Sustainable Ethanol Production Only Feasible With Unsustainable Government Subsidy

https://grantcoulson.files.wordpress.com/2014/04/incentiveseverywherepicturecorrect1.jpg?w=444&h=288

    Do not think about, write about or deal with  human behavior without determining the effects of incentives.

     Today we see, once again, the distorting effects of GOOD GOVERNMENT INTENTIONS coupled with a total disregard with economic principles. That’s depressingly familiar because it represents a political law as immutable as any of the Laws of Physics. Here’s the Law–When politicians do something, however silly, they will relentlessly present the results as an Unalloyed Public Good. That is, the results are all good and the policy has produced the benefits intended..

The vicious cycle: Government warps markets until government stops warping markets   
By: Seton Motley   

The pernicious effect of government warping markets is absolute – and the evidence is obvious and everywhere.

When 300+ million Americans (and when 8+ billion worldwide are able to) make their own decisions, markets constantly morph to accommodate those decisions – and the maximum amount of success and happiness is achieved.

When government sticks its prodigious proboscis into the private sector, things quickly go sideways and upside down.  When government makes decisions for us – the market is mutated into a grossly less efficient government-accomodation model.  The examples are myriad.

Green energy – which is neither green nor energy – is a fabulously terrible one.  “Sustainable” energy isn’t sustainable unless and until it no longer requires government rafts of cash and policy favoritism to stay afloat. It must – all on its own – produce energy at least as prodigiously and cheaply as traditional sources.  You know, the actually sustainable ones.

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   If one hears “sustainable”, it always means government subsidy and the activity is only “sustainable” while the subsidy lasts.

Government-propped-up ethanol has been a decades-long disaster.

    Ethanol Uses More Energy Than It Makes

    EPA Acknowledges Ethanol Damages Engines

Government pouring its money and favors on something makes it less agile, athletic and quick to adapt – that something gets quite comfortable in the Leviathan-provided hammock.

This was written forty-plus years into the ethanol experiment.  Ummm…way too late – that SS Disaster has long since sailed.

When the government acts, it doesn’t do so in a vacuum – actions always have reactions.  And when the actions are government-level bad – so too are the reactions.

    Water Shortages Leading Right Back to Ethanol

    Ethanol Fuel Faulted as ‘Unsustainable Subsidized Food Burning’

And government action crowds out private sector action.  What company wants to get into a shoving match with the Leviathan?

    Cosan, which controls top producer Raizen Energia in a joint venture with Royal Dutch Shell, is cutting investments in sugar cane amid a global glut of the sweetener and Brazilian government policies that hold down the price of ethanol, Chief Financial Officer Marcelo Martins said….

    “Reinvestment in the sector will be made only if returns become satisfactory, and we don’t see it happening now,” Martins said at Bloomberg’s office in Sao Paulo….

Government-induced over-production and under-pricing making the market…unsustainable.  When there’s been this much government for this long – even the biggest private companies bail.

Unintended government consequences.  The Leviathan crowding out the private sector.  Anyone still surprised by any of this is willfully ignorant – or has been really, really sleepy the past century-plus.

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    Ethanol as fuel tries to defy the Laws of Physics and Economics. As with all other impertinent attempts to defy immutable laws, this defiance didn’t work. Time to admit this, remove the ethanol subsidies and move on to the next “unsustainable” nonsense.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Days of Songs and Mirrors: A Jacobite in the ‘45.”
Cui Bono–Cherchez les Contingencies

 

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