How the Supermarket Helped America Win the Cold War (Update)

Summary

Freakonomics Radio: How the Supermarket Helped America Win the Cold War (Update)
Release Date: December 9, 2024

In this illuminating episode of Freakonomics Radio, host Stephen Dubner delves into the intriguing and often overlooked role that American supermarkets played in the Cold War. Drawing on historical analysis and expert insights, Dubner explores how the seemingly mundane grocery store became a powerful symbol of American prosperity and capitalist superiority over the Soviet Union.

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1. The Birth of the American Supermarket

Shane Hamilton, an American historian and author of Supermarket Food and Power in the Cold War Farms Race, opens the discussion by tracing the origins of the supermarket in the United States. Hamilton argues that the supermarket was a uniquely American invention, emerging around the late 1930s. Unlike traditional dry goods stores, early supermarkets like Piggly Wiggly introduced the self-service model, allowing customers to select their own produce and goods— a revolutionary shift in retail.

Shane Hamilton [03:49]: "I argue yes. The easy answer is that the first declared supermarket was built in the United States."

This transformation was underpinned by the development of an industrial agriculture system that enabled mass production of food, making supermarkets a feasible and affordable option for the average American.

2. Government's Role in Agricultural Productivity

Ann Efland, a former senior economist at the USDA, provides critical insights into the government's pivotal role in shaping American agriculture. Post-World War I and World War II, the USDA invested heavily in scientific research, focusing on areas like seed development, livestock breeding, and farm machinery.

Ann Efland [07:14]: "There was a need for better transportation from the farms to the cities."

This investment not only boosted productivity but also laid the foundation for the high-volume, standardized agriculture that supermarkets depended upon.

3. The Farms Race and Supermarkets as Propaganda

During the Cold War, the United States engaged in a "farms race" against the Soviet Union, emphasizing agricultural abundance as a testament to the superiority of capitalist systems. Shane Hamilton explains how initiatives like the "Chicken of Tomorrow" project were designed to produce efficient, visually appealing, and disease-resistant poultry, symbolizing American innovation.

Shane Hamilton [15:24]: "What it was was a contest to produce the most efficient chicken using genetic techniques basically."

4. The Chicken of Tomorrow

The "Chicken of Tomorrow" project exemplified the intersection of science, agriculture, and propaganda. By developing chickens with heavy breasts and light-colored feathers, the project aimed to create poultry that met both aesthetic and practical demands of supermarket display and mass production.

Shane Hamilton [15:38]: "The chicken of tomorrow is the chicken of today in that we're all eating the kind of genetic progeny of the original chicken of Tomorrow."

5. Supermarkets in Communist Countries

To showcase the successes of American capitalism, the U.S. government exported the supermarket model to communist nations. In 1957, the "Supermarket USA" exhibit was established in Zagreb, Yugoslavia, featuring a fully operational American supermarket filled with processed and frozen foods.

Shane Hamilton [16:18]: "The U.S. Information Agency were searching for concrete forms of propaganda to display America's wealth."

The exhibit was a massive hit, attracting over a million visitors and leading Yugoslav leader Marshal Tito to adopt the American supermarket model, purchasing the entire setup to replicate the system domestically.

6. Impact on American Agriculture and Economy

The push for high productivity and mass production had profound effects on American agriculture. Peter Timmer, a retired Harvard economist and former farm boy, recounts the transition from manual farming to mechanized processes, highlighting how innovations like the mechanical tomato harvester revolutionized operations.

Peter Timmer [08:19]: "It just revolutionized our operation."

However, this shift also led to the decline of small family farms and the rise of large, industrialized agricultural enterprises. The consolidation was driven by supermarket chains' demand for consistent quality and low prices, favoring large-scale producers over small farmers.

7. Long-term Consequences and Modern Implications

The episode doesn't just stop at the historical analysis but also touches upon the long-term consequences of this agricultural transformation. Policies that once aimed to stabilize farm incomes inadvertently led to market distortions, overproduction, and environmental issues.

Ann Efland discusses how price support systems created surplus production, which the government had to purchase and store, leading to inefficiencies and waste.

Ann Efland [30:35]: "One of the problems with this is that it leads to a large surplus."

Furthermore, the focus on a few staple crops like corn and soybeans spurred the rise of processed foods and materials like high fructose corn syrup, which have had significant health implications.

Peter Timmer [35:58]: "If I had only one thing to say about the impact of our agricultural programs on what you see in the supermarket and subsequent health issues out of the diet, I would have said the fact that we use so much high fructose corn syrup..."

8. The Supermarket as a Cold War Weapon

The supermarket was not just a place to buy groceries but a strategic tool in the Cold War arsenal. By exhibiting the abundance and technological prowess of American supermarkets, the U.S. aimed to undermine Soviet claims of superiority.

Shane Hamilton [23:25]: "It's built on this idea that supermarkets are producing this affordability just through the workings of supply and demand, that it's unfettered markets that are somehow making food so affordable for American consumers..."

However, this portrayal often obscured the substantial government support and scientific advancements that underpinned the supermarket model, presenting it misleadingly as a purely free-market phenomenon.

9. Conclusion: The Supermarket's Legacy

As the episode wraps up, Dubner reflects on the complex legacy of America's supermarket victory in the Cold War. While it showcased the nation's ability to produce affordable, abundant food, it also set the stage for modern challenges related to sustainability, health, and economic equity.

Shane Hamilton [40:26]: "We clearly won the food wars in terms of supply and abundance. We won the abundance war. What we may be in the process of losing is the health and quality dimensions going forward."

The episode concludes by pondering the future of American agriculture and the supermarket system, suggesting that a shift towards more sustainable and environmentally friendly practices is imperative to address the enduring consequences of past policies.

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Notable Quotes:

• Shane Hamilton [03:49]: "I argue yes. The easy answer is that the first declared supermarket was built in the United States."

• Peter Timmer [08:19]: "It just revolutionized our operation."

• Ann Efland [30:35]: "One of the problems with this is that it leads to a large surplus."

• Peter Timmer [35:58]: "If I had only one thing to say about the impact of our agricultural programs on what you see in the supermarket and subsequent health issues out of the diet, I would have said the fact that we use so much high fructose corn syrup..."

• Shane Hamilton [23:25]: "It's built on this idea that supermarkets are producing this affordability just through the workings of supply and demand..."

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This episode offers a comprehensive examination of how the American supermarket, backed by government policy and scientific innovation, became a symbol of Cold War victory. It underscores the profound and lasting impacts of agricultural policies on both the economy and public health, while also highlighting the complexities and unintended consequences of leveraging consumer systems as tools of geopolitical strategy.

Transcript

[Stephen Dubner]

Freakonomics Radio is sponsored by Capital One. In today's world, everyone subscribes to everything music, tv, even pet supplies. And it rocks until you have to manage it all. Which is where Capital One comes in. Capital One credit card holders can easily track, block or cancel recurring charges right from the Capital One mobile app at no additional cost. With one sign in, you can manage all your subscriptions all in one place. Learn more at CapitalOne.comscriptions Terms and Conditions apply. Apple Card is the perfect card for your holiday shopping. You can apply on your iPhone in minutes and start using it right away. You'll earn up to 3% daily cash back on every purchase, including products at Apple like a new iPhone 16 or Apple Watch Ultra. Start holiday shopping for your friends and family today with Apple Card subject to credit approval. Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch terms and [e-mail] hey there, it's Stephen Dubner with a bonus episode of Freakonomics Radio. Our most recent regular episode was an interview with John Sullivan, a former U.S. ambassador to Russia. We didn't really talk about the Cold War, but as a result of that conversation I've been thinking a lot about the Cold War. And that got me thinking about an episode we made some years ago called how the Supermarket Helped America Win the Cold War. So I went back and listened to it. I really liked it, if I do say so myself, and I thought you might like to hear it again too. So here it is. We have updated facts and figures as necessary. As always, thanks for listening. When you think about propaganda campaigns, I am guessing you don't think of this.

[Peter Timmer]

Shop, your Safeway store.

[Stephen Dubner]

You will always save more at the sign of the S after World War I and World War II came the Cold War between the US and the USSR. It featured a space race, an arms race and a farms race.

[Audra Wolff]

Things like chicken breeding and hybrid corn took a outsize and somewhat surprising role in U.S. propaganda in the early 1950s.

[Stephen Dubner]

The farms race had an obvious winner.

[Peter Timmer]

We clearly won the abundance war.

[Stephen Dubner]

But the American victory was to some degree a puerk victory whose after effects are still being felt.

[Peter Timmer]

Economists who don't do US agricultural policy are horrified by what they see in terms of distorting markets.

[Stephen Dubner]

Today on Freakonomics Radio, how a sprawling system of agriculture, technology, economic policy and political will came to life in the supermarket.

[Shane Hamilton]

Tell me, who could possibly afford to buy food in a place such as this? This is just an ordinary food market. Competition and big volume keep prices down. Utterly impossible.

[Stephen Dubner]

This is freakonomics Radio, the podcast that.

[Peter Timmer]

Explores the hidden side of everything with.

[Stephen Dubner]

Your host, Stephen Dubner. The supermarket is so ubiquitous today that it's hard to imagine the world without it. But of course, such a time did exist.

[Shane Hamilton]

There's some debate about when supermarkets actually started, but usually we pin it at around 19:30.

[Stephen Dubner]

That's Shane Hamilton. He's an American historian who teaches at the University of York in England.

[Shane Hamilton]

I am the author of Supermarket Food and Power in the Cold War Farms Race.

[Stephen Dubner]

Was the supermarket a purely American invention?

[Shane Hamilton]

I argue yes. The easy answer is that the first declared supermarket was built in the United States. I think the broader answer is that what makes a supermarket a supermarket is the industrial agriculture system that enables the affordability of mass produced foods.

[Stephen Dubner]

The predecessor of the supermarket was the dry goods store.

[Shane Hamilton]

So they didn't have fresh produce. They didn't necessarily have milk or meat or a bakery in house. That's what a supermarket did is it put all those food items and often many other things. You could get, you know, auto parts, you could get your shoes shined. In the early supermarkets, it was a kind of one stop shopping and service emporium.

[Stephen Dubner]

Another big difference, supermarkets were self serve. In a dry goods shop, you'd ask a clerk for something and they'd fetch it. In a supermarket you could ogle the meat and produce yourself, even handle it and then put it in your basket. The supermarket chain Piggly Wiggly is credited with having pioneered the self service retail model. It is still operating today in 18 states. But the biggest supermarket chain for much of the 20th century was a and P, the great Atlantic and Pacific Tea Company.

[Shane Hamilton]

A and P, as of the 1940s was the world's largest retailer by any measure, by sales volume, by number of outlets and so forth.

[Stephen Dubner]

Between 1946 and 1954 in the US the share of food bought in supermarkets rose from 28% to 48%. By 1963, that number had risen to nearly 70%. A&P had so much market power that the Department of Justice went after it for anti competitive practices. This was an interesting development considering that the US government played such a significant role in the creation of supermarkets in the first place.

[Shane Hamilton]

The original goal had been to use the supermarkets to drive down the cost of food for urban consumers.

[Ann Efland]

The US becomes a majority urban nation by, I think 1920, and there's a lot of anxiety among leaders, political leaders, thought leaders, about whether or not US agriculture is going to be productive enough to feed this growing urban population, that is.

[Stephen Dubner]

Ann Efland, a former senior economist at the USDA. The U.S. department of Agriculture, established in 1862, had a long history of funding and conducting scientific research.

[Ann Efland]

You know, a lot of the seed development and livestock breeding. One good example would be the research done in the 1890s on animal disease, on bovine tuberculosis, for example, to identify the causes of those diseases and then to develop ways to treat that. There was also research on developing new kinds of machinery that would, you know, be less heavy on the ground or less damaging to crops.

[Stephen Dubner]

The USDA's Promotion of Agriculture went even further than farm machinery and animal breeding.

[Ann Efland]

There was a need for better transportation from the farms to the cities. So USDA had a unit that did engineering research on the best road materials and road construction methods. The Rural Electrification Administration was part of the New Deal. Usda, the private electrical companies didn't see a profit in expanding out into rural areas. And so that was taken on by usda.

[Stephen Dubner]

But perhaps the biggest changes to American agriculture were mechanization and automation, if I may say so.

[Peter Timmer]

I lived through the structural transformation of the agricultural economy.

[Stephen Dubner]

That's Peter Timmer, an economist who used to teach at Harvard.

[Peter Timmer]

I'm a retired professor, have worked on agriculture and food policy, poverty reduction, economic development for well over 50 years now.

[Stephen Dubner]

And before that, Timmer was a farm boy in Ohio. He worked for the Tip Top Canning factory, which was founded by his great grandfather, and the factory's tomato farm.

[Peter Timmer]

I'm old enough to remember when we hand picked all of our tomatoes and we hand peeled all of our tomatoes.

[Stephen Dubner]

But that of course changed when I.

[Peter Timmer]

Was in grade school or junior high school. If we could pack 40 or 50,000 cases of canned tomatoes and product in a year, that was a pretty successful year. By the time I had graduated from graduate school, the company was putting out a million cases a year.

[Stephen Dubner]

This was thanks in large part to a mechanical tomato harvester which came out of the engineering school at the University of California, Davis, with the help of federal research money. It had taken years to get the harvester right, mostly because they first had to get the tomato right, breeding a new variety that could withstand the rough treatment of the mechanical harvester.

[Peter Timmer]

I remember when we bought our first one, it was a huge expense and it just revolutionized our operation. I was just in a microcosm of what turned out to be very general trends in the entire US food system at the time.

[Stephen Dubner]

The general trends could best be characterized as high volume and standardized agriculture. If you would describe US agriculture policy as aggressive in earlier decades then in the Cold War era, it was pretty much on steroids. And this wasn't just about feeding a growing US Population. This had a political thrust meant to show the Soviet Union and the rest of the world just how mighty the US Was.

[Shane Hamilton]

Shane Hamilton, again, I don't mean to deny the power and the might of these weapons systems that were deployed and the space race and all that, but fundamentally, this was a contest to demonstrate that either communism or capitalism was a superior political economic system.

[Audra Wolff]

After Sputnik, when the United States was trying to understand why it was falling behind in the space race or why it thought it was falling behind in the space race, many of the commentators said, the problem is we're not funding basic research. So after 1957, the budgets of not only organizations like the National Science foundation, but also specific government departments like the Department of Agriculture, their budgets for research increased dramatically on the theory that this is how the United States would win the Cold War, by doing the best science, that is.

[Stephen Dubner]

Audra Wolff.

[Audra Wolff]

I'm a writer, editor, and historian.

[Stephen Dubner]

Wolff's latest book is called Freedom's the Cold War Struggle for the Soul of Science.

[Audra Wolff]

And it really looks at the ways that science as an idea became a tool for propaganda in the Cold War, especially on the American side. There's this idea that you can change hearts and minds and you can establish a climate of opinion that makes people more willing to accept the American way of life as the better choice.

[Stephen Dubner]

And one of the things that made America so great, its agricultural system, things.

[Audra Wolff]

Like chicken breeding and hybrid corn, took a outsized and somewhat surprising role in US propaganda in the early 1950s.

[Stephen Dubner]

But there was a tension.

[Audra Wolff]

The United States wanted to promote personal exchanges, scientific and technical exchanges as a way to promote American values. But at the same time, it was very, very nervous that by doing so, it would lose the advantages that it had, particularly in grain production.

[Stephen Dubner]

In 1955, the US government unexpectedly had its hand forced.

[Audra Wolff]

A newspaper editor in Iowa named Lauren south invited Khrushchev to the United States to see the wonders of American agriculture.

[Stephen Dubner]

That's Nikita Khrushchev, then leader of the Soviet Union.

[Audra Wolff]

And somewhat to everyone's shock, Khrushchev said yes. Now, Khrushchev didn't come himself until 1959, but in 1955, a group of 12 Soviet agricultural experts came to the United States to see the wonders of American agriculture. They saw how contour farming worked. They saw the wonders of hybrid corn. They saw the chicken breeders.

[Stephen Dubner]

And what were those chicken breeders working on?

[Shane Hamilton]

The chicken of tomorrow.

[Stephen Dubner]

That's coming up. I'm Stephen Dubner this is Freakonomics Radio. We'll be right back. Freakonomics Radio is sponsored by LinkedIn. When you're hiring for your small business, you want to find quality professionals that are right for the role. That's why you have to check out LinkedIn Jobs. LinkedIn Jobs has the tools to help find the right professionals for your team faster and for free. LinkedIn isn't just a job board. LinkedIn helps you hire professionals you can't find anywhere else, even those who aren't actively searching for a new job but might be open to the perfect role on LinkedIn. 86% of small businesses get a qualified candidate within 24 hours. So if you're not looking on LinkedIn, you're looking in the wrong place. Hire professionals like a professional on LinkedIn. Post your job for free at LinkedIn.com freak that's LinkedIn.com freak to post your job for free. Terms and conditions apply. Freakonomics Radio is sponsored by Stripe, Zip, Twint, Kria, oxo, Conbini and Pit Pay. These are popular payment methods from around the world and even if you aren't an expert on all of these, your checkout will be with the optimized Checkout suite from Stripe. Businesses saw an 11.9% revenue uplift on average when they used the Stripe Optimized Checkout suite. This includes optimizations like intelligently surfacing the right payment methods to each customer using machine learning trained on trillions of transactions globally. That may sound like a minor convenience, but did you know that 85% of consumers will abandon their cart if their preferred payment method isn't offered? Stripe helps businesses avoid abandoned carts by enabling a wide range of payment options to accommodate your customers preferences, grow your revenue and sell globally with Stripe. Learn [e-mail] what's your boldest, truly ambitious life goal?

[Audra Wolff]

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[Stephen Dubner]

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[Ann Efland]

That's why Estate street offers a way.

[Stephen Dubner]

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[Ann Efland]

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[Audra Wolff]

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[Shane Hamilton]

Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit ssga.com for perspectives containing this and other information. Read it carefully.

[Stephen Dubner]

DIA Subject to risks similar to those.

[Shane Hamilton]

Of stocks, all ATs are subject to risk, including possible loss of principal Alps Distributors Inc. Distributor chicken in the 1920s was pound for pound as expensive as Lobster. By the 1960s it was so Cheap that it was quickly becoming America's most popular meat.

[Stephen Dubner]

That again is Shane Hamilton, a historian and the author of Supermarket Food and Power in the Cold War Farms Race. In the book he tells the story of a project called the Chicken of Tomorrow.

[Shane Hamilton]

Really the chicken of tomorrow is the chicken of today in that we're all eating the kind of genetic progeny of the original chicken of Tomorrow. What it was was a contest to produce the most efficient chicken using genetic techniques basically. And it not only had to be an efficient chicken, but very heavy breasts, very light colored feathers so that when it's plucked it would look good under cellophane and then later plastic packaging. And the birds had to relatively disease resistant so that they could be put in intensive rearing operations without dying too quickly.

[Stephen Dubner]

This agricultural bounty, those heavy breasted cheap chickens, those millions of cases of tomatoes, all this was a good candidate for the U.S. propaganda machine.

[Shane Hamilton]

The U.S. information Agency were searching for concrete forms of propaganda to display America's wealth.

[Stephen Dubner]

Enter one of the most concrete forms of display imaginable, the supermarket.

[Shane Hamilton]

A supermarket is not just a retail box, but actually the endpoint of an industrial agriculture supply chain. A supermarket can't exist without the inputs of mass produced foods. The farms race was about how do you get the food from industrially productive, technologically sophisticated farms to, you know, this display of abundance. And the display was really crucial.

[Stephen Dubner]

Since the average citizen living under communism wouldn't have access to a Piggly Wiggly or an ANP. The US government brought the supermarket to the Communists.

[Shane Hamilton]

The 1957 Supermarket USA exhibit in Zagreb, Yugoslavia, which was then a communist country. It was a fully operational 10,000 square foot American supermarket filled with frozen foods and breakfast cereals and everything else. They airlifted in fresh produce from the US because they didn't think Yugoslavian produce was attractive enough. It was about this display of affordable abundance available to American consumers.

[Stephen Dubner]

For anyone who didn't get the message, there was also a sign touting the knowledge of science and technology available to this age. In other words, if you like our breakfast cereal, just think how much you'll like the rest of our capitalism.

[Shane Hamilton]

There were quite a few people who thought that if you showed that American consumers could access affordable food, you know, strawberry in December without having to wait in line, that that might actually cause the whole communist system to collapse.

[Stephen Dubner]

The Supermarket USA exhibit proved tremendously popular. More than 1 million Yugoslavs visited. Some received free bags of American food.

[Shane Hamilton]

Immediately after seeing it. Marshal Tito, the leader of the country at the time, ordered the whole thing to be purchased and it was bought wholesale from the United States exhibitors and used as a model. They hired a consultant from an Atlanta supermarket firm to come over and teach them how to build their own chain of socialist supermarkets.

[Stephen Dubner]

So Yugoslavia, along with other European countries, started building American style supermarkets which created new buyers for processed and frozen foods from America. This did not however, lead to a wider embrace of American culture, much less the downfall of communism. But just a couple years later, the Americans took another shot, this time in Moscow at the American National Exhibition. They built a split level ranch style American house, its kitchen stocked with food and the latest labor saving appliances. The message was the American economy, based in free market capitalism, was capable of producing things that the Soviets command and control economy simply couldn't. The exhibition opening was attended by Nikita Khrushchev and then US Vice President Richard Nixon. They engaged in what came to be known as the kitchen debate. You must not be afraid of ideas. That's what we're telling you.

[Shane Hamilton]

Don't be afraid of ideas.

[Ann Efland]

We have nothing to fear.

[Stephen Dubner]

The time has passed when ideas scared us.

[Shane Hamilton]

Well then let's have more exchange of them. Richard Nixon and Nikita Khrushchev. They are two of the most explicit users of this Cold War farms race language. Khrushchev declared that by outproducing the US in per capita meat and milk production, that would be the Soviet equivalent of hitting American capitalism with a torpedo. Nixon retorted that if there was going to be a torpedo fired, it was going to be by America's farmers and ranchers. To which the farmers and ranchers, listening to his speech, applauded very mightily.

[Stephen Dubner]

A few months afterward, Khrushchev finally visited the US and he got to see for himself the sprawling cornfields of Iowa. But this was of little help to the Soviet farmers back home.

[Peter Timmer]

The fact is they were unable to modernize Soviet agriculture with the economic structure and strategy that they were following.

[Stephen Dubner]

The economist Peter Timmer.

[Peter Timmer]

Again, it was not a technological problem. It was a management and marketing problem. There was a total divorce between what consumers wanted and what the managers of the big state farms were told to produce.

[Stephen Dubner]

Timmer was part of a World bank team that visited the Soviet Union. He saw for himself their agricultural system and supermarkets.

[Peter Timmer]

Oh gosh. I mean, the shelves were empty. It was just weird. We stayed at a government hotel and there was hardly anything to eat. You talk with the staff of the research agencies and places like that who would struggle just to come up with basic foods. They knew it could be better than that.

[Stephen Dubner]

Khrushchev, despite his bravado, was ultimately forced to buy imported grain from the us.

[Shane Hamilton]

Some historians would argue that this was one of the crucial factors that led to his downfall, that it was just embarrassing on the world stage for the Soviet Union, this vast country with enormous agricultural resources having to turn to its archenemy for grain.

[Stephen Dubner]

Khrushchev's successor, Leonid Brezhnev, continued the policy of importing food from the US to cover domestic shortfalls. If the two countries had been normal trading partners, this wouldn't have been a big deal. But they weren't normal trading partners. They were Cold War adversaries, the global icons of capitalism and communism. And it was becoming clear which system would prevail, at least on the food front. Peter Timmer's final analysis.

[Peter Timmer]

It was a fundamentally failed strategy for agriculture that brought down the Soviet Union. They didn't grow enough and they didn't grow the right things, and there were no price signals telling you what's expensive and what's cheap. They wasted a lot of what they were producing on the land. It never got into the supermarkets.

[Stephen Dubner]

Timur was actually in Moscow when the Soviet Union collapsed.

[Peter Timmer]

The neat thing is I have a passport going in stamped Soviet Union, but my passport coming out, the exit stamp is Russia. People were so optimistic about what was going to happen. They knew that American supermarkets were a miracle. They had seen it on television. That point had clearly gotten through, at least to everybody that I talked to.

[Stephen Dubner]

And so it seems as though the mighty supermarket may indeed have played a role in America's Cold War victory.

[Shane Hamilton]

Yeah, I mean, this is central to the kind of lie, really, of the supermarket as a weapon.

[Stephen Dubner]

The historian Shane Hamilton, again, so when.

[Shane Hamilton]

The supermarket is upheld as this, you know, effectively missile, this concrete consumer weapon against the claims of communism, it's built on this idea that supermarkets are producing this affordability just through the workings of supply and demand, that it's unfettered markets that are somehow making food so affordable for American consumers, where the reality is for everything from milk to beef to grain to processed foods of all kinds, there's massive government investment in the science and technology that enables the productivity of American farms, from fertilizers to frozen food processes to distribution and so forth, and that's all erased. The image is that it's just the supermarket itself that is the source of abundance.

[Stephen Dubner]

So when you describe it like that, it's certainly. I mean, you use the word lie and you talk about the hidden components and you make it certainly sound nefarious. But couldn't you argue that, you know, the role of a government is to invest in science and technology that'll benefit private industry and ultimately the citizenry.

[Shane Hamilton]

Yeah, I actually don't have a problem with the US Government investment in science and technology and encouraging, you know, more productivity. The concern is with, you know, that being disguised as a free market when it's not particularly free. I mean, taking that to a propaganda level and attacking another country for not having free markets, it's just duplicitous. Right?

[Stephen Dubner]

You may or may not be as disturbed as Shane Hamilton is by what he calls the duplicity of the US Government for promoting the supermarket as an emblem of free market capitalism. To me, the big question is, what was the ultimate cost of this supermarket victory? What are the economic and political and health consequences of more than 100 years of agriculture policy, policy that encouraged industrialization, standardization and low prices? That's coming up right after this. Freakonomics Radio is sponsored by NetSuite. What does the future hold for business? Ask nine experts and you'll get 10 answers. Bull market, Bear market rates will rise or fall. Can someone please invent a crystal ball? Until then, over 40,000 businesses have future proofed their business with NetSuite by Oracle, the number one cloud ERP bringing accounting, financial management, inventory and HR into one fluid platform. With real time insights and forecasting, you are peering into the future with actionable data. Whether your company is earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. Speaking of opportunity, download the CFO's guide to AI and machine learning at netsuite.com freak the guide is free to you at netsuite.com freak netsuite.com freak Freakonomics radio is sponsored by Hydro. This holiday season give the gift of an immersive full body workout all from the comfort of home with the Hydro Rower. Hydro combines strength and cardio to give you an amazing full body workout all in 20 minutes. With the largest library of rowing workouts led by Olympians and world class athletes, Hydro helps you stay motivated and crush your fitness goals. And they have you covered with free standard shipping, 30 day risk free trial and a one year warranty. Give the gift of a full body workout all from the comfort of home Home with Hydro head over to hydro.com and use code FREAKONOMICS to save up to $800 off your hydro Pro rower. That's H Y d r o w.com code freakonomics to save up to $800 hydro.com code freakonomics after investing billions to light up our network T Mobile is America's largest 5G network. Plus right now you can switch. Keep your phone and we'll pay it off up to $800. See how you can save on every plan versus Verizon and AT&T. @t mobile.com KeepAndSwitch up to four lines via virtual prepaid card. Allow 15 days qualifying unlock device credit service ported 90 plus days with device ineligible carrier and timely redemption required. Card has no cash access and expires in six months. So the US won the so called farms race with an industrial approach to agriculture that was heavily influenced by government policy and funding. What were the long term results of that victory? We need to go back about 100 years to figure that out. That is on the advice of Anne Efland, the former USDA economist we've been hearing from. Efland thinks there's one key event that.

[Ann Efland]

Really drove US food policy and that is production increases. Around World War I, farmers expanded their production to meet wartime goals. And there were some price supports during that time that provided incentives for increased especially wheat and pork and some of these other staple commodities. But there was no real planning for the aftermath after the increased demand and the price supports that are set up for war go away. And it left a number of farmers who had in good faith developed larger farms and more productive farms with very low prices.

[Stephen Dubner]

So after the war, farmers were producing more food than was necessary. Then came the Great Depression. The economist Peter Timmer I mean demand.

[Peter Timmer]

Collapsed but agricultural productivity did not. And what that meant was prices just collapsed. And so that so totally set the mind frame for US agricultural policy.

[Ann Efland]

That's when we see the beginning of real price policies for agriculture.

[Stephen Dubner]

Price policies for agriculture would take many forms over the ensuing decades, from crop insurance to loans and direct payments and many more. Now you can understand why the government would want to make agriculture financially viable and remove some of the uncertainty. A national food supply is a pretty important thing. One key policy tool the government used was a price support system guaranteeing farmers a certain minimum price for a specific crop at a specific time.

[Ann Efland]

There was an idea of something called parity, which was that the price should be such that it would give farmers the same purchasing power in comparison to workers and others in the economy that they had had before World War I. And that was the guideline for what those price support levels ought to be.

[Stephen Dubner]

But if you increase the price being paid without limiting the amount being produced.

[Ann Efland]

Well, one of the problems with this is that it leads to a large surplus.

[Stephen Dubner]

This would leave the federal government to buy and Store excess produce. In the early 1930s, when the U.S. government guaranteed farmers 80 cents per bushel of wheat, the government wound up buying and storing more than 250 million bushels.

[Ann Efland]

These things all take place in the context of their own times. Having policies that found a way to increase farm incomes in the 1930s, I think would be seen as a good thing. But there are also consequences of that over time as they get embedded.

[Stephen Dubner]

If you ever Wonder why the USDA's old food pyramid, the diagram of recommended servings of different foods, why the biggest category at the bottom of the pyramid was bread, cereal, rice, and pasta? Well, the US had an awful lot of all those foods. And if you ate as the USDA instructed, there's a good chance you put on a few pounds. You can't think about nutrition without thinking about agriculture policy. And US Agriculture came to be driven by financial incentives, incentives that, given how government funding often works, weren't always entirely sensible.

[Peter Timmer]

You know, economists who don't do US Agricultural policy are usually horrified by what they see in terms of distorting markets. Picking, okay corn, soybeans, wheat, you guys get big subsidies. Apples, grapes, fresh fruits and vegetables. You're on your own. Dairy, incredibly regulated, both federally and at the state level. Just a mess. Just an awful mess.

[Stephen Dubner]

With price guarantees for certain crops and the resultant glut of supply. The government sometimes paid farmers to plant fewer crops, but even this wasn't fully successful.

[Ann Efland]

So we have controls on how much can you plant on an acre, but not on how much your yield is on the acres you are planting. There's a huge boom. Lots of new chemicals, fertilizers, machinery that make farms more productive. So even though we're trying to control by reducing the acreage, there continues to be increasing production, and surpluses don't go down.

[Stephen Dubner]

But Anne Eflin says this was a problem the USDA wasn't all that unhappy about.

[Ann Efland]

Problem solving on the scientific and technical and engineering side tends to run on its own track and be seen as a positive outcome. I don't think there's ever a point at which the policy side is saying, oh, stop providing good science and better agricultural practices so we don't have these surpluses. Because when you do that, what you're saying is, then stop this economic development. Solving problems and making farming more efficient are still seen as good projects to continue. The fact that they also create these surpluses is sort of a different track of problems that the farm policy then is trying to figure out solutions to.

[Stephen Dubner]

One solution was to use surplus grain for Animal feed.

[Shane Hamilton]

Shane Hamilton Again, those massive surpluses of cheap corn and later soybeans encourages the rise of industrial meat production, concentrated animal production, livestock feeding operations, where that's enabled by cheap grain production.

[Stephen Dubner]

Industrial meat production fueled by cheap grain meant cheap meat too. And helps explain how the US became one of the world's biggest consumers of meat. Per capita Today, more than 30% of corn, more than 50% of soybeans grown in the US goes toward feeding cattle and other livestock. But even that left a lot of surplus production. So what happened?

[Peter Timmer]

High fructose corn syrup? Yep, you've got surplus corn and you've got a demand for easy, convenient sweetener in the food sector. And that was just a perfect storm. That syrup revolutionizes food processing because instead of a powdery sweet thing, it's a liquid. And liquids are way easier to handle in food processing. If I had only one thing to say about the impact of our agricultural programs on what you see in the supermarket and subsequent health issues out of the diet, I would have said the fact that we use so much high fructose corn syrup, that's the example of how things can go badly wrong, even if well intended. I mean, don't get me started on ethanol because that's the next step in reducing the surpluses. But I don't want to go there.

[Stephen Dubner]

The rise in agricultural productivity tended to favor larger, more industrial farms. It didn't hurt that they often receive the government price supports designed for smaller family farms. As you can imagine, this began to put a lot of small farms out of business.

[Peter Timmer]

We didn't manage that process very well, but I think just basic economic forces would have pushed us in that direction. It just wouldn't have pushed us as far.

[Stephen Dubner]

Peter Timmer, you will recall, grew up working on the tomato farm and cannery founded by his great grandfather. You'll also recall when the Tip Top Canning company got their first mechanical tomato harvester.

[Peter Timmer]

It just revolutionized our operation.

[Stephen Dubner]

When the mechanical harvester was introduced, There were around 5,000 tomato growers in the US within five years, 4,400 had gone out of business. The Timmer family farm and canning factory made the cut and they lasted for decades. But between 1940, in 1969, 3.4 million American farmers and their families stopped farming.

[Shane Hamilton]

Quite a few historians suggest that, you know, this all out push to productivity killed the family farm effectively. Shane Hamilton Again, and it's hard to deny that. On the other hand, we don't apply the same kind of metrics to, you know, industrial manufacturing, where similarly there's been massive US government investment in science and technology to support economic growth and productivity. I'm sympathetic to those who, you know, see it as overall a net positive gain. However, you know, the pain is real.

[Stephen Dubner]

Peter Timmer says this massive consolidation on the production side was driven by what was happening on the consumption side. The growth of supermarket chains.

[Peter Timmer]

Supermarkets were able to manage the supply chains all the way back to farmers, but they didn't want little tiny farmers. Just one supplier, please. It's just way too complicated to contract with 50 or 100. That has changed then the nature of production right down at the level of Tip Top Canning company and how we would be able to provide the kind of regular quality and supply and low price that a Walmart or a Kroger or a Publix would need.

[Shane Hamilton]

I mean, Walmart really came in and looked at the landscape of American supermarkets and saw inefficiencies everywhere. What Walmart did was build on its successful model of general merchandise sales with hyper efficient logistics and distribution, brought that into the supermarket industry and really shook things up.

[Peter Timmer]

I used to ask my class, I'm talking 1985, where is the world's largest supercomputer? And the correct answer was, it's at the Pentagon. Okay, where is the world's second largest supercomputer? Bentonville, Arkansas, home of Walmart. They used that computer to track every single item on every single Walmart shelf. That information technology is what revolutionized food marketing. And it was pretty much invented by Walmart.

[Stephen Dubner]

This technology would spread across the world affecting not just the demand side supermarkets, but the agriculture supply side.

[Peter Timmer]

So the US experience is formative. And it's formative for two reasons. One, US universities train so many ag economists, food scientists, food policy people to go back to other countries that the US model is pretty well ingrained intellectually. But the other thing, of course, is the biological and mechanical technologies mostly came out of the United States.

[Stephen Dubner]

Another consequence of the scaling up of American agriculture. More standardization and less variety.

[Shane Hamilton]

So apples. In the early 20th century, consumers in, say, New York state would have access to literally hundreds of varieties. You know, even in mass retail markets. By the mid 20th century, it's down to just a handful. And you know, Red Delicious really dominates the whole market. And apples became remarkably tasteless by the mid 20th century, you know, so certain qualities were given up in order to gain that advantage of price and abundance.

[Peter Timmer]

Well, you know, we clearly won the food wars in terms of supply and abundance. We won the abundance war. What we may be in the process of losing is the health and quality dimensions going forward.

[Shane Hamilton]

I think today we're certainly witnessing, perhaps especially among millennials, an attempt to kind of reconfigure values. What are you actually looking for when you go to a supermarket? It's not just price. Price does not contain all relevant information for many shoppers in a contemporary supermarket. So the costs of pollution, of degraded animal welfare that are currently not being borne by either producers or consumers of food would have to be born if.

[Peter Timmer]

We had worried much, much more about the quality of farmland, of sustainability, about environmental side effects from heavy fertilization on corn. You know, we've got a dead zone in the Gulf of Mexico that is directly attributable to putting fertilizer on corn up in the Midwest. I accused my brothers of poisoning the Gulf of Mexico, and they said, well, what are we going to do? We have to get high yields. There was this sense of everybody being trapped in an old paradigm, and now how do we break out of that? I hate to say it, but the current government seems to be trying to take us back to the old paradigm rather than a more sustainable, environmentally friendly, let's make agriculture do more on organic and natural processes. That doesn't seem to be the political driver right now, but it has to come back. We have to make agriculture green, which is a strange, strange thing to say.

[Stephen Dubner]

Peter Timmer has seen a lot of change in the farming business over his lifetime, and who knows, maybe he'll see the change he's hoping for now. But it's going to be hard to break the status quo, at least in terms of how financial incentives drive food production. For instance, when the first Trump administration placed billions of dollars of tariffs on Chinese imports starting in 2018, China responded with their own tariffs on imported American crops like soybeans, alfalfa, and hay. American crop exports to China fell dramatically, as did, of course, farmers revenues. In response, the U.S. government announced a $16 billion welfare package to U.S. farmers. That was followed by more farm aid tied to the COVID 19 pandemic. Together, the Trump and Biden administrations have authorized over $157 billion in direct government payments to farmers and ranchers. And now Trump is promising more tariffs in his second term, which means the cycle may start again. And that's it for this bonus episode from our archive. We will be back shortly with a new episode. Until then, take care of yourself. And if you can, someone else too. Freakonomics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app. It's [e-mail] where we publish transcripts and show notes. This episode was produced by Matt Hickey and updated by Teo Jacobs. The Freakonomics Radio Network staff also includes Dalvin Abuaji, Alina Cullman, Augusta Chapman, Eleanor Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippon, Jasmine Klinger, Jason Gambrell, Jeremy Johnston, John Schnarz, Lyric Bowditch, Morgan Levy, Neal Carruth, Rebecca Lee Douglas, Sarah Lilly and Zach Lipinski. Our theme song is Mr. Fortune by the Hitchhikers, and our composer is Luis Guerra. As always, thank you for listening.

[Peter Timmer]

When I was a Fulbright Scholar and had to explain myself to the cohort when we got to London, I said, well, my background is tomatoes. And everybody just laughed. I hadn't realized that it was not such a normal background.

[Stephen Dubner]

The Freakonomics Radio Network the hidden side of Everything.

[Shane Hamilton]

Stitcher.

[Stephen Dubner]

Freakonomics Radio is sponsored by Toyota. Did you know Toyota has an all electric SUV, the BZ4X. It's a secret worth sharing. Skip gas stations and feel the thrill of electric driving from a brand you can trust. The BZ4X features smart tech that keeps you connected on every drive. And its modern design helps you stand out in the right ways. It's all electric and it's all real. The Toyota BZ4X. Learn [e-mail] Toyota let's go places. If you could hear love, what would it sound like? Son, can we talk about your drinking? Yeah, Dad, I think we should. Helping those closest to you think about their excessive drinking. Maybe that's what love sounds like. [e-mail] An OHA initiative.

[Peter Timmer]

Every day, our world gets a little.

[Shane Hamilton]

More connected, but a little further apart.

[Peter Timmer]

But then there are moments that remind.

[Stephen Dubner]

Us to be more human.

[Peter Timmer]

Thank you for calling Amica Insurance.

[Shane Hamilton]

Hey, I was just in an accident.

[Peter Timmer]

Don't worry. We'll get you taken care of.

[Stephen Dubner]

At Amica, we understand that looking out for each other isn't new or groundbreaking. It's human. Amica empathy is our best policy.