A New York Times editorial today (free access began today) points out some of the unintended consequences of corn ethanol subsidies and restrictive tariffs on imports. The NYT notes —
American corn-based ethanol is expensive. And while it can help cut oil imports and provide modest reductions in greenhouse gases compared to conventional gasoline, corn ethanol also carries considerable risks. Even now as Europe and China join the United States in ramping up production, world food prices are rising, threatening misery for the poorest countries.
While the editorial bewails some of the problems ethanol subsidies have spawned, it doesn’t endorse the importance of markets rather than mandates and subsidies in the future. While criticizing “unnecessary subsidies,” it seems to leave the door open for “necessary subsidies,” whatever those are:
There is nothing wrong with developing alternative fuels, and there is high hope among environmentalists and even venture capitalists that more advanced biofuels — like cellulosic ethanol — can eventually play a constructive role in reducing oil dependency and greenhouse gases. What’s wrong is letting politics — the kind that leads to unnecessary subsidies, the invasion of natural landscapes best left alone and soaring food prices that hurt the poor — rather than sound science and sound economics drive America’s energy policy.
“Sound science and sound economics” — that is a start, but not if it leads to subsidizing other pet programs. Markets are better at picking and backing winners and losers without the distorting effects of government planning.