Wednesday, August 15, 2007

What Happens When Congress Pretends It's Smarter Than Markets?


But it actually gets way worse than higher food prices. Thanks to Congress last year essentially commanding American farmers to scrap whatever they were doing to instead focus on producing as much corn as they can possibly manage -- you know, for ethanol, that magical alcohol that'll soon replace gasoline -- prices have also been pushed higher for gasoline, beer, farmland, and anything else even loosely related to corn.

Already, state and federal subsidies for ethanol -- pushed by greens hoping to diminish reliance on fossil fuels -- approach $6 billion per year. Couple this with a 54-cent per gallon import tariff, and farmers would be insane not to cash in. So while the size of American farmlands are retreating, the percentage dedicated to corn is growing. This led to American farmers producing more corn last year than any year during the last half century. Non-corn farm good are consequently growing more costly. Not that corn's getting any cheaper: its price grew 80 percent in 2006 alone.

All of this is owed to the artificial demand created by the economic wizards populating Congress. Perhaps people should start sending them their grocery bills as a sign of thanks.


mkfreeberg said...

You deserve MAD props for this one. If I could wave a magic wand and make all those billions of posts on millions of blogs all over the net look like just one, this would be the model right here.

A well-chosen target for peevish economic resentment, solid facts, solid logic, no trickery involved, you've taken a simple issue with massive opportunities to become needlessly complex, and against all odds you've kept it simple. And as frosting on the cake, you happen to be absolutely correct. Congress intrudes, and prices that had little or no need to increase at all, end up skyrocketing. A dubious legacy, with unfortunately a long and lengthening history, fed in perpetuity by an apathetic and ignorant public. When will we ever learn.

Eskimo Curlew said...

Ethinol what some would call corn squeezings