products, since vegetarians are less likely to be obese?