For John, BLUF: Fighting Global Warming by adding Ethanol to our gas raises food prices and leads to revolution (and immigration). Nothing to see here; just move along.
Reporter Kimberley A Strassel, of The Wall Street Journal, gives us "Behind an Ethanol Special Favor". The subtitle is "An Alon USA Energy refinery in Louisiana was the only one—out of 143—exempted from an EPA mandate. Why?".
Ms Strassel writes about the fact that political favors are being exchanged. Here is her "bottom line", which asks why Krotz Springs gets a break?
The problem is we don't know. The EPA, citing confidentiality restrictions, won't explain the process. We are to trust that it did the right thing. Yet this is the same Obama administration that has spent years doling out billions in grants and loans to politically connected energy companies and junking federal rules to help favored players. Why trust the EPA now?It is a great question, in that a redistributionist state is a state with an ever increasing number of regulations and more and more companies spending their time and money trying to find the loopholes rather than trying to find the scientific and engineering advances that make their produces safer, cheaper and more effective. If personal computers were regulated like banks, then we would still be driving machines with slow speeds and small memories.With federal mandates growing to crushing sizes, agencies like the EPA increasingly hold discretionary powers that can mean life or death for companies. The public deserves to know how and why that power is being exercised.
But, that isn't the important issue, important as it is. The important issue is that in our effort to deal with concerns about global warming we are fomenting revolution across the globe and especially in the Near East. The more we thin our gasoline with Ethanol the more food prices grow around the world. When you produce more corn you produce less wheat and thus the price of wheat goes up. Here is one take on it, a WSJ OpEd. When you think of the ongoing turmoil in Egypt, remember that you, American voter, are helping to keep it going by who you send to Congress and what you are telling them is important.
Here is NYT OpEd writer, Mr Thomas L Friedman, writing about this issue and using a study by Princeton Professor Anne-Marie Slaughter♠ and two others.
Doing bad by trying to do good.
Hat tip to the Instapundit.
Regards — Cliff
♠ Yes, this is the former Department of State Director of Policy Planning who wrote for the Atlantic an article titled "Why Women Still Can't Have it All`" (July/August 2012).
1 comment:
Lets start with this - all states are 'redistributionist'. The idea that states require "ever increasing number of regulations" isn't necessarily true. The analogy about bank regulation is inapt I think. First its a stretch - the types of ways you regulate a bank and the types of ways you regulate a manufacturing sector are pretty different. Also, the professed goal of 'unhandcuffing' the banks lead to what they called financial innovation and was really 'building financial mountains on foudnations of air'. That is, the regulations that the financial sector wanted to be free of were limits on risk. The computer analogy only makes sense when you consider that risk is a driver of performance in the sector - especially when you can figure on getting bailed out.
Interestingly, the links that support your main point aren't until the end of your post. The WSJ article is about regulation exemptions and how they might relate to regulatory capture. The Middle East Forum mentions the food scarcity issue in Egypt, but the notion that it is exacerbated by anthing going on in the US isn't demonstrated. Moreover, as is well described in the article, the pressure on Egypt's populous is more economic in general. Economic pressure and food scarcity are related, but not necessarily the same thing. The American Progress link makes your point, however.
The specific case of Ethanol creating a corn price 'stressor' is probably something that needs to be explained before calling it out specifically as a stressor. The larger point about global warming mitigation having an effect on food scarcity is certianly worth talking about, but ethanol subsidies are probably not a good example of this - at least if the reasoning behind the subsidies is to be believed (which I admit is probably in dobut). Certainly ethanol requirements (which have little to do with mitigating climate change BTW - there is plenty of carbon in corn) boost corn production prices, but the point of that subsisidy was to keep the price at a sustainable minimum. That is, in theory, dropping the subsidy would cut prices to a point where it wouldn't result in more corn sold at a lower price to ameliorate food shortages elsewhere, it would cut prices to the point where businesses would be hard pressed to sustain production and production would actually contract - not resulting in more or cheap food. At least that is what the proponents would say. Now is that correct? I don't know - but the phenomenon of it being a an instance of regulatory capture is probably much more problematic than the actual effect of corn scarcity for food.
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