Don't feel sorry for the ethanol hogs.
The New York Times has a short piece regarding Texas asking the Environmental Protection Agency for a waiver on the use of the ethanol. Of course the ethanol hogs, feeding at the government trough, are livid over the idea.
Yet some of those who will lose their place on the government gravy train do have legitimate concerns. One company complain that it wouldn’t have spent millions on piping without the governments mandated increases in the use of ethanol.
One farmer said: “We bought fertilizer and corn seed, decide our crop mix on the basis of ethanol being where it was. To change the mandate in the middle of our growing season, that’s really not right.” He apparently never worried if the mandate was right in the first place.
Government intervention constantly screws up the private plans of citizens. Government planning does not impose planning where chaos ruled. It imposes one crude plan in place of millions of micro-plans set up by the people. It substitutes a plan by a politician for the millions of plans by individuals.
When politicians pushed the ethanol boondoggle they messed up the plans of lots of people. For instance, they are starving poor people to death in Third World nations because they have push up food prices artificially by consuming vast amounts of food to produce ethanol. Those poor people didn’t plan on starving to death but Hillary and Obama and the majority of the US Congress decided that buying the votes of well-off farmers was more important than a bunch of poor people starving to death.
Others who are are not starving are still financially hurting because of the moves. Families that planned one budget suddenly had to start cutting things out, in the middle of their financial year, because well-off farmers got hoggish with government subsidies. The businessmen and farmers now complaining about a change in the policy didn’t see anything wrong with upsetting the plans of others when they helped push these subsidies through.
The very individuals who are now complaining about how a change in policy is upsetting their plans advocated the policies which upset the plans of hundreds of millions of other people. They didn’t care then so why should we care now?
On the surface it sounds reasonable for them to complain that they made certain investments based on the returns promised by politicians. Changing those plans now will be detrimental to them. But so what? First, their profits were being stolen from working people by government force. What they are whining about is that they might not be able to mug the taxpayers any longer.
If you are walking down a dark street and someone puts a knife to your throat he has plans for your money. If you use Mace on him you might just foil all the plans he had made. But he had no right to make plans with your money.
And the farmers and corporate interests that were getting rich off of ethanol had no right to make plans with your money either. Personally I think it a good thing when we foil the plans of robbers, thieves and political muggers.
This ethanol issue also shows how pernicious the argument used by conservative Bob Barr, presidential candidate for the (formerly) Libertarian Party. Barr wanted to bail out FannieMae and FreddieMac because government had been so heavily involved in the housing bubble that it helped create the crisis we are now facing.
Government did. Just like it created the food crisis with ethanol, the energy crisis with numerous policies, the drug cartel problem with drug prohibition, the illiteracy problem with state education, the congestion problem with socialized roading and a host of problems.
People make plans based on the current political realities. Government forces people to change those plans. And a series of state interventions usually leads to a crisis. But if we were to bail out every industry that was negatively effected by government policy we would have 100% federal bailouts. Every industry would be eligible.
If we want government to mitigate the bad results of every policy it has passed there would be no end of government interference. People who advocate state intervention to mitigate bad policies are no different than the people who advocated the bad policies in the first place. First, none of them argued their policies were bad. They all felt they were justified for some greater good.
And the Barr interventionists are ignoring the main lesson from such debacles: government intervention, no matter the intentions, leads to unintended consequences. Barr’s solution will itself distort the market even more and lead to further bad consequences. That is the road to serfdom that Hayek warned about. Bad policies lead to bad consequences. These results then are used to justify more policies to mitigate those harms. The new policies lead to further bad consequences thus justifying more intervention. Mises argued that interventionism is socialism by “a series of successive steps.”
And many of these successive steps were justified as remedies for the ill results of previous policies.
Bailing out people who benefited from previous government policies is not libertarian. Their failure, if anything is a bit of justice. It returns some of the booty that they stole back to the productive economy. As such their failure fuels beneficial and productive enterprises.
The ethanol hogs, eating at the through, had no right to the riches they received. They picked those riches out of the pockets of lots of people who were in far worse financial straits. Government intervention almost always robs those who are poorer and less powerful and benefits those who are wealthier and powerful. After all, the political elites love that wealth and power, they need it. So it should be no surprise that government intervention redistributes wealth from the have-nots to the haves.
Now and then the haves end up in trouble because the government program they rely upon is not sustainable. Some, like ethanol subsidies, create massive disasters quickly. Bailing out those who were lining their pockets with stolen money is absurd. Let them fail. Their failure will be a sign to others who hope to get rich by political redistribution. It will help rectify the economic crisis faster if they fail. And it starts to put the stolen money back in the hands where it belonged. After watching the misery inflicted on billions of people by this ethanol policy I can’t muster any sympathy for the ethanol hogs fearing the end of their free ride. It should have come sooner.