4 Jul 2011

Anything but water

  • Think about this: "global exploration budgets [for fossil energy] will rise by some 14% in 2011, to $533 billion"

  • Yet another editorial pointing out how stupid and wasteful ethanol subsidies are. (Oh, and a good way to make poor hungry people hate Americans who think self-sufficiency is better than trade. Hungry people are easy to recruit for terrorism.)

  • Speaking of stupid, Oil refiners will pay $6 million in fines to the government for failing to mix adequate amounts of cellulosic ethanol into their gasoline. Why? The stuff doesn't exist in sufficiently cheap quantities.

  • Lynne @ KP describes a rare instance of "calling back" political bribes (around the Fiesta Bowl).

  • Environmental Working Group continues to go after farm subsidies. This LA Times blog post describes how $394 million was paid to people living in "big" cities (>100,000 people). Subsidies don't go to "family farms" as much as farmers with the scale and sophistication to grow stuff that attracts money (some of these farmers also influence how laws are written and implemented, i.e., facilitate corruption).


CRG said...

The city of Fresno has a population of more than 100,000 (in fact it's closer to 1 million). Should no one with a Fresno mailing address be allowed to receive farm subsidies, even though Fresno County is the largest ag county in the nation, and ag is that county's primary industry?

I'm not sure exactly how you're defining a "family farm." I know lots of farmers with "scale and sophistication to grow stuff that attracts money" (would it be more noble of them to try to be unprofitable?) who are very much family farms. Many of these farmers grew up on the seat of a tractor with their parents and grandparents, and are now training their kids to take over the farm in a few decades. They are family farms in nearly every sense of the word.

I am not defending subsidies nor am I arguing against them. What I am addressing is the belief that I see all too often that in order to be a family farm your operation has to be either 1) unprofitable or barely profitable; or 2) very small and non-technologically advanced.

David Zetland said...

@CRG -- well put. I oppose subsidies. I doubt that EWG's claim is accurate all the time, but they are attacking the conventional (and mistaken) impression that subsidies are "worth it" b/c they go to folks down on the farm.

CRG said...

Thanks DZ. To be honest, I don't really have much of an opinion on subsidies - I haven't studied them enough to really have a set opinion. Generally I'm not overly supportive of them, though I do think that they are misunderstood by many people.

Joe Schmoe at the store complains about subsidies of cotton but doesn't want the price of his tighty whiteys to go up. He doesn't stop to think that he is actually the one being subsidized.

That's not to say that a purely market-based system wouldn't be better, but the price of cotton would have to go up in order for U.S. farmers to grow it without the promise of a subsidy. So either the price of tighty whiteys would go up, or the cotton would be sourced from somewhere else and US-grown cotton would become a thing of the past (and of course there are domestic economic impacts of losing that industry). I could make arguments for and against that situation all day long.

Subsidies are much more complex than just whom the check is written out to. But you knew that.

David Zetland said...

@CRG -- your cotton underwear example indicates how complex "the right thing" becomes when you are trying to distort prices (to increase cotton production or consumption). The problem is that this process of "correcting" quickly gets out of control. It's easier (and more efficient and more fair, given corruption) to leave prices to markets and, say, send a check to farmers (for mere existence) if you like farmers. Read Hayek.

CRG said...

True, there are always consequences way beyond the initial intended consequences, and doing the right thing is rarely as simple as just doing "the right thing."

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