Editor's Note: Supply and Demand
Print Issue: November 2018
Growing up in rural Oklahoma, I thought "Government Cheese" was a brand name, like Kleenex or Coke. My grandmother's freezer was full of the stuff and we never left her house without a 5-pound brick. Salty, gritty, and smelly, it was a staple ingredient in the casseroles and grilled cheese sandwiches of my childhood. It was also a cautionary tale of economics, supply and demand, and unintended consequences.
Government Cheese began as government milk. In an article for the History Channel's website, "How the U.S. Ended Up with Warehouses Full of 'Government Cheese,'" Erin Blakemore writes that "during the 1970s, as Americans sat in long gas lines and watched the economy tank, they faced another crisis: an unprecedented shortage of dairy products. In 1973, dairy prices shot up 30 percent as the price of other foods inflated. When the government tried to intervene, prices fell so low that the dairy industry balked."
In 1977, under President Jimmy Carter, the government implemented a new policy that injected $2 billion into the dairy industry in just four years, as explained in a recent episode of NPR's Planet Money podcast.
This left the U.S. federal government with tons of milk. How to store such an easily spoiled commodity? Cheese.
Once the government started producing cheese, storage spaces were overrun. "We had cheese in every cold storage in the United States," former government cheese inspector Bob Aschebrock told Planet Money.
"Within five years, the government was storing two pounds of cheese for every single American citizen," according to the podcast.
However, all this cheese was creating another problem. If the government sold the cheese, it would be economically displacing actual cheese producers. Flooding the market would push the price of cheese down, not up. So, they gave it away to the poor and the elderly. Government Cheese was born.
This month's cover story by Associate Editor Holly Gilbert Stowell addresses another supply-and-demand crisis—a scarcity of copper—and details the solutions deployed to mitigate the rash of copper thefts in Alberta, Canada. Stowell interviewed Ross Johnson, CPP, senior manager, security and contingency planning at Capital Power in Alberta about the program he helped implement to curb metal theft.
"Since you cannot mine copper fast enough to keep up with the demand, the shortfall is made up from the recycling industry, and that's what drives up the value of copper," he notes. "Generally, when the price per pound on the scrap market goes up, what happens is the theft goes up as well."
Instead of lobbying for measures to address copper prices, the electricity, metal, and telecommunications industries worked alongside law enforcement, the recycling industry, and the government to tackle the crime.
Stowell details how the coalition, using a suite of crime-prevention tools, thwarted metal thieves and avoided unintended consequences.