Constant Conservative

I’ve been thinking about this for several years, watching, listening, wondering if it was going to work. I am not an expert in the area, but I’ve come to believe that there are several huge obstacles which must be addressed before corn-based (or even grass-based) ethanol production to be economically viable without a regular infusion of tax money (otherwise called “government funding”). It is not impossible that all of these things will work out, but it is improbable.

Now, I find out that others, who study the topic more intensely than do I, are wondering if the whole subsidy system hasn’t gotten too complex:

After adding all the pluses and minuses together (including the two factors mentioned above), the Iowa State researchers concluded that ethanol subsidies have had the effect of lowering overall farm subsidies by $2.65 billion in 2007. That’s a chunky bit of savings for the US taxpayer.

On the heels of these research results, the UK Financial Times has released a multi-part series detailing how the US corn ethanol boom and subsequent bust is fully attributable to government subsidies that inflated demand for a product against natural market pressures.

According the the Financial Times, billions of taxpayer dollars were used to subsidize the corn ethanol industry. Early investors, including people like Bill Gates, have lost billions more because the self-same subsidies that were supposed to spawn an industry have ended up killing it.

So which is it? Are US taxpayers losing money to ethanol investment, or are we saving money on other fronts that make up for the losses and perhaps even provide a surplus? Has the system of corn ethanol subsidies gotten too large and bureaucratic for even the experts to understand at this point?

If I had a dog, I think I’d name it Simplicity (nickname: Simple). Since I do not (currently) have a dog, I’ll just think about the principle of simplicity as applied to the corn ethanol subsidies. As in “the simple and more practical approach would be to phase out the subsidies over a 3-5yr period and let the market sort out the simple from the wise.” I’d like to suggest cold turkey, but I am not certain that would work as well.