Adam Smith’s invisible hand – drink more coke
Adam Smith described the opposing, but complementary forces of self-interest and competition as the invisible hand. The fingers of this hand now have a global reach and thousands of multi-national corporations now with financial clout of nation states without being voted in or being responsible for collateral damage. Mining companies are good example.
John Maynard Keynes preferred economic intervention by government to free markets. Keynesian economist Paul Krugman thinks the pursuit of self-interest can lead to problems for society as a whole: ‘Now I’m not saying that Keynes was right about everything, that we should treat The General Theory as a sort of secular bible – the way that Marxists treat Das Kapital. But the essential truth of Keynes’s big idea – that even the most productive economy can fail if consumers and investors spend too little, that the pursuit of sound money and balanced budgets is sometimes (not always!) folly rather than wisdom – is as evident in today’s world as it was in the 1930s. And in these dangerous days, we ignore or reject that idea at the world economy’s peril.’[i] But economists of either persuasion ignore issues of sustainability, let alone third world socio-political-economic issues.
‘Sometime in the 19th century, economics largely dropped its traditional attention to land, water and food, as industry replaced agriculture as the leading economic sector. Economists decided, by and large, that they could ignore nature – take it “as given” – and instead focus on market-based finance, saving, and business investment. Mainstream economists derided the claims of ‘limits to growth’.’ [Jeffrey Sachs. ‘By separating nature from economics, we have walked blindly into tragedy’, The Guardian, 10 March 2015]
A key problem is, as Ross Gittings warns, is that. ‘The market isn’t capable of ensuring we don’t stuff the environment and thereby stuff the economy. This looks like being true of our excessive contribution to global greenhouse gas emissions. But it also applies to the more mundane problems of protecting and restoring our degraded land, water systems and native flora and fauna.’ [‘Time to get the economics of environment right’, Sydney Morning Herald, July 17, 2015]
Multi-nationals produce goods in developing countries where wages are cheap, worker’s rights minimal and ecological sustainability of no interest. Companies making money out of goods that have side effects have a responsibility, from asbestos companies to confectionary and food industries.
‘If you consume one can like that a week, no, I don’t think that’s unhealthy,’ said Alison Watkins, the managing director of Coca-Cola Amatil a couple of days ago.[ii] Sure, that is their customer’s consumption habits.
When asked if Coke could make money if everyone just drunk one can a week, Ms Watkins replied: ‘We would much rather have lots of people drinking small amounts of our product than to have a small number of people drinking a lot of our product.’
But the Dietitians Association of Australia (DAA) hit back at Ms Watkins example, saying it was less than ideal to have one can of coke a week. ‘It is unhealthy, [Coca-Cola] has no basis in saying that. It’s out of context of a healthy diet,’ DAA accredited practising dietitian Arlene Normand said.
According to evidence provided to Senate estimates [12 Feb, 16], at least 1.1 million litres of so-called ‘full sugar’ soft drinks were sold in remote community stores last financial year. [iii]
High consumption of soft drinks and other sugary drinks are associated with a number of health problems, including overweight and obesity, type 2 diabetes, osteoporosis and dental caries. In Australia, soft drinks are the most commonly consumed sugary beverage and have been singled out for specific attention as a target of obesity prevention programs. The evidence linking soft drinks consumption to overweight and obesity is now strong.
[ii] David Taylor, ‘Coca-Cola Amatil: Soft drink giant says one can a week not unhealthy, as obesity row rages’, http://www.abc.net.au/news/2016-03-02/coke-one-can-not-harmful-coca-cola-obesity/7212744
[iii] Anna Henderson, ‘Indigenous Affairs Minister Nigel Scullion says sugary soft drinks ‘killing the population’ in remote communities’, http://www.abc.net.au/news/2016-02-12/scullion-says-sugar-is-killing-remote-communities/7162974