a thoughtful web.
Good ideas and conversation. No ads, no tracking.   Login or Take a Tour!
comment by wasoxygen

I agree that the price of crude oil appears to be mostly based on market realities, with government distortion coming later, such as in gasoline tax. And the corn subsidy must have a significant effect on beef prices, though I doubt one pays more than double for a grass-fed steak, assuming that is a less distorted alternative.

But you may be overestimating the amount of beef in Big Macs. It looks like a "10:1 Regular Meat" — the tenth-of-a-pound beef patty, two of which go into a Big Mac — costs about 18 or 21 cents. That's only about 10% of the retail price of the burger.

Simon did try to avoid bets on prices that were distorted by government. His last wager stipulated that "This agreement is null and void if the price of saw timber (in south Alabama) is controlled by the government" after five years. Simon paid out on that bet but cited logging restrictions in the Pacific northwest that influenced prices, invalidating the bet.





b_b  ·  3591 days ago  ·  link  ·  

Yes, I spoke incorrectly (or, rather, incompletely) when I mused about price supports for meat. What I should have said was that the government has huge price supports for fast food, because we're talking beef, wheat, corn and soy all in one package (w.r.t. the Big Mac), not to mention the welfare and food stamps required to supplement the wages of the workers for them to pay rent and sustain themselves. None of these things is a consideration in the price of a barrel of crude.

wasoxygen  ·  3591 days ago  ·  link  ·  

I can think of some government policies that might make fast food less attractive than alternatives, like minimum wage and crazy fees, but I bet you're right, most of the distortion favors McDonald's.

Why on Earth would government promote less healthy food at the expense of healthier alternatives? Oh right, because politicians respond to incentives, like everyone else.

b_b  ·  3591 days ago  ·  link  ·  

Unfortunately for us the incentives to which they're responding often don't align with those of their constituents. Hence the deferred costs of unhealthy food.