Commentary

Appeasing the Corn God

By Jerry Taylor
August 23, 1999
Every four years, the Iowa Caucuses grab America by the throat. And every four years, politicians promise to empty the pockets of the American taxpayer to “save” America’s most obnoxious and cloying welfare recipient — the corn farmer. This year, the bidding started early. Fearing that the Republicans were going to monopolize the field of farm welfare, Al Gore flew to Iowa days before the Iowa Straw Poll to announce a new administration initiative to triple the amount of energy generated from biomass (plants, trees and shrubs) by 2010. The vice president boasted that this strong-arming of the private sector will transfer $20 billion or so into farmers’ bank accounts. But it’s unlikely that this quasi-religious sacrifice of taxpayer money will appease the angry political Corn God for long.

You might have thought that the ethanol boondoggle — the attempt to make cars run on a mixture of grain alcohol and gasoline — would have taught us something. That particular biomass program has shoveled over $10 billion into the welfare farm trough over the past 20 years but has left farmers no better off than before. Ethanol is still three or four times more expensive to produce than gasoline, which is why its market share is pretty close to zero. Moreover, by raising the price of corn by a few dimes a bushel, the program, according to even the U.S. Department of Agriculture, has the perverse effect of actually doing net harm to the agricultural sector. Remember, 60 percent of all corn produced is used as feed by cattle, hog and chicken farmers. The Agriculture Department has also shown that the program harms soybean farmers and that every $1 of ethanol subsidies costs consumers $4. But then again, every one vote in Iowa is worth a lot more than four votes elsewhere, so it meets the political cost-benefit test.

So will a lot more of the same make any difference? Probably not. Burning wood, plants, shrubs or whatever to produce electricity is still three times more expensive than burning natural gas in the latest state-of-the-art facilities. So we won’t be turning fireplaces into power plants anytime soon. Moreover, with the price of gasoline so low (that is to say, with the current historic glut of petroleum on the world market), there is little chance that biomass will be able to compete with conventional gasoline in the foreseeable future.

The environmental benefits of biomass are similarly dubious. It takes almost as much energy to grow this stuff as it produces after being harvested. Some emissions are lower, but others are higher. The ethanol program is almost universally despised by the environmental establishment, but the environmentalists are oddly optimistic about the ability of government-funded research to remedy the problem. But let’s be clear; the track record of such federal R&D expenditures is so bad that a study of the subject published by the Brookings Institution was titled “The Technology Porkbarrel.”

What are the chances, really, that the federal government knows what the heck it’s doing when it comes to picking winners and losers in the energy economy? Have we already forgotten the $80 billion “synfuels” debacle? Twenty years ago, the federal government similarly threw itself into a multi-billion-dollar crusade to synthetically produce petroleum with almost comical results. Or remember government’s promise that nuclear energy would be almost “too cheap to meter”? Billions of tax dollars and regulatory preferences once showered that industry, too, but the federal subsidy produced nothing but angry environmentalists and ridiculously expensive electricity. The solar and wind power crusades also continue to disappoint. About $15 billion in subsidies has been thrown at those and other non-hydro renewable energy industries since the mid-1970s, and their market share is no more than an anemic 1.5 percent.

We Americans are constantly being bombarded by ringing denunciations of political corruption in Washington. The idea, however, that the scandal lies in the conveyor belt of money from corporate America to political America is quaint. That transfer of money is but a trickling creek compared to the roaring ocean of bribes headed in the other direction; the multi-billion-dollar vote purchasing that virtually defines modern government and contemporary politics.

The truly amazing thing is that the corn bribes don’t make the farmer any better off. But then again, neither did the snake oil the country rubes used to buy, but that didn’t stop them from buying ever-larger quantities of it every time another shyster salesman came to town.

Jerry Taylor, an Iowa native, is the director of natural resources studies at the Cato Institute.