Appeasing the Corn God


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 tomakecars run on a mixture of grain alcohol and gasoline -- would have taught ussomething. That particular biomass program has shoveled over $10 billioninto the welfare farm trough over the past 20 years but has left farmers nobetter off than before. Ethanol is still three or four times moreexpensive to produce than gasoline, which is why its market share is prettyclose to zero. Moreover, by raising the price of corn by a few dimes abushel, the program, according to even the U.S. Department of Agriculture,has the perverse effect of actually doing net harm to the agriculturalsector. Remember, 60 percent of all corn produced is used as feed bycattle, hog and chicken farmers. The Agriculture Department has also shownthat the program harms soybean farmers and that every $1 of ethanolsubsidies costs consumers $4. But then again, every one vote in Iowa isworth a lot more than four votes elsewhere, so it meets the politicalcost-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 stillthree times more expensive than burning natural gas in the lateststate-of-the-art facilities. So we won't be turning fireplaces into powerplants anytime soon. Moreover, with the price of gasoline so low (that isto say, with the current historic glut of petroleum on the world market),there is little chance that biomass will be able to compete withconventional gasoline in the foreseeable future.

The environmental benefits of biomass are similarly dubious. Ittakesalmost as much energy to grow this stuff as it produces after beingharvested. Some emissions are lower, but others are higher. The ethanolprogram is almost universally despised by the environmental establishment,but the environmentalists are oddly optimistic about the ability ofgovernment-funded research to remedy the problem. But let's be clear; thetrack record of such federal R&D expenditures is so bad that a study of thesubject published by the Brookings Institution was titled "The TechnologyPorkbarrel."

What are the chances, really, that the federal government knows whattheheck it's doing when it comes to picking winners and losers in the energyeconomy? Have we already forgotten the $80 billion "synfuels" debacle?Twenty years ago, the federal government similarly threw itself into amulti-billion-dollar crusade to synthetically produce petroleum with almostcomical results. Or remember government's promise that nuclear energywould be almost "too cheap to meter"? Billions of tax dollars andregulatory preferences once showered that industry, too, but the federalsubsidy produced nothing but angry environmentalists and ridiculouslyexpensive electricity. The solar and wind power crusades also continue todisappoint. About $15 billion in subsidies has been thrown at those andother non-hydro renewable energy industries since the mid-1970s, and theirmarket share is no more than an anemic 1.5 percent.

We Americans are constantly being bombarded by ringing denunciations ofpolitical corruption in Washington. The idea, however, that the scandallies in the conveyor belt of money from corporate America to politicalAmerica is quaint. That transfer of money is but a trickling creekcompared to the roaring ocean of bribes headed in the other direction; themulti-billion-dollar vote purchasing that virtually defines moderngovernment and contemporary politics.

The truly amazing thing is that the corn bribes don't make the farmer anybetter off. But then again, neither did the snake oil the country rubesused to buy, but that didn't stop them from buying ever-larger quantitiesof it every time another shyster salesman came to town.