My last Blog lamented the guvmint’s ethanol subsidy. Several of you—who did not want to post comments on the Blog—asked me how the subsidy held back free-market progress. The general comment was how can it hurt if it gives us cheaper fuel? I gotta admit that’s a great question that deserves more consideration.
Let’s say the ethanol subsidy amounts to a price drop of fifty cents per gallon at the gas pump. Good deal, huh? Everybody’s gonna save fifty cents a gallon, or about $6.00 per tank fill up. Let the good times roll. Of course the subsidy will be added to our taxes, so that’s not so great after all.
But it doesn’t stop there. All over the country and around the world free-market companies were trying hard to lower the price of gasoline. Some of them (one of them is a friend) thought they could reduce the pump price by say, twenty-five cents a gallon and they were excited about it. Then the guvmint, in its infinite and merciful wisdom, announced the ethanol subsidy. Now, what would you have done if you were trying to cut the pump price by twenty-five cents per gallon? Well, you’d probably stop your efforts totally. And why not? The guvmint subsidy had already dropped the price by more than you ever thought you could. You might fire people and/or shut down the factory (my friend did both), if you had one, or shut down plans to build a factory.
Just think of all the private effort/investment that came to a screeching halt around the world. Do you reckon some of those private ideas might have cut the price of fuel by more than fifty cents per gallon by now? We’ll never know.
This is somewhat like your car’s catalytic converter. Decades ago there was much private effort invested in cutting auto emissions. Then the guvmint mandated catalytic converters. And all that private effort ceased immediately and remained ceased in the decades since.
In short, every interference with the free market costs money. Somebody—maybe you and I—should push like hell to get the guvmint to consider the cost as well as the supposed benefit.
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