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Economic conservatives, many Republicans among them, often talk about letting the market determine which energy source is best, and the need for consumers and businesses to access low-cost energy sources. Well, applying that standard then, it's time to end the $5 billion federal subsidy for U.S. corn farmers who produce ethanol.
Subsidized corn ethanol: a bad welfare program
Corn from ethanol has always had dubious justification: among other concerns, there's little research to confirm that ethanol from corn is cheaper and more efficient than ethanol from sugar cane imported from Brazil. And why don't American consumers see more ethanol from Brazil? You guessed it: it's because the United States also imposes a tariff on imported sugar cane from Brazil.
And who voted for both the corn subsidy, also known as welfare, for America's farmers, and the tariff on Brazil ethanol to prevent market forces from ruling the day? That's correct: some of the very same economic conservatives, many Republicans among them, who preach about "letting the market determine which energy source is best," and "the need for consumers and businesses to access low-cost energy sources."
Federal government subsidies to prop-up your industry. Tariffs to effectively eliminate competition. That's free market economics? In politics that's called a double-standard or hypocrisy. And it's got to end.
If the economic conservatives want market forces to determine Americans' energy sources, based on low cost, they should repeal both the ethanol subsidy and the sugar cane import tariff. Subsidizing a misguided, inefficient and environmentally harming corn/ethanol policy is welfare of the very worst sort, and it's time to end it.
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
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Reader Comments (Page 1 of 1)
7-15-2009 @ 3:09PM
ij70 said...
Does Brazil have tariffs on US made products? How high are they?
7-15-2009 @ 5:09PM
sandfort said...
I am unaware of a subsidy to farmers for production of ethanol. I am fully appraised of the "blender's credit" for blending ethanol into gasoline. Guess who gets this? Yes, the oil industry. This misconception has been perpetuated for too long. This $0.45 per gallon of ethanol blended indeed is a federal gift from our tax dollars to the oil industry, not to our farmers or their ethanol plants.
Sitting on the sidelines claiming that the industry has not been adequately studied is cute verbiage, but completely untrue. American has corn, not sugar cane. American corn ethanol makes ethanol plus a valuable byproduct animal feed - which takes the place of some of the corn/soybean part of our animal industry diets. The land use issue completely neglects this large offset in order to make corn ethanol comparisons less favorable.
To contribute to energy independence while supporting our own economy, corn ethanol is a completely viable alternative. It, by itself, is only a contribution to energy independence. Conservation, more and better public transportation, clean coal, nuclear, wind, geothermal, higher energy efficiency of lights, electric devices and especially car engines are also critical steps.
To claim that corn ethanol is not a piece of the puzzle is patently incorrect. Consider the mass of literature on an unbiased plane.
7-15-2009 @ 3:34PM
Mike O said...
The problem is that Americans agree that domestic energy production needs to improve. Continued subsidies could have the advantage of making the US a world leader in areas of alternative energy production.
Remember, it takes money to make money.
Farm subsidies have allowed our farms to be the most productive and technologically sophisticated in the world. If anything, I would reduce or end farm subsidies.
7-15-2009 @ 3:26PM
Mike said...
Wow, I agree with Lazzaro on something for once. We're miles apart on health care, but yeah this is ridiculous. Ethabol is a waste, expensive to produce, and highly inefficient. Market forces will put ethanol out of business, and put corn back where it belongs, on our dinner plates.