My buddy Steve made a post over at his blog about Hillary's windfall tax. I was just going to comment his post but did not want to sully his blog with my uneducated understanding of economics. Steve makes a point about the windfall tax being aimed at Exxon and their record profits last year. He then moves on to talk about the ethanol mandate and it's ill-effects.
I am always interested in government intervention in business. The little I do know about economics has always led me to believe that any outside artificial pressures and stimuli only confuse or distract investors from making sound decisions in future technologies. The ethanol mandate not only sets the bar for how much ethanol is to be supplied but also provides tax credits and tariff protection from cheaper more efficiently produced foreign ethanol. This makes the production of corn based ethanol more profitable, it turn causing the price of corn to skyrocket. And as Steve points out this increases the price of not only US produced ethanol but also corn used as food for human and animal consumption. All of this comes to the tune of about $7 billion in government incentives to increase production of a more expensive fuel that is 1/3 less efficient than regular gasoline. And I have seen estimates that put the reduction in petroleum use caused by ethanol as low as 1% by 2012. It seems clear, even to a layperson like myself, that ethanol is a poor alternative to petroleum and these government mandates only serve to pull capital away from markets that may provide a more efficient and economically sound fuel source.
Really, I am just agreeing with Steve's comments on ethanol as an alternative fuel. My father and I just had a similar conversation last night so perhaps this is just left over enthusiasm. I just find it hard to believe that anyone can look at the facts on ethanol and not see that it is a poor fuel choice and that these government mandates are hurting consumers with minimal benefits to petroleum use and the environment. At least corn farmers are making an increased profit. It always seems that when farmers are involved people have this emotional reaction that has them jumping to their rescue. I have a healthy respect for farmers, it is a hard life, but I cannot help to end with a quote by H.L. Mencken.
….LET the farmer, so far as I am concerned, be damned forevermore. To Hell with him, and bad luck to him. He is a tedious fraud and ignoramus, a cheap rogue and hypocrite, the eternal Jack of the human pack. He deserves all that he ever suffers under our economic system, and more. Any city man, not insane, who sheds tears for him is shedding tears of the crocodile.
No more grasping, selfish and dishonest mammal, indeed, is known to students of the Anthropoidea. When the going is good for him he robs the rest of us up to the extreme limit of our endurance; when the going is bad be comes bawling for help out of the public till. Has anyone ever heard of a farmer making any sacrifice of his own interests, however slight, to the common good? Has anyone ever heard of a farmer practising or advocating any political idea that was not absolutely self-seeking–that was not, in fact, deliberately designed to loot the rest of us to his gain? Greenbackism, free silver, the government guarantee of prices, bonuses, all the complex fiscal imbecilities of the cow State John Baptists–these are the contributions of the virtuous husbandmen to American political theory. There has never been a time, in good seasons or bad, when his hands were not itching for more; there has never been a time when he was not ready to support any charlatan, however grotesque, who promised to get it for him. Only one issue ever fetches him, and that is the issue of his own profit. He must be promised something definite and valuable, to be paid to him alone, or he is off after some other mountebank. He simply cannot imagine himself as a citizen of a commonwealth, in duty bound to give as well as take; he can imagine himself only as getting all and giving nothing.
Yet we are asked to venerate this prehensile moron as the Ur-burgher, the citizen par excellence, the foundation-stone of the state! And why? Because he produces something that all of us must have–that we must get somehow on penalty of death. And how do we get it from him? By submitting helplessly to his unconscionable blackmailing by paying him, not under any rule of reason, but in proportion to his roguery and incompetence, and hence to the direness of our need. I doubt that the human race, as a whole, would submit to that sort of high-jacking, year in and year out, from any other necessary class of men. But the farmers carry it on incessantly, without challenge or reprisal, and the only thing that keeps them from reducing us, at intervals, to actual famine is their own imbecile knavery. They are all willing and eager to pillage us by starving us, but they can’t do it because they can’t resist attempts to swindle each other. Recall, for example, the case of the cottongrowers in the South. Back in the 1920’s they agreed among themselves to cut down the cotton acreage in order to inflate the price–and instantly every party to the agreement began planting more cotton in order to profit by the abstinence of his neighbors. That abstinence being wholly imaginary, the price of cotton fell instead of going up –and then the entire pack of scoundrels began demanding assistance from the national treasury–in brief, began demanding that the rest of us indemnify them for the failure of their plot to blackmail us.
The same demand is made sempiternally by the wheat farmers of the Middle West. It is the theory of the zanies who perform at Washington that a grower of wheat devotes himself to that banal art in a philanthropic and patriotic spirit–that he plants and harvests his crop in order that the folks of the cities may not go without bread. It is the plain fact that he raises wheat because it takes less labor than any other crop–because it enables him, after working no more than sixty days a year, to loaf the rest of the twelve months. If wheat-raising could be taken out of the hands of such lazy fellahin and organized as the production of iron or cement is organized, the price might be reduced by two-thirds, and still leave a large profit for entrepreneurs. But what would become of the farmers? Well, what rational man gives a hoot? If wheat went to $10 a bushel tomorrow, and all the workmen of the cities became slaves in name as well as in fact, no farmer in this grand land of freedom would consent voluntarily to a reduction of as much as 1/8 of a cent a bushel. "The greatest wolves," said E. W. Howe, a graduate of the farm, "are the farmers who bring produce to town to sell." Wolves? Let us not insult Canis lupus I move the substitution of Hyæna hyæna.
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