Wednesday, April 23, 2008

Let Them Eat Ethanol, With A Side Dish Of Biofuels

The Chicago Tribune has decided that maybe the current rice shortage might be caused by the rising cost of biofuels.
And rain might be caused by those fluffy white things called clouds.

"We feel that the developed countries should seriously rethink the whole issue of biofuel, particularly the biofuel subsidies," (Asian Development Bank Director General Rajat) Nag said. "Giving subsidies for biofuels ... basically acts as an implicit tax on staple foods."

Yep. You can look it up. The great Thomas Sowell's Basic Economics states that Economics is the study of the allocation of scarce resources which have multiple uses.

Rice has multiple uses. It can feed Filipinos, or it can be converted into fuel for your Volvo so you can go to Whole Foods Market. If our government gets a wild hair up its ass and decides to provide price supports for the rice grown for fuel, that action raises the price of rice everywhere.

So if you Greenies are still feeling that warm virtuous glow when you see the "this fuel contains 10% ethanol" sticker on the gas pump, get over it. Your ethanol mandates have been hit with The Law Of Unintended Consequences.

Here's more from the Tribune, quoting Mr. Bank Director Nag:

He urged governments faced with rising food prices not to impose price caps or export bans, as the measures could prove counterproductive.

Excellent advice from Mr. Nag. He's obviously studied President Nixon's disastrous venture into price controls.

Price controls are disincentives for farmers amid the rising costs, he said."The cost of production is going up, so the obvious, rational reaction (to price caps) of the farmer is to reduce planting, which is exactly the opposite of what we want. We want production to increase, not decrease," he said.

I'm copying the entire article here, just in case the Tribune takes it down because of pressure from the Rodham administration.
The chart at the top is from the always useful Cato Institute.

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