Saturday, December 11, 2010

Should ethanol subsidies be on the chopping block?

I'm not in favor of governmental subsidies in any form for numerous reasons - starting with the fact that they're unconstitutional, to the interference in the free market, to the fact that they're used to extract favors and votes for politicians. As subsidies for ethanol are set to expire, I thought this, from the Cato Institute was very timely:

Lawmakers have until December 31 to decide on extending tax subsidies for corn-ethanol, and support for the once-popular biofuel appears to be wavering. So should taxpayers subsidize ethanol? Cato scholars Jerry Taylor and Harry de Gorter have looked at all the evidence and argue that the most commonly offered rationales -- that ethanol reduces harm caused by our reliance on foreign oil and a host of air pollution problems -- do not hold up to scrutiny.

Ethanol: Let Protectionism Expire, by Harry de Gorter and Jerry Taylor
The Ethanol Tax Credit -- It's Worse Than You Think, by Jerry Taylor and Harry de Gorter
An Economic Critique of Corn-Ethanol Subsidies, by Jerry Taylor

I hope you'll encourage lawmakers to oppose further subsidies for ethanol - and all other industries.


Tim Higgins said...

Looks like all of the ethanol subsidies, as well as some for wind power, will end up as part of the 'compromise' on the Bush Tax Rates and extension of unemployment. What a shame.

I'm with you however Maggie. We shouldn't need subsidies to prop up ethanol, wind power, or anything else if they are viable. Spending for research is one thing, spending to serve unprofitable technology is another.

Of course the ethanol subsidy ties in to farm subsidies as well, and the especially egregious fallacy of propping up crop prices and paying farmers not to plant while driving up crop prices with ethanol production; but that's a rant for another day.

Mad Jack said...

If the government wants to support higher corn prices, then by all means waste some money on the farmers who plant corn. I strongly object to supporting ethanol.

Supporting ethanol is one of the stupidest things the government has ever done, but I note with no surprise that it hasn't slowed them down. Just begin at harvest time, where perfectly good food is hauled away (using energy) to be processed into ethanol (using energy) and likely hauled again (using energy) to be added to gasoline (using energy) where it is hauled again to gas stations (using energy) to fuel... farm equipment that runs on gas, which uses energy.

Government has never been famous for efficiency, but I find this a little extreme even for government.

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