My Econ Article and Analysis

http://www.allheadlinenews.com/articles/7006599170
Extract:
Prince Charles of England thinks that the gigantic fast food company, McDonalds, should be banned. Prince Charles visited Imperial College London Diabetes center and emphasized on the fact that a well-balanced meal is essential to preventing diabetes and strengthening health. As a result, McDonalds has not only caused obesity and bad health for their costumers, but the damage extends to a third party, the healthy population, because health problems increase insurance rates, taxes, and decreases labor quality. This is known as a negative externality, as it damages a third party that did not participate in the fast food market.

Analysis:
The health problems that McDonalds are causing reflect mainly on the lower income population, since McDonalds has a relatively low price. Therefore, these harmed people become unhealthy, causing them to demand more health fee which is paid by the insurance companies. Many of those low income people are receiving free insurance and their need for more health fee drives up the insurance rates in general, making the healthy population pay more insurance money. Therefore, this is one of the negative externality costs.
Secondly, since most of the low income population receives government funded health care, once their health worsens, the government needs more money to cover those costs. In addition, when more people become ill, the government needs to spend more money on building extra hospitals. All of these taxes come from those higher income people that were not involved in the fast food market. Thus, this extra tax is another negative externality cost.
Finally, once the health conditions of the fast food consumers drops, the quality of the labor forces decreases as well. Since the quality of one of the resources decreases, the Possible Productivity Curve shifts in for many companies. In other words, the cost of production for companies other than McDonalds has increased, and since they are not in the same market, that extra cost of production is also a negative externality cost.
Prince Charles suggests solving this problem by banning all of the McDonalds restaurants in the world. However, that is almost impossible, it requires too much cost and it might lead to a black market for McDonald’s fast food. Therefore, a better solution would be taxing McDonalds for their product, making the cost of production higher for McDonalds, and thus shifting the Marginal Productivity Curve in to Marginal Socially Beneficial Curve, since cost of production is a determinant of supply.
This tax revenue can then be spent on educating the population with the problems of fast foods and the importance of a well balanced diet. The physical education department in schools and communities can be subsidized using the government tax revenue. Healthy restaurants can also be subsidized to reduce obesity and diabetes. Finally, the tax revenue can also be spent on advertising healthy food on TV and radio, educating the masses through advertisement.