Quote:
Originally Posted by MorphDaCivic
Shame on ADM lobbyist for getting us into this mess.  |
I just watched "The Informant!" last night, about the guy who tattled on ADM for their price fixing in the 80s and 90s. Pretty fun movie.
As a libertarian liberal (help people out, but realize you're not going to be able to push water uphill forever), I think the system of subsidies and trade barriers that has given us corn ethanol in our fuel just seems silly. And while I'm more libertarian than not, I think "money=speech=unlimited in politics" is causing some real problems for our country. Not a fan of the
Citizen's United decision. Anyhoo...
We want to protect sugar farmers, so we block imports of sugar. Good.
We want to get our corn-state senators re-elected, so we subsidize corn production, making their constituents rich and happy so they vote for incumbents. Money in politics.
That creates a surplus of corn, and high prices for sugar. Market response.
Some clever company/person finds a way to make sugar from cheap corn. It's not particularly efficient, but corn is so cheap that it's profitable. Market response.
Now we have all this "sugar" that's artifically cheap, and someone figures out how to make it into fuel and make some money. Market response.
Then we need to make sure the corn-state senators get re-elected again, so we require that corn-fuel in all the fuel so the farmers make money and vote for incumbents. Money in politics again.
Now there's such a demand for corn-sugar-fuel that corn starts to get scarce, and the food that used to be made with real sugar, and is now made with (artificially cheap) corn sugar, starts getting expensive. Market response.
And the people get angry because food prices go up. Of course, the market found uses, other than sugar, for cheap corn, and those things go up in price as well (meat, for instance).
So we started with: Help out the sugar farmers. Good idea, I guess.
And we ended up with: Help out Con-Agra and ADM, at the expense of the rest of us. More expensive food, more taxes to pay for the subsidies, lots of wasted energy making corn into fuel (which it's not that well suited to). Wasted energy is usually related to pollution, it seems like, so throw environmental problems into the pile.
We get a "biofuel" that doesn't make much environmental sense, because it's a result of a bunch of market distortions, and there's no incentive for anyone in the process to help the environment. You can't expect a fuel designed to rake in subsidies to be very effective at doing other stuff. Take out the subsidies and mandates, and corn ethanol probably falls flat. Other crops might make sense, but they don't have the taxpayer backing, so they don't get to compete.
Incentives created with good intentions led to bad results. An attempt to insulate people from reality turned out to cause bad results. Amazing
.
How about instead:
Tell the sugar farmers that, just like the rest of us, they might have to think about getting a second or different job. Maybe some help for the transition (there's the liberal peeking through), but something that makes it clear that they'll have to learn to deal with market forces.
Eliminate trade barriers on sugar (to the extent that foreign producers are competing fairly) and sugar products including ethanol. This would allow producers who can efficiently make biofuel (sugarcane producers, for instance) to compete in a reasonably free market with other fuel producers. Farm ground that was in corn production to get subsidies, now gets to respond to market prices, and keep food prices realistic. (Not necessarily lower, mind you, the market would have sort that part out.)
Set taxes on fuels to recover the costs externalized on society by the manufacturers. Keeping shipping lanes open with a Navy carrier group, for instance, should be included in the price of (at least imported) oil. Waterway cleanup and restoration costs should probably be paid for by ethanol users if ethanol production is causing the damage (with fertilizer and pesticide residues, for instance).
Stand back and let the market allocate resources and find prices. Markets are good at that. If weird things happen, figure out which incentives are causing them and manipulate those incentives carefully.
Money in politics makes this more difficult, I think.
I can't wait until I can get back out in the garage and tinker with stuff...being laid up makes me think about stuff that makes me grumpy.