Most of us sense that something is rotten in the state of meatonomics. Polls regularly show that voters are outraged by farm subsidies and consumers are alarmed by inhumane and unsanitary conditions on factory farms. Nevertheless, there is little change in the status quo, and most of us go about our daily lives—working to pay our share of the massive financial costs that these problems cause. As we've seen, the hidden expenses of meatonomics total more than $400 billion dollars yearly. Let's revisit those costs for a moment.
Contemplating the Costs
The hidden costs associated with animal foods are about the same as all state and federal spending on Medicaid, or about $20 billion more than Russia's annual government budget. However you look at this number, it's huge. For a line-by-line look at how this $414 billion estimate is calculated, see Appendix B.
CHART 10.1 External Costs of US Animal Food Production (in billions of dollars)
Some may question the underlying assumptions and conclude that this huge total is overstated. But rather than being on the high side, this total likely understates the actual costs for several reasons. In order to keep this figure credible and focused on the United States, I've omitted data that can't be measured (but nevertheless exist), data that are irrelevant to the American economy (but relevant elsewhere), and data that standard economic theory does not currently recognize (but arguably should, and may someday).1 Big problems call for big solutions, so the real question is, what can be done?
The Solution
I propose a three-part solution to the problems of meatonomics. First, adjust taxes to make animal foods more costly and to put cash in taxpayers' pockets. Beyond the financial boost, this change would give consumers more accurate price signals and lead to an important shift in consumption patterns. Second, restructure the USDA, clarifying its purpose to ensure that industry influence is minimized and consumers receive accurate information. And third, adjust federal support programs to reduce spending and better align financial support with policy goals. All told, these changes would lower the hidden costs of animal food production by an estimated $184 billion per year, save more than 172,000 American lives yearly, and cut our carbon-equivalent emissions by almost half each year. If it doesn't completely fix the failed market for animal foods, it's a big start with a serious impact. But before we get to the macro plan, let's start by laying out a few simple changes that anyone can make personally. To tweak an old adage: fixing the animal food industry starts at home.
Be the Change
“They always say time changes things,” said Andy Warhol, “but you actually have to change them yourself.” In fact, anyone can make an instant, personal change that will immediately reduce the burden of meatonomics on people, animals, and the environment. That simple shift is to consume less animal foods—or give them up altogether.
Want to lose weight? Studies find that on average, people on a plant-based diet weigh significantly less than omnivores. A 2009 research paper published in Diabetes Care, for example, found that after adjusting for confounding lifestyle factors like physical activity and television watching, vegans and meat-eaters had a mean body mass index (BMI) of 23.6 and 28.8, respectively (anyone with BMI over 25 is considered clinically overweight).2 This finding led the study's authors to note the “substantial potential of vegetarianism to protect against obesity.”3 It's hard to argue with the 18 percent difference in BMI between the two groups. That means that if diet were the only factor in weight loss, an omnivore who weighed 180 pounds could shed 32 pounds by going vegan.
Want to lower your cholesterol? Studies routinely find herbivores have far healthier cholesterol levels than omnivores. One synthesis of published papers on the subject finds that American vegans and omnivores have average blood cholesterol of 146 mg/dl and 194 mg/dl, respectively.4 These figures are particularly important because, while the magic number 200 mg/dl is often cited as the safe level for total blood cholesterol, considerable evidence points to the much lower 150 mg/dl as the truly safe level. The Framingham Heart Study, for example, is a long-running cardiovascular study on thousands of residents (spanning three generations) of Framingham, Massachusetts. Among study participants who suffered heart attacks, more than one-third had cholesterol levels between 150 and 200 mg/dl.5 On the other hand, no one in the Framingham study with cholesterol below 150 mg/dl ever suffered a heart attack.
If you're not ready for wholesale change, consider some of the effects of skipping animal foods just one day a week. A single American's decision to forego meat, eggs, and cheese each Monday would cut 450 pounds from the total volume of animal waste generated for the year—enough to fill a bathtub to the brim. That decision would also spare at least five land animals each year from hyper-confined lives in factories. If a family of four skips steak one day a week, according to a 2011 report by the Environmental Working Group, the reduction in carbon emissions would be like taking a car off the road for three months.6 There are also major health benefits in bypassing animal foods just one day a week. According to Allison Righter, director of the Johns Hopkins Meatless Monday Project, replacing four servings of red meat each Monday with nuts, legumes, or whole grains reduces one's risk of death by more than 11 percent.7
Not long ago, nuts and other stereotypical squirrel food would have been at the top of the list as substitutes for animal-based meat. But the market for vegetarian foods is growing fast, and in the past decade, food makers have introduced dozens of tasty, healthy, plant-based meats. Today, most grocery stores carry animal-free versions of foods like salami, bologna, pepperoni, pastrami, sausage, turkey, hamburger, tuna, shrimp, calamari, meatballs, corned beef, shredded beef, barbecued ribs, hot dogs, and chicken nuggets, to name a few. If you like the taste of meat but suspect you eat more of it than you should, it's easier than you might think to eat less or give it up completely.
The same goes for eggs and dairy. Plant-based substitutes abound for milk, cheese, yogurt, butter, ice cream, and eggs. Interested in cheese that's eco-friendly, humane, and cholesterol-free? Increasingly, markets carry plant-based versions of cheddar, jack, mozzarella, feta, blue cheese, cream cheese, and others. Instead of cow's milk, there's milk from oats, rice, hemp, soy, almonds, and coconuts (my own favorite is vanilla-flavored almond milk). Another humble recommendation: coconut-milk ice cream (it comes in flavors like coconut almond chip and chocolate peanut butter swirl). Plant-based foods don't taste exactly like their animal-based counterparts, and they may take a little getting used to. But then, maybe that's part of the point.
We vote with our pocketbooks every day, and our consumption choices matter. We've seen that animal food producers use a variety of techniques to make us buy their goods in the highest quantities possible, including keeping prices low to boost demand and disseminating misleading or confusing marketing messages. Perhaps a newfound understanding of the various insidious factors that influence our buying decisions will help readers make better-informed choices. Yet, while it certainly helps for individuals to spend their dollars outside of the animal food system, society must go even farther and reform the institutions that define this system.
Some will say it's naïve dreaming to suggest changes to one of the most powerful and intractable industrial complexes on the planet. Others have proposed reform, and others will, following the release of this volume. But maybe the constant reminders are helpful. Maybe it helps to have a working blueprint. Maybe it helps to catalog the benefits that changing the status quo can yield. At any rate, many believe society will soon be ready for changes like these—perhaps a lot sooner than we think. As civil-rights-activist-turned-congressman John Lewis asked, “If not us, then who? If not now, then when?”
Pigs, Pigou, and the Pigovian Tax
The same economist who introduced externalities explained how to fix them. Arthur Pigou, a Cambridge University professor active in the first half of the 20th century, conscientiously objected to World War I and drove an ambulance rather than serving in the military. He was also a famo
us intellectual adversary of economist John Maynard Keynes, although their public disagreements were offset by a strong private friendship. Between ambulance trips, Pigou found time to theorize that negative externalities can be fixed by taxing the goods that cause them. A Pigovian tax adjusts the market for goods that cause externalities by raising the goods' costs and thereby reducing demand for them. Such a tax pays a double dividend by both generating revenue and reducing undesirable consumption. Ideally, the new revenue adds to—or replaces—general tax revenue and thus can be used to lower general taxes.
Taxing authorities around the world have successfully used Pigovian taxes in a variety of ways. Most notable, perhaps, are programs that use tobacco taxes to reduce cigarette smoking and increase tax revenues. In the United States, we tax cigarettes at the federal, state, and—in some cases—city level. This combination is highest in New York City, where a pack of cigarettes carries taxes of $5.85 and sells for $11 or more. Amazingly, this hefty tax still falls far short of the total externalized costs of cigarettes. Recovering that entire figure would require imposing taxes of $10.47 per pack (according to the latest estimate by the US Centers for Disease Control and Prevention), or nearly three times the average pre-tax price of a pack of cigarettes.8
Nevertheless, cigarette taxes do work. Studies show that depending on the affected consumer group's age, income level, and extent of addiction, a 10 percent cigarette tax lowers smoking by 4 to 14 percent.9 Moreover, cigarette taxes lead to huge revenue boosts. In Texas, for example, a 2007 cigarette tax hike of $1 per pack increased state tax revenues in the first year by more than $1 billion—while lowering cigarette sales in the state by 21 percent.10
Consider the huge gains that cigarette taxes have yielded for both personal health and government revenue since the early eighties, when state and federal governments began aggressively increasing these levies. From 1982 to 2007, inflation-adjusted prices of cigarettes nearly tripled as a result of increases in state and federal tobacco taxes.11 During the same period, moving virtually in lockstep with the tax increases, US per capita cigarette consumption dropped more than 50 percent and the incidence of lung cancer among Americans fell 30 percent.12 The tax increases paid a double dividend as well: despite the significant decline in consumption, combined state and federal tobacco tax revenues grew during the period from $15.7 billion to $25.2 billion (in inflation-adjusted dollars).13 Table 10.1 shows the direct, negative correlation between cigarette prices and consumption, and table 10.2 shows the double dividend: an increase in tax revenues and simultaneous decrease in lung cancer incidence.
Taxes aren't the sole reason for Americans' declining consumption of cigarettes. For decades, government agencies and nonprofits have engaged in regulatory and public relations campaigns against tobacco use. These have yielded stricter labeling laws, restrictions on cigarette advertising, and billboard, radio, and TV ads that warn of smoking's dangers. But data from other countries, where cigarette taxes have been overwhelmingly successful even in the absence of American-style regulatory and public relations efforts, show that taxes are the most important part of any antismoking campaign. In Mexico, new tobacco taxes imposed between 1981 and 2007 led to cigarette prices tripling and consumption dropping by half.14 In France, a 27 percent tax increase between 2003 and 2004 caused consumption to fall 7 percent.15 And in Japan, a 2010 tax increase led to the steepest year-over-year consumption drop (2.2 percent) ever seen in that country.16 These results from around the world show that even without help from public relations, taxes unquestionably work to reduce consumption.
TABLE 10.1 US Cigarette Prices and Consumption, 1982–2007
TABLE 10.2 US Cigarette Tax Revenues and Lung Cancer Incidence, 1982–2007
Taxing Meat and Dairy
Just as it has for cigarettes, a tax on animal foods would pay a double dividend by simultaneously boosting revenues and lowering consumption (and related social problems). Recall that the weighted average elasticity rate (that number that ties demand to price) for all animal foods is about 0.65.17 A 3 percent tax on animal foods, for example, would reduce consumption by about 2 percent and generate about $7.4 billion in revenue.18
Of course, because we've seen that animal foods generate external costs worth nearly double their retail prices, a 3 percent tax in this category is unlikely to do much. The average cigarette tax in the United States is a hefty 72 percent.19 Accordingly, in light of the slightly smaller ratio of external costs generated by animal foods, I propose a 50 percent federal excise tax on all domestic retail sales of meat, fish, eggs, and dairy.20 For simplicity, I refer to this across-the-board tax on animal foods as the Meat Tax.
The way the tax would work is simple. Every food item intended for human consumption that contains any animal product as an ingredient or component would be subject to a 50 percent tax imposed at the retail point of sale. For example, including the tax, a $10 store-bought steak would cost $15, a $4 Big Mac would cost $6, and a $2 Baskin-Robbins ice cream cone would cost $3. Goods containing only negligible amounts of animal foods, like cookies containing egg, or bread containing whey (a milk by-product), are nonetheless taxed at the usual Meat Tax rate. Why? Two reasons. First, trying to set thresholds for the tax's applicability would be both costly to administer and impractical to enforce. Second, any ingredient that is negligible can, by definition, easily be replaced or eliminated, which means producers who want to avoid the tax can easily change their foods' composition. The fact that, for example, many brands of bread and cookies contain no animal products shows how easy it is to make such items without animal foods. In fact, one of the tax's benefits is that it would encourage producers to reformulate the composition of such hybrid goods. As the proverb goes, “Necessity is the mother of invention.” Plus, beyond healthier new edible combinations, the revised goods would impose lower external costs on society.
A Tax Credit in Every Pocket
“I shall never use profanity,” said Mark Twain, “except in discussing house rent and taxes.” Like Twain, many will find it hard to swallow a new tax, especially one applied to common dietary staples. That's why there's another feature meant to soften the blow.
In conjunction with the Meat Tax, each American taxpaying individual or family would get an annual tax credit averaging about $560 (the precise amounts range from $410 for single filers to $750 for married joint filers).21 This would cost the US Treasury $78 billion, admittedly a nontrivial figure.22 But the revenue and cost savings resulting from the Meat Tax will not only offset this cost but will also provide a comfortable cushion above it. Thus, after accounting for the reduced demand that it causes, the tax and other changes would yield an annual cash surplus of more than $32 billion.23
Why a tax credit? For one thing, the amount of the credit will offset the extra tax burden on each taxpaying individual or family (after adjusting for lower consumption), so that Americans' ability to eat will not be diminished. Further, the spending-related stimulus will help offset the lower spending caused by other parts of the plan. Finally, it's the quid pro quo, the benefit to individuals, that will motivate voters and lawmakers to support the overall plan.
Wouldn't a tax credit be useless to people who pay no income taxes—a group which recent estimates put at nearly half the US population? Actually, even those who pay no taxes can turn a tax credit into cash by simply filing a tax return. That's why some filers get tax refunds based on items like the Child Tax Credit and the Lifetime Learning Tax Credit even though they have no taxable income and pay no taxes. The fact that those with lower incomes are disproportionately more likely to pay no taxes does not mean the poor will be less able than others to take advantage of the proposed tax credit. To the contrary, there's evidence the poor are generally well-informed about tax credits and other benefits to which they may be entitled.24
Revamping the USDA
The USDA, as we've seen, is riddled with built-in conflicts that make it almost impossible to discern its purpose or message. Many critics
, including lawmakers like former US Senator Peter Fitzgerald (R-IL), have proposed reorganizing the agency to eliminate some of these inherent contradictions. The USDA should keep its original, Lincoln-era purpose of helping farmers and other rural Americans. But the duties of regulating animal food labels and inspecting meat and dairy plants, which frequently require the agency to act in a way opposed to its clients' interests, must be revamped. The FDA already performs these functions for most other foods and is the logical choice to take over these tasks.
The USDA should also completely exit the business of promoting animal foods and leave that to the trade organizations. There is simply no reason for the US government to encourage the heaviest people on Earth to eat more fat-rich food. Checkoff programs for animal foods should be discontinued so costs are no longer routinely passed on to consumers for messages that many consider insidious and inappropriate. Some people argue that food is a necessity and this warrants government reminders to eat. Clothing is also a necessity, but Americans manage to dress ourselves without bureaucrats reminding us to buy and wear garments. We don't have—or need—a taxpayer-funded Department of Clothing to help Gap and Benetton sell their products. Because we've seen checkoffs drive about $4.6 billion in annual sales of animal foods, or 1.8 percent of the industry's total annual sales of $251 billion, we can expect that eliminating these programs would reduce consumption by about 1.8 percent.25
Meatonomics Page 20