If you like to drink Coke or Pepsi and you’ve traveled outside the U.S., you might have noticed that Coke tastes different in other countries. It’s more delicious. Why?In Europe, Canada, Mexico and everywhere else, Coke uses pure cane sugar. But in the U.S., Coke uses high-fructose corn syrup (HFCS), an artificial sweetener. The next time you go to a grocery story, look for “Mexican Coke” in the back aisles. It looks like a nostalgic glass Coke bottle that uses real sugar instead of HFCS. Try it out to see why soda in America leaves a lot to be desired.
So why am I talking about Mexican Coke in a political op/ed column? Because Coke in America sucks, and the government is to blame. Coke in the U.S. uses HFCS instead of cane sugar, not because it’s a superior sweetener, not because it’s truly cheaper, or because it’s easier to process than sugar, but because of the federal government’s agricultural trade policy.
In 1982, ADM, a company that manufacturers artificial sweeteners like HFCS, successfully lobbied the federal government to pass draconian sugar importation quotas. It’s all about supply and demand: when the supply of sugar is artificially restricted, the price will go up, and that is exactly what has happened with sugar ever since.
We don’t see real cane sugar in Coke and Pepsi products because imported sugar is prohibitively expensive to use in manufacturing. In a truly free market without price controls, import quotas and other market distortions, consumers would dictate what kinds of soda products we see in stores.
Instead, when the government distorts the market to benefit mega-corporate farmers, Coke and Pepsi have a harder time justifying the use of a superior, yet foreign-produced, ingredient.
You may still be reading this and thinking that other issues are of far greater importance to write about, like global warming and world peace. But governments creating trade restrictions that distort the soft drink market is just one of thousands of examples of government policy benefiting corporations and special interests over the people, “the little guy.”
The last problem with government trade restrictions and Big Soda is how these sugar quotas stifle innovation and artificially raise entry requirements for alternative soda brands that might want to use real sugar.
Max Raskin of the Ludwig von Mises Institute concluded a recent article of his on that subject: “Under a system of tariffs, subsidies, and restrictions, we get companies like Coke and Pepsi producing collectivist drinks for the masses,” he wrote.
“There is nothing exciting about these products because there is nothing exciting about the system that produces them. Interventionism is restrictive; it confines the innovative human mind, while the laissez-faire economy unleashes it.