Junk Food, Taxes, and the Market Solution - Sascha Baghestanian - Mises Institute

Junk Food, Taxes, and the Market Solution - Sascha Baghestanian - Mises Institute: "So it seems to be easy to explain why people love fast food: it contains a lot of meat, it is designed to taste well, and it is getting ever cheaper. But how can a good that is potentially hazardous get cheaper and cheaper? Shouldn't the market accommodate for the hazard, so that people who are willing to take the potential risk for the sake of pleasure have to face higher costs in terms of higher insurance premiums?

That's where the public medical plans come into play. Since the government distorts the health insurance markets, it releases the insurance seekers from their own responsibilities.

The standard health insurance premiums for overweight people (and smokers) are certainly below a potential free market price. The most obvious proof for this is the public health deficit — which a profit-oriented insurance company could not run year after year without being outcompeted by other companies. Clearly, on a free market in health insurance, obese persons would have to pay even higher premiums than they do now."

'For the sake of argument, let us also accept the government's assumption that an increase in taxes would affect behavior and reduce the consumption of burgers and pizza.

Who would be the most negatively affected by such a tax hike?'

'In the fast food industry, where 70% of total costs is attributed to labor, it's pretty clear who is going to be affected: the people who are standing behind the counter, asking several-hundred times a day, "For here or to go?"'

'What about the consumer? The government gave him the illusion that the side effects of his actions would be costless. He is certainly not the one who should be blamed for this situation. It is government overregulation that caused this mess and deserves the blame.'