The case against ethanol
Last week, The Washington Post reported that food prices are going up and some countries are making moves to protect their supplies and keep prices under control.
Faced with rising international food prices, governments around the world are cooking up measures to protect domestic supplies and keep a lid on prices at home.
Russia has banned grain exports until the end of the 2011 harvest. South Korea and the Philippines have suspended some of their import duties on foodstuffs such as fish and powdered milk. In December, Sri Lanka released rice stocks and re-imposed a price ceiling that had been removed in October. And across the Mideast and North Africa, governments have kept food prices low by using big subsidies.
The Food and Agriculture Organization of the United Nations recently warned that in December its food price index surpassed its previous peak of early summer 2008, fed by particularly sharp increases in sugar, cooking oils and fats. Corn and soy prices were also moving up quickly, with corn hitting a 29-month high Friday.
Why is corn hitting a 29-month high? You can bet ethanol subsidies have a lot to do with it.
Turning food into a gasoline additive while food prices rise is immoral. The GOP-controlled House would demonstrate some fiscal discipline and plain old good common sense if they were to end ethanol subsidies.
On this one, I won’t be holding my breath.
One comment on “The case against ethanol”
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Ethanol is Exhibit A of how government's "good intentions" ultimately come to tears. Even environmentalists hate corn-based ethanol. They finally came around after years of everyone else with a modicum of common sense saying that corn-based ethanol was an economic disaster.
So, in the face of all evidence, what did the bureaucrats do recently? They INCREASED the amount of ethanol allowed in gasoline.
George Stigler won a Nobel prize in economics for demonstrating that ultimately regulators become "captured" by the industry being regulated. This is exactly what happened with the ethanol industry. The bureaucracy now exists to support an industry that does demonstrable harm to low-income people around the world and does nothing to help the environment. if it wasn't so incredibly sad, it would be funny.