AP Exposes Ethanol … We Want More
By Staff News & Analysis - November 13, 2013

The secret, dirty cost of Obama's green power push … The hills of southern Iowa bear the scars of America's push for green energy: The brown gashes where rain has washed away the soil. The polluted streams that dump fertilizer into the water supply. Even the cemetery that disappeared like an apparition into a cornfield. It wasn't supposed to be this way. With the Iowa political caucuses on the horizon in 2007, presidential candidate Barack Obama made homegrown corn a centerpiece of his plan to slow global warming. And when President George W. Bush signed a law that year requiring oil companies to add billions of gallons of ethanol to their gasoline each year, Bush predicted it would make the country "stronger, cleaner and more secure." – AP

Dominant Social Theme: We just found out laws have unintended consequences and because we're AP, we have massive resources that allow us to pursue this incredible insight wherever it may lead.

Free-Market Analysis: As we can see, AP is fearlessly pursuing the problems with government-sponsored ethanol production. AP is one of the leaders of Western journalism, known for its extensive coverage of Lady Gaga and probing analysis of the West's power structure … an analysis arrived at by asking the leadership itself to evaluate its progress.

AP's first-hand access to top pols and leaders of finance means its writers and editors get the scoop directly from those in charge, which obviates the necessity for further reporting. Not that AP is apt to continue anyway, given its official reluctance to use anonymous background sources or other techniques that might be deemed irresponsible.

AP obviously has the highest ethics as a reporting organization, which is why it is so surprising that it has launched several thunderous broadsides against the ethanol industry, the latest of which is this absolutely endless article.

Picked up by Drudge and generally splashed across the Internet yesterday, the reporting is so lengthy and detailed that those who are younger than a certain age might well feel they are in the presence of unusually dedicated journalism.

We, however, who are more cynical, are not impressed by the length of this article nor its summation, which involves the conclusion that … wait for it … laws sometimes have consequences other than those intended by the "lawmakers."

Heck, we could have told them that in a sentence. AP takes an eternity to deliver its verdict. And it is questionable as to who might still be awake to read it.

Here's some more:

The ethanol era has proven far more damaging to the environment than politicians promised and much worse than the government admits today. As farmers rushed to find new places to plant corn, they wiped out millions of acres of conservation land, destroyed habitat and polluted water supplies, an Associated Press investigation found.

Five million acres of land set aside for conservation – more than Yellowstone, Everglades and Yosemite National Parks combined – have vanished on Obama's watch. Landowners filled in wetlands. They plowed into pristine prairies, releasing carbon dioxide that had been locked in the soil. Sprayers pumped out billions of pounds of fertilizer, some of which seeped into drinking water, contaminated rivers and worsened the huge dead zone in the Gulf of Mexico where marine life can't survive.

The consequences are so severe that environmentalists and many scientists have now rejected corn-based ethanol as bad environmental policy. But the Obama administration stands by it, highlighting its benefits to the farming industry rather than any negative impact.

Farmers planted 15 million more acres of corn last year than before the ethanol boom, and the effects are visible in places like south central Iowa. The hilly, once-grassy landscape is made up of fragile soil that, unlike the earth in the rest of the state, is poorly suited for corn. Nevertheless, it has yielded to America's demand for it.

"They're raping the land," said Bill Alley, a member of the board of supervisors in Wayne County, which now bears little resemblance to the rolling cow pastures shown in postcards sold at a Corydon pharmacy. All energy comes at a cost.

… The numbers behind the ethanol mandate have become so unworkable that, for the first time, the EPA is soon expected to reduce the amount of ethanol required to be added to the gasoline supply. An unusual coalition of big oil companies, environmental groups and food companies is pushing the government to go even further and reconsider the entire ethanol program.

Well, they should. Mandating ethanol fuel is idiocy. It is based on the idea that government must do the heavy lifting of cleaning up the environment … but given that the US government is among the worst polluters in the world, one wonders why government officials feel qualified.

Unfortunately, government bureaucrats, empowered by their official roles, rarely if ever question their empowerment or the laws themselves that they churn out with miserable regularity.

As we have long pointed out, laws are essentially price fixes. They mandate that people do certain things a certain way. If people don't do those things that way, then they are exposed to government force, including civil and criminal penalties. God knows how distorted Western economies are from the combined burden of so many laws and regulations, few if any of which are functioning as intended.

This AP article, though of mind-numbing length, does do us the service of explaining clearly how laws can backfire and environmental mandates end up doing more harm than good. Being amateur economists of the free-market type, we might have been able to help the AP reporters condense their findings by pointing out the dividing line between classical and neoclassical economics – marginal utility.

It is marginal utility that shows us how the market itself determines prices and leads ineluctably to Ludwig von Mises's insight that human action determines the fate of societies and eventually supersedes laws and regulations, no matter how powerfully enforced. The AP reporters could have read Mises's Human Action and saved themselves a whole lot of time and ink.

Why are free-market concepts so hard to understand? Laws – all laws – are economic distortions. Some basic laws, of course, may be necessary and purposeful, a handful anyway that conform to human nature … natural law, it is called. But as for the rest, well … they are for the most part destructive and reduce prosperity.

Environmental laws don't work well for the most part as there are unintended consequences, as can be easily seen from the AP article. Drug laws have always failed, as have other laws attempting to legislate personal behavior.

Zoning laws can make neighborhoods nearly unlivable. Laws that mediate marital battery and divorce can be counterproductive. On the economic front, laws that attempt to fix prices, moderate certain kinds of trading, make acting on various kinds of information illegal, etc., are simply creating a confused playing field where those with the most resources have the best chance of negotiating regulatory complexity.

Ultimately, regulatory democracy is "The God That Failed," as Hans-Hermann Hoppe has put it eloquently. We would go further and suggest that it was never meant to be efficient or appropriate. The power elite behind the formation of the modern demos intended that a combination of regulations and laws would make it impossible for most people to create the kind of sizeable capital necessary to challenge their positions.

It worked in the 20th century but has been less successful in the 21st as people begin to challenge the fundamental rationales for the organization of the societies they live in. The alternative Internet media has been very useful in this regard, and the mainstream media less so.

But for some reason, AP has decided to inform its sizeable readership that regulations are not altogether beneficial. Now we look forward to the AP brain-trust extending their investigations beyond ethanol to, say … public schools, the legal profession, political parties, Congress, the White House, the Supreme Court, the Pentagon, the military-industrial complex, etc.

After Thoughts

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