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Or, more sharply: the government distorts the market, which distorts what we eat, which distorts our kids’ bodies and health.

So, why? What leads our government to such anti-free-market silliness?

There are many possible causes. Presidential campaigns begin in Iowa. Rural states are overrepresented in the Senate. Subsidies once started are difficult to end. And so on.

But as you try to reckon this mix of protections and subsidies, there is one fact to keep clear: The beneficiaries of these policies spend an enormous amount to keep them. The opponents spend very little to oppose them. The campaign spending of the sugar industry over the past two decades is high and growing.51

FIGURE 1

The lobbying and campaign spending of the corn industry is even higher.52

FIGURE 2

These numbers are large relative to other lobbying and campaign spending, even though they are tiny relative to the benefit they seek.

But I don’t offer them here to prove anything about causation. Instead, the question that I mean these data to raise is simply this:

Not: Did these contributions buy the silliness we see?

Instead: Do these contributions affect your ability to believe that this policy is something other than silliness?

CHAPTER 5

Why Don’t We Have Efficient Markets?

Imagine you drove into a small town just at the moment that a celebration was beginning. The town has a single street, creatively named Main Street. Behind the row of shops on one side of the street, imagine there’s a steep drop-off to a river below.

All the action is in front of a restaurant on Main Street. The mayor is honoring the owner of that restaurant for her success and profitability.

As the son of an entrepreneur, I understand the pride of the owner. Success in business is hard. It only ever comes with hard work. And as a student of economics, it is easy for me to recognize the appreciation of the mayor and the town: successful business is the lifeblood of an economy. Everyone, whether liberal or conservative, should honor, celebrate, and protect such success.

But now imagine that you walked behind the restaurant and discovered a torrent of trash flowing from the back door, down the hill, and into the river. Imagine that torrent of trash flowed from a decision by the owner of the business: rather than paying to have her garbage collected, she simply dumped the garbage down the hill. And imagine, finally, that if you calculated the cost of garbage collection and subtracted it from the restaurant’s profits, the restaurant would no longer have been profitable. It is profitable, in other words, only because it is not paying all of its costs.

Economists have a technical term for this kind of cost: externalities. Since time immemorial, economists have argued that such costs must be “internalized,” meaning the people creating the costs must pay for what they create. Markets that don’t internalize externalities are not, the economist insists, “efficient markets.” Such markets might be profitable (for the businesses that don’t have to pay for the costs they impose on others). But whether profitable or not, they are not efficient. An efficient market is one that fully pays its costs, and compensates for its benefits.

Put most simply, an externality is any effect that I have upon you that you and I haven’t bargained about. If my friends and I have a party, the music from my stereo keeping you up late is an externality. If my family has a barbecue, and sparks from the fire turn your house into an inferno, those sparks are an externality. If I decide to raise hogs in my backyard, the smell from those lovely, cuddly creatures is an externality. In each case, the externality is something I do to you that you and I haven’t agreed upon. In each case, you’d be perfectly right to complain.

But not with all externalities. Sometimes society likes the externality that I impose upon you, even if you don’t. If I invent a better mousetrap, one that might well destroy your less-innovative mousetrap business,