In 2000, I began to realize what a monster ethanol was becoming. Bill Bradley was seeking the Democratic nomination for president. Although I disagreed with Bradley on many things, I had always admired his principled stands on issues. As a senator, he had always opposed subsidies for ethanol. Shortly into the primary season, he “revaluated” his ethanol stand and decided he was in favor of ethanol subsidies—so much for Bradley being a man of principle.
One of the major beneficiaries of ethanol subsidies has been Archer Daniels Midland (ADM). They receive billions of dollars of government subsidies a year. The Cato Institute has called ADM one the biggest recipient of corporate welfare. To insure that their welfare keeps flowing, ADM gives generously to political candidates of both political parties. All three remaining candidates—John McCain, Barack Obama, and Hillary Clinton—support the continuation of these subsidies. For that alone, all three are unqualified to be president.
All three value their political future more than the environment, the food supply, and the health and welfare of billions of individuals. If you think that is hyperbole read on.
In previous posts, I have covered some of the more harmful environmental effects of ethanol, such as its effects on aquifers. In another post, I observed that ethanol is a creation of a complex set of subsidies, and—like nuclear power—it would not thrive on a free-market. This subsidization drains away capital from entrepreneurs who are seeking to discover new, viable forms of alternative energy.
Astonishingly, ethanol is being produced by ADM in coal fired plants that produce significant amounts of pollution. According to many, including UC Berkeley geo-engineering professor Tad Patzek, making ethanol uses up to six times more energy than the finished fuel itself generates—for a net loss of energy. This is precisely why ethanol would not exist on a free-market.
OK, so what do we have so far: we have a fuel that wastes energy, helps to destroy the environment, draws investment funds away from the discovery of real alternative fuels, costs the taxpayer billions, and corrupts many politicians. Is there anything else? Unfortunately, yes. Ethanol, along with the current housing crisis, is threatening to push food prices beyond the reach of billions.
Before we go any further, you may be scratching your head over how our current housing crisis is inflating food prices. Every time the Fed bailouts a Bears Stearns, it monetizes private securities and increases the money supply. The money has to go somewhere, and one of the places it is going is to hedge funds that are helping to create a commodities bubble.
Of course, perhaps the major culprit in the commodities bubble is ethanol. According to The Economist in 2007:
Biofuels (took) a third of America’s (record) maize harvest. That affects food markets directly: fill up an SUV’s fuel tank with ethanol and you have used enough maize to feed a person for a year. And it affects them indirectly, as farmers switch to maize from other crops. The 30m tons of extra maize going to ethanol this year amounts to half the fall in the world’s overall grain stocks.
Rice and wheat prices have at least doubled in the past year. The Economist‘s food-price index has jumped in real terms by 75% since 2005. Rising food prices have led to riots in recent weeks in Haiti, Indonesia, and Africa. In Haiti, many have been reduced to eating cookies made from mud.
My wife came home today and told me she paid $5.29 a pound for kale. Green vegetables are a staple in my family’s diet, and we will cut back on other spending before we reduce our consumption of vegetables. Others are not as fortunate, they will fill their bellies with cheaper, processed food. In that way, subsidies toward ethanol will also contribute to rising health care costs.
McCain, Obama, and Clinton argue over who is the real elitist. They can all proudly wear that title. While they enjoy a standard of living that few who have ever walked this earth have enjoyed, they support policies that make many go hungry and sicken others.
What is a voter to do? Hug your children, walk in the woods, read a good book, help a neighbor or a colleague. These three candidates don’t deserve your time, attention, or energy. All you need to know about the three of them is that they all support continued subsidies for ethanol. How sad that our great country faces a choice like this.