Introduction Part 2
I’ll tell you another quick story.
Would you like to know why people are so fat today?
You’ll hear a lot about people eating too much McDonalds, or people being too lazy to exercise. But here’s what really happened.
The Rest of the Story...
Back in the 1970s, the US government used to pay farmers to grow corn – to keep the farmers from going bankrupt because of weather fluctuations, or commodity prices. And as a result, there was a LOT of corn sitting around on farms, in silos, and warehouses around the country.
At the same time, the price of sugar was going through the roof because source countries like Brazil, Thailand and Mexico had a bit of political instability, mostly because of Communist insurgencies.
It turns out that company named CPC International, which made things like corn syrup and mayonnaise, had over-invested in this corn – and they needed a way to get rid of it. A lot of it. And fast.
So they asked a team of us graduate students at Rutgers Business School if we would do a survey, and see if we could find any food manufacturers who would be interested in using CPS’s High Fructose Corn Syrup – a sweetener you can make really cheaply out of excess corn.
It was like, one-fifth of the price of sugar back then.
So we went to the large commercial bakers, folks like Wonder Bread, but they didn’t want to risk their sensitive production process just to save a few bucks on ingredients.
And then we went to the candy companies, like Hershey’s, but they didn’t want to risk the quality of their product when they could just easily adjust the price in response to commodity costs.
So then we went to the soda manufacturers – for whom the cost of sugar was an enormous expense. And its varying availability often limited production, and their ability to grow.
And they said “we’ll take all we can get.”
And the price of making a can of soda dropped by like 80%.
Basically, they were able to cut the cost of their most expensive ingredient by 80%, and gain access to an almost unlimited supply of sweetener - and then shove the stuff down people’s throats, with government support!
And that’s why people are so fat today.
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