"The industrial food chain does produce food more cheaply, in terms of the price you pay at McDonald’s or the supermarket,” replies Pollan, “but the real cost of cheap food is not reflected in those prices. You’re paying for it in your tax dollars because you’re giving farmers $20 billion a year in subsidies. You’re paying for it in public health costs. These subsidies make unhealthy food cheaper than healthy food, and so our country is facing an obesity epidemic."
$20 billion comes up under $100 per person per year in the US. Even giving it a generous x4 multiplier to account for the people subsidizing the industry without being consumers, at $400 per year, given the $3 and $7 prices by parent, you would need to eat under 100 pounds of meat for meat replacements to be viable. The average American allegedly consumes close to 200 pounds of meat[0] per year, so it ends up still being quote economical.
You're making the incorrect assumption that vegetarians are replacing whatever meat they were eating with the more-expensive meat substitutes. As I noted in my comment above, there are plenty of meat substitutes and alternatives that are much cheaper than $7/lb.
The US is fixing that problem. Starting December 2016, a vet must examine and prescribe antibiotics for each animal; it will no longer be allowable to preemptively dose an entire herd just to enhance production.
a snip:
"The industrial food chain does produce food more cheaply, in terms of the price you pay at McDonald’s or the supermarket,” replies Pollan, “but the real cost of cheap food is not reflected in those prices. You’re paying for it in your tax dollars because you’re giving farmers $20 billion a year in subsidies. You’re paying for it in public health costs. These subsidies make unhealthy food cheaper than healthy food, and so our country is facing an obesity epidemic."