Editor's Note: Kenneth Rogoff is Professor of Economics and Public Policy at Harvard University, and was formerly chief economist at the IMF. For more from Rogoff, visit Project Syndicate or follow it on Facebook and Twitter. The views expressed in this article are solely those of Kenneth Rogoff.
By Kenneth Rogoff, Project Syndicate
A systematic and broad failure of regulation is the elephant in the room when it comes to reforming today’s Western capitalism. Yes, much has been said about the unhealthy political-regulatory-financial dynamic that led to the global economy’s heart attack in 2008 (initiating what Carmen Reinhart and I call “The Second Great Contraction”). But is the problem unique to the financial industry, or does it exemplify a deeper flaw in Western capitalism?
Consider the food industry, particularly its sometimes-malign influence on nutrition and health. Obesity rates are soaring around the entire world, though, among large countries, the problem is perhaps most severe in the United States. According the US Centers for Disease Control and Prevention, roughly one-third of US adults are obese (indicated by a body mass index above 30). Even more shockingly, more than one in six children and adolescents are obese, a rate that has tripled since 1980. (Full disclosure: my spouse produces a television and Web show, called kickinkitchen.tv, aimed at combating childhood obesity.)
Of course, the problems of the food industry have been vigorously highlighted by experts on nutrition and health, including Michael Pollan and David Katz, and certainly by many economists as well. And there are numerous other examples, across a wide variety of goods and services, where one could find similar issues. Here, though, I want to focus on the food industry’s link to broader problems with contemporary capitalism (which has certainly facilitated the worldwide obesity explosion), and on why the US political system has devoted remarkably little attention to the issue (though First Lady Michelle Obama has made important efforts to raise awareness).
Obesity affects life expectancy in numerous ways, ranging from cardiovascular disease to some types of cancer. Moreover, obesity – certainly in its morbid manifestations – can affect quality of life. The costs are borne not only by the individual, but also by society – directly, through the health-care system, and indirectly, through lost productivity, for example, and higher transport costs (more jet fuel, larger seats, etc.).
But the obesity epidemic hardly looks like a growth killer. Highly processed corn-based food products, with lots of chemical additives, are well known to be a major driver of weight gain, but, from a conventional growth-accounting perspective, they are great stuff. Big agriculture gets paid for growing the corn (often subsidized by the government), and the food processors get paid for adding tons of chemicals to create a habit-forming – and thus irresistible – product. Along the way, scientists get paid for finding just the right mix of salt, sugar, and chemicals to make the latest instant food maximally addictive; advertisers get paid for peddling it; and, in the end, the health-care industry makes a fortune treating the disease that inevitably results.
Coronary capitalism is fantastic for the stock market, which includes companies in all of these industries. Highly processed food is also good for jobs, including high-end employment in research, advertising, and health care.
So, who could complain? Certainly not politicians, who get re-elected when jobs are plentiful and stock prices are up – and get donations from all of the industries that participate in the production of processed food. Indeed, in the US, politicians who dared to talk about the health, environmental, or sustainability implications of processed food would in many cases find themselves starved of campaign funds.
True, market forces have spurred innovation, which has continually driven down the price of processed food, even as the price of plain old fruits and vegetables has gone up. That is a fair point, but it overlooks the huge market failure here.
Consumers are provided with precious little information through schools, libraries, or health campaigns; instead, they are swamped with disinformation through advertising. Conditions for children are particularly alarming. With few resources for high-quality public television in most countries, children are co-opted by channels paid for by advertisements, including by food industry.
Beyond disinformation, producers have few incentives to internalize the costs of the environmental damage that they cause. Likewise, consumers have little incentive to internalize the health-care costs of their food choices.
If our only problems were the food industry causing physical heart attacks and the financial industry facilitating their economic equivalent, that would be bad enough. But the pathological regulatory-political-economic dynamic that characterizes these industries is far broader. We need to develop new and much better institutions to protect society’s long-run interests.
Of course, the balance between consumer sovereignty and paternalism is always delicate. But we could certainly begin to strike a healthier balance than the one we have by giving the public far better information across a range of platforms, so that people could begin to make more informed consumption choices and political decisions.
© 2011 Cable News Network. Turner Broadcasting System, Inc. All Rights Reserved.
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Innovation cannot be about big companies anymore. If you have an idea, follow through. Guess what? You will be working for free for a while. It wont kill you. It is a wild ride! We expect to be highly paid, and that is not wrong, but there is a rush associated with new product design. Anyone can do it!
At this point, the real offenders are those that suppress free thinking on any level. Sure, we need to be grounded, but that doesnt mean we will fail if we are.
What we can say with surety is, that there is not one economic expert who can tell us how we got in this economic mess. Further, there is not one economic expert who can tell us how to resolve our economic problems. For your information Google “The World Monetary Order”.
http://theworldmonetaryordertocome.blogspot.com/2010/11/introduction.html
(Definition: “An expert is someone with a briefcase far away from home.”)
We are what we eat! Home enviroment has an impact on our taste and eating habits. If we are stuffed with processed baby food right from the cradle and don't eat wholesome meals as children. Sooner or later we'll be confined to bed. Come the day we feel we'd be better off in a coffin. Our lives are well catered for by commerce: from birth to death.
What happened to Rogoff the arch-neoliberal. Why has he become more enlightened recently. Has he been researching social and political science or development economics or what!!!
To expand his brianpan further he needs to leave the USA. What he says western capitalism he means US capitalism which is at the laissez faire end. DO NOT SAY WESTERN WHEN YOU MEAN AMERICAN. America has many failings (and strengths) that are unique, or at least not common to the west.
This article is good though and highlights an important problem with its epicentre in the low quality US food chain but which has now expanded as non-US multinationals try to compete on cost with US companies such as Kraft and Hersheys (though high-fructose corn syrup is uniquely subsidised and prevalent in the US food chain currently).
Time was when you could avoid any foodstuff that was made by an American company. Still you need to do that to remain healthy. But increasingly you need to be careful of processed food more generally. Alas the quality foods that Europe and Asia have produced for generations are losing market prominence because of the deep marketing budgets of the US producers of CRAP and the non-US companies now forced to compete.
أكد وزير الخارجية التونسي رفيق عبد السلام اليوم السبت أن حكومة بلاده اتخذت قرارا بطرد السفير السوري في تونس، فيما أعلن الرئيس التونسي أن بلاده سحبت اعترافها بشرعية حكم الأسد، وذلك في وقت دعا فيه رئيس البرلمان العربي سالم الدقباسي الدول العربية لطرد السفراء السوريين المعتمدين لديها.
وقال عبد السلام في مقابلة مع الجزيرة، إن قرار الحكومة التونسية جاء احتجاجا على المجازر التي جرت وتجري اليوم في حمص وفي غيرها من المدن السورية، وأوضح أن وزارته ستقوم بتنفيذ القرار في القريب العاجل وستستدعي سفيرها في دمشق.
وتوقع الوزير أن تحذو معظم الدول العربية حذو بلاده في هذه الخطوة، وخص بالذكر مصر والمغرب ودول الخليج، وقال "نحن ننسق مع شركائنا في الدول العربية".
COUNTER FITED DOLLARS AND IRAQI DINAR DONE BY IRAN
علم هدهد سليمان ومن مصدر امني مهم , أن هناك طائرة نقل إيرانية تحط أسبوعيا في مطار النجف الاشرف وهي محملة بالمليارات من الدنانير العراقية المزورة من إيران وبعد ذلك يتم نقل هذه المليارات من الأوراق النقدية العراقية المزورة تحت حماية أمنية مشددة وبإشراف عدد معين من كبار المسئولين في أحزاب الائتلاف الوطني إلى البنك التجاري العراقي فرع النجف الاشرف لغرض إيداعها به , ومن ثم سحب البديل عنها بالعملة الصعبة والتي تقدر بالمليارات من الدولارات ثم تحمل سراً بنفس الطائرة لتقلع بها إلى طهران . this is a fact every week an Iranian plan fly to iraq and directly to najaf province not baghdad in this najaf province the evil province in iraq , this plan brings billions of Iraqi dinars faked Iran dinar from iran and exchange it with USA dollars in janaf under the watch of al hakeem and al maleki group, bringing billions of dollars back to iran and then give to Syria , Russia and Hezbollah. WHY USA DONT DO NOTHING , WHAT IS THE USE OF SANCTIONING IRAN AND KEEPING THE EVIL IRAQI PRIM MINSTER DOING THIS EVIL DEEDS WAKE UP OBAMA
More than an opinion, this is a request. What is happening in Latin America should be addressed immediately. The so called democratic governments of Venezuela, Ecuador, Bolivia, Nicaragua, Cuba of course and Argentina to a lesser extent, are nothing but disguised tyrannies taking advantage of the ignorance of the 80 or 90 per cent of their people. There is no freedom of opinion; no free enterprise at all. Close ties with Iran, etc.
Fareed, it is time to take the bull by the horns and you should present this naked truth to the world.
This website does not facilitate easy use. There needs to be an easy way to watch entire programs from a particular day. This will be useful to people who miss a program on Sunday and want to watch it. A second need is an easy way to watch segments of a program. I watched a segment this past Sunday. I wanted to watch it again. It was an interview from Davos of an official from Singapore. I have spent more than an hour looking for it and cannot find it anywhere. Shame on you; you should be enabeling your customers not frustrating them.
The best way to solve the problem is let people know "invalid happiness" is the culprit and quit it. Just like quitting the marijuana. (See my blog blog.sina.com.cn/happywellness)