Food Price/Ethanol Numbers and Sources
I chided Becker and Posner for not giving sources for their posts. Here is some data that backs them up in a more serious manner (HT: Gabriel)(Not sure how I found this), a comment below:
Food prices
How should a well-fed American react when some of the world’s poorest citizens in Haiti and Bangladesh riot over the rising price of food?
To be sure, there are many factors influencing food prices. But to me it’s natural to begin with the element that represents a deliberate policy choice on the part of the United States. I refer to America’s decision to divert a significant part of our agricultural production for purposes of creating a fuel additive for motor vehicles. USDA Chief Economist Joseph Glauber predicts that 4.1 billion bushels, or 31% of the entire U.S. corn crop, will be devoted to ethanol production for the 2008/09 season.
On one level, the question of whether it is morally acceptable for us to divert the food that might have fed the hungry for purposes of driving our SUVs is no different from similar questions about any of a number of other details of how the well-off dispose of their wealth. But I’m thinking that the profound inefficiencies associated with this particular disposition of resources may also be relevant. As a result of ethanol subsidies and mandates, the dollar value of what we ourselves throw away in order to produce fuel in this fashion could be 50% greater than the value of the fuel itself. In other words, we could have more food for the Haitians, more fuel for us, and still have something left over for your other favorite cause, if we were simply to use our existing resources more wisely.We have adopted this policy not because we want to drive our cars, but because our elected officials perceive a greater reward from generating a windfall for American farmers.But the food price increases are now biting ordinary Americans as well. That could make those political calculations change, and may present be an opportunity for a nimble politician to demonstrate a bit of real leadership. I notice, for example, that although Senator Barack Obama (D-IL) was among those who voted in favor of the monstrous 2005 Energy Bill that began these mandates, Hillary Clinton (D-NY) and John McCain (R-AZ) were among the 26 senators who bravely voted against it.Wouldn’t it be refreshing if one of them actually tried to make this a campaign issue?
The emphasized text (my emphasis) is what I want to discuss. I do believe there is a difference between not giving [edit: so does the original author. My point here is that he failed to prove the existence of the level referred to in "on one level"]. Large institutions and capital investments have been made depending on well reasoned forecasts of food supply and price movements. Finance is not readily available to alter these institutions and divert the capital investments to dealing with a radical shift in grain prices due largely to crappy wannabe environmentalism. This says simply that they have no control over their sudden loss of income. If this just brought their standard of living down a little bit, maybe it wouldn’t be a big deal. But coming down a little bit at a subsistence level of living causes serious harm. Interdependence forces us to consider the effects of our policies elsewhere.
On that note, the political analysis of ethanol given is rather simplified. It is true that Obama’s voting record sucks on ethanol (which is to say he seems to have consistently voted in favor of it) and that Clinton’s isn’t bad. However, good luck trying to get Clinton to say she is opposed to ethanol use now. McCain’s record is similar to Clinton’s. I don’t know if this means they are hiding in the closet in the issue for the election or have actually changed their minds on the issue (for political or principled reasons).
