Posted 12/4/2010

ETHANOL'S UNINTENDED CONSEQUENCES

When Al Gore cast the deciding vote to subsidize and promote ethanol in 1994, he had no idea of what the consequences might be.

Instead, he, Republican Senator Chuck Grassley of Iowa and others focused like a laser beam on the good things: Ethanol production would reduce gasoline's tendency to throw carbon dioxide and carbon monoxide into the air, helping to reduce global warming. Ethanol would further decrease our dependence on foreign oil. (Senator Grassley of course concentrated more on the economics of his home state. Iowa corn farmers were sure to enjoy boom times.)

Unfortunately, the ethanol subsidy blundered straight into the Law of Unintended Consequences. This situation generally occurs when simple systems (government) attempt to regulate complex systems (the environment or human nature).

It occurs because highly intelligent government officials focus on problems, and potential solutions, to the point of "tunnel vision."

For example, the program called "Aid to Dependent Children" was intended to help out poor children by paying a stipend to mothers according to the number of children they had. The program was limited to women who had no husband living under the same roof. It all sounded very compassionate.

The result was the destruction of the black family, as women heaved men out the door in order to qualify for the program. Many women deliberately produced greater numbers of children in order to raise their benefit checks. A lady named Bessie was quoted on television, saying "What you mean I ain't working? I'm working for the ADC. And I'm doin' good. I just had another baby and they gave me a raise!"

Another example of the law in motion: In 1990, Washington passed the clean air act, which encouraged oil refiners to add a chemical called "methyl tertiary butyl ether" (MTBE) to gasoline. The chemical promised to make your auto produce more oxygen and less carbon. That was the good thing.

But Washington didn't look at the potential side effects of a chemical which is very durable and which dissolves easily in water. They also didn't find out until it was too late that MTBE is highly carcinogenic. The result of cleaning up the air a little was the poisoning of large reservoirs of America's groundwaters as old gas station storage tanks seeped their contents into the soil. The potential clean-up bill could be $30 billion. And many of our groundwaters will never again be safe.

Not having learned from those blunders into the Law of Intended Consequences, Congress moved quickly on ethanol. What are the results?

1. Farmers have dramatically increased corn acreage by shifting land from wheat, soybeans, rice and cotton.

2. Over 40 percent of the increased corn acreage has gone to ethanol production, resulting in rising food prices all over the world.

3. Poor nations are experiencing food riots and unrest. In southeast Asia, fathers bring their 15-year-old daughters to market and sell them to the highest bidder because the family can no longer afford to feed them.

4. Rising grain prices are hurting American cereal makers, bakers and other businesses, which are caught between higher costs and consumer price resistance.

5. Cotton prices are going up, which will make it more expensive to buy a shirt next year � or anything made of cotton, for that matter.

6. Ethanol is damaging our water systems. Groundwater levels are dropping in the Mississippi Delta region as farmers switch from cotton to corn, which requires a great deal more water.

7. Like the MTBE fiasco, ethanol is damaging the quality of our waters as well. Because corn requires more fertilizer and pesticides than cotton, the resulting runoff has already damaged the waters of the Gulf of Mexico.

Despite all that, Senator Grassley is as happy as a hog in mud. For corn prices are up so much that the farm belt has become the only sector of the economy to recover from the Great Recession.

In a recent speech abroad, Al Gore said, "The ethanol program was bad policy, but good politics." He admitted when he signed the bill that he was thinking of running for President.

And where was the first state caucus?

Iowa � where the corn is.

I wonder what the Nobel Prize folks think of all this?

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