❝ In the first year of a big soda tax in Mexico, sales of sugary drinks fell. In the second year, they fell again…
The finding represents the best evidence to date of how sizable taxes on sugary drinks, increasingly favored by large American cities, may influence consumer behavior. The results could have consequences for public health. But they also matter for policy makers who hope to use the money raised by such taxes to fund other projects. Philadelphia, San Francisco, Oakland, Calif., and the Illinois county that contains Chicago have recently passed taxes similar in size to the tax in Mexico.
❝ Mexico’s soda tax took effect in 2014, and applied to all beverages that included added sugar, including carbonated soft drinks, fruit drinks and sweetened iced teas. The effort was pushed by public health advocates who argued that liquid sugar was contributing to the country’s high burden of obesity and diabetes.
❝ Studies on the first year of the tax found that sugary beverage consumption fell substantially, with the biggest decreases among low-income Mexicans — the group at highest risk of obesity-related diseases. But industry analysts and anti-tax advocates had argued that the one-year results could just be a blip that would reverse as companies retooled their products, or as consumers adjusted to higher prices for their favorite drinks.
❝ The new study, published online Wednesday in Health Affairs, shows that the results of such a tax may be far more long-lasting. The research, based on shopping data from a large sample of urban Mexican households, showed that the first year’s consumption declines continued during the second year. Over all, sugary drink sales fell by 5.5 percent in 2014 compared with the year before, and by 9.7 percent in 2015 — again compared with 2013…Once again, the largest reductions were among the poorest Mexicans…
The article ends with the All-American requirement for sophistry. Let’s present the obverse understanding as if it bears equal weight. Hogwash. I’ll waste time worrying about the profits of the beverage industry and sugar producers right after I decide to vote for politicians advocating for higher profits for the drugs and pharma corporate sluggos.
Which is never.
Thomas Piketty’s impressive and much-discussed book Capital in the Twenty-First Century has brought considerable attention to the problem of rising economic inequality. But it is not strong on solutions. As Piketty admits, his proposal – a progressive global tax on capital (or wealth) – “would require a very high and no doubt unrealistic level of international cooperation.”
We should not be focusing on quick solutions. The really important concern for policymakers everywhere is to prevent disasters – that is, the outlier events that matter the most. And, because inequality tends to change slowly, any disaster probably lies decades in the future.
That disaster – a return to levels of inequality not seen since the late nineteenth to early twentieth century – is amply described in Piketty’s book. In this scenario, a tiny minority becomes super-rich – not, for the most part, because they are smarter or work harder than everyone else, but because fundamental economic forces capriciously redistribute incomes.
In The New Financial Order: Risk in the 21st Century, I proposed “inequality insurance” as a way to avert disaster. Despite the similarity of their titles, my book is very different from Piketty’s. Mine openly advocates innovative scientific finance and insurance, both private and public, to reduce inequality, by quantitatively managing all of the risks that contribute to it. And I am more optimistic about my plan to prevent disastrous inequality than Piketty is about his.
Inequality insurance would require governments to establish very long-term plans to make income-tax rates automatically higher for high-income people in the future if inequality worsens significantly, with no change in taxes otherwise. I called it inequality insurance because, like any insurance policy, it addresses risks beforehand. Just as one must buy fire insurance before, not after, one’s house burns down, we have to deal with the risk of inequality before it becomes much worse and creates a powerful new class of entitled rich people who use their power to consolidate their gains…
Piketty’s book makes an invaluable contribution to our understanding of the dynamics of contemporary inequality. He has identified a serious risk to our society. Policymakers have a responsibility to implement a workable way to insure against it.
Here in America, we’re saddled with policymakers who are convinced their first responsibility is to be re-elected immediately followed by becoming a lobbyist for the corporations and other power-hungry entities they’re supposed to be keeping an eye on.
Thomas Piketty’s book and Bob Shiller’s tome complement each other well. Yes, I endorse reading both and those of you who think they can’t enjoy modern economics must only have a problem with the pleasures of learning.
Both men represent a school of thought that has never left modern investigations of political economy. Every nation’s economy is only as successful in how it treats all of us – not just the oligarchs. Retrograde examples from Reagan onward excepted of course.