Ultra-processed foods - why do they exist?
Ultra-processed foods, or UPF, as they are known, are all around us. Savouries, snacks, drinks, cookies, for example. We colloquially call them "junk food," as though that lessens the problem somehow. But have you ever wondered why they exist?
Human nature determines that our actions have a purpose. So if someone is manufacturing ultra-processed food, someone is marketing it, and someone else is endorsing it, then clearly there has to be a motive. What is the motive in this case?
In 1602, the Dutch East India Company issued shares for the first time. Something like this had never been done before. An entity was issuing paper to raise capital from ordinary people.
Fine, not ordinary, but people other than emperors and kings. It created a new class of people in the world: shareholders.
Over time, this evolved into the concept of "maximising shareholder value." Broadly speaking, reward someone for having taken the risk of putting their money into your shares.
Clearly, this was beneficial for all. The investor got a return on their money, and the company got cheap capital from multiple sources.
It then went and built institutions that gave jobs, endorsement deals, and distribution rights, all of which created more wealth for everyone.
But where does ultra-processed food come in? At some point, the companies that had raised the capital realised that feeding the hungry was very profitable.
Remember, for thousands of years, humankind has suffered famines and droughts. For most, food was short, not in excess.
Once you got into the game, your goal was to maximise shareholder value, which meant selling more. Your motive became to find ways to get consumers to constantly feel hungry and buy more.
If you were a shareholder, you would be delighted with the company's performance, wouldn't you?
But here is where economics comes back to bite us. As a shareholder, you want more. But as a parent, you want your child to eat less junk food.
Strangely, your goal of wanting more was to provide a better quality of life for your family.
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