Only something this stupid could come from Washington
I have written before that burning our food as fuel was one of the world's dumbest ideas. The only reason we use ethanol is due to Iowa having one of the first presidential primaries. If that weren't the case, no national politician would care about Iowa. However, as it is now constructed the farm vote is vital early on. Ethanol confirms three of Harold Black's laws "If it is mandated, its bad". "If it is subsidized, it is bad" and "If it is protected, it is bad". That is, if it fails the market test, then it is simply wasteful. Ethanol is mandated to be mixed with gasoline by the government. Supposedly this is to reduce the dependency on foreign oil. But, ethanol is less efficient, burns hotter, damages engines, more expensive to use and to produce and is more harmful to the environment. On top of all that, we burn up our food raising food costs to boot. Studies have reported that US food prices have increased by over $15 billion annually due to ethanol consumption. That is because corn is feed to livestock as well as to people. There is even a report by the World Bank that said that US energy policy has led to food riots around the world by increasing the costs of our exported corn as more gets burned at the pump. We even impose tariffs on the importation of ethanol to make Brazilian ethanol too costly to use domestically - at least the Brazilians burn sugarcane. Let me digress for a second. One of my fondest memories is my parents bringing home sugarcane for us to chew. We loved it! I guess that was one of the casualties of the Cuban embargo. By the way, this was just another example of the bad policy actions taken by George Bush who signed the law mandating a five-fold increase in the amount of ethanol mixed with gasoline. Well now there is a bit of light at the end of the tunnel (and hopefully it is not a train). Where else would the right and the left agree on anything? But 17 Senators including Diane Feinstein and John Kyl have called ethanol (according to the Wall Street Journal) "economically unwise" and "fiscally indefensible". Even more revealing the aforementioned senators even cite in a sense the three Harold Black's laws when they point out that ethanol may be the only product that is mandated, subsidized and protected. Glory be! If Washington actually admits that a disaster of its own making is really a disaster, perhaps the November election is paying dividends even in this lame duck congress.
Harold A. Black is professor emeritus in the Department of Finance, University of Tennessee, Knoxville having retired after 24 years of service. He has served on the faculties of American University, Howard University, the University of North Carolina - Chapel Hill and the University of Florida. His government service includes the Office of the Comptroller of the Currency and as a Board Member of the National Credit Union Administration. He also has served on the boards of directors Home Savings of America and its parent company, H. F. Ahmanson & Co., Irwindale, California prior to its merger with Washington Mutual Savings Bank, on the board of New Century Financial Corporation, Irvine, California, then the nation’s largest real estate investment trust and as director and later chairman of the Nashville Branch of the Federal Reserve Bank of Atlanta. He writes an occasional article for the Knoxville News-Sentinel at http://www.knoxnews.com/staff/dr-harold-black/. His web page is haroldablackphd.com