Bread n' Circuses -- or Freedom

Sunday, September 17, 2006

There was a particularly brain-dead column by Lester Brown, head of the Earth Policy Institute, attacking alternative fuels from an environmentalist perspective in today's Houston Chronicle. Brown's basic premise, for which he at least partly credits Jared Diamond's Collapse: How Societies Choose to Fail or Succeed is that our civilization is going to collapse because it is not "safeguarding [our] basic resources".

Brown opens by surveying examples, presumably from Diamond's book, of civilizations that either responded effectively to shortages in major economic resources (which he frames as environmental catastrophes) or not. The Sumerians, for example, never found an effective way to make up for a severe water shortage. Irrigation enabled them to grow wheat for a time, then barley as salt levels in the irrigated land became intolerable to wheat, and then the civilization collapsed as even barley yields dropped. So far, so good.

But Brown frames all these examples in environmentalist terms. The problem with the Sumerians was not, to Brown, a water shortage, but what he should have called "salt pollution". He then cites the differing responses of the Mayans and the Icelanders to soil erosion, calling the measures taken by Icelandic farmers "sustainable". One need not espouse environmentalism to see the wisdom of not over-grazing: One need only appreciate the value of his own land. But Brown is planting the seeds of confusion here: He wants his readers to equate long-range planning with acceptance of his Green agenda. This is why he will later make some fast and loose assumptions about economic behavior.

And it is also why his very next paragraph is addressed to Western civilization.

Among the many environmental threats to our future -- increasing CO2 levels, melting ice sheets, rising sea levels, falling water tables and shrinking forests -- the depletion of oil reserves may be the most immediate for our oil-based global civilization.
It is debatable whether the first three of these, if they are really occurring, are due to human activity. The next two are local problems. Brown makes his life easier by using these more nebulous, but commonly-accepted threats to get our attention before homing in on the only plausibly urgent problem: That we will run out of oil some day, and one day soon unless oil is of abiotic origin.

Uh-oh! Crisis! Time to throw basic economic theory out the window! And so Brown does.

Brown's "analysis" of oil economics follows: Oil discoveries will only delay the impending End of Oil. So for fuel, we are turning to biofuels. And since we make these out of food crops, the world's automobile drivers are going to starve the world's poor.

This is a smear of capitalism, and nothing more, from beginning to end.

When Brown says that biofuel was "once spurred mainly by government subsidies", he is being disingenuous. Brazil may have significantly reduced or eliminated subsidies for fuel ethanol production from sugar cane, but its existing infrastructure was government-financed and the government encourages its use for fuel through tax breaks to this day. One wonders whether we'd be talking about Brazil at all in this context had its past dictatorship not enacted the fuel policy it did.

Furthermore, Brown focuses on America's use of corn (a crop already subsidized by the government) for ethanol, whose use is in gasoline is encouraged by a 51 cent per gallon tax credit (according to the October 2006 issue of Consumer Reports). And when European subsidies of biodiesel are taken into account, one must admit that the shift to biofuels is hardly a market-driven phenomenon.

Yet Brown never challenges such government encouragement of biofuels as bad policy. He is more interested in giving his readers the impression that the free market is driving the use of food as fuel so that his notion of what "good" government interference is will sound reasonable later.

But let's pause for a moment to consider what else Brown does by bringing up food as fuel. What is it about America's economy that permits it to grow such a huge surplus of food in the first place? The right to own property is largely protected here. Individuals can work for a profit. Farmers can, if they locate a buyer willing to pay more, sell to him rather than having the fruits of their labor stolen and shipped off to somewhere halfway around the world. Prevent farmers from selling to the highest bidder and you will see them move from farming to something more likely to pay the bills.

Contrast this situation to that in much of the third world. Many of the world's poorest regions have governments most notable for their wholesale destruction of property rights, resulting in social conditions that remove all incentive for productive work. Yet Brown does not recognize and attack the policy of the American government of redistributing wealth as an attack on America's protection of property rights and thus her ability to continue being marvelously productive. Nor does Brown devote any ink to the need for other nations to protect the rights of their farmers to make a living. Brown, it seems, does not mind government interference in the economy, even when it makes Africa unable to feed itself and could further hamper America's ability to take up some of the slack.

And let's pretend, for the sake of argument, that ethanol were not an absurdly poor substitute for gasoline. What if American farmers sold most of their corn crop for fuel? What does fuel do anyway? For one thing, it is used in transportation, which makes human labor far more efficient in the realm of production. If the fuel-dependent economy of America, which feeds much of the world, were deprived of fuel, I suspect that its agricultural output, not all of which is corn, would drop like a rock. Brown does not entertain this idea, either.

So what ideas does Brown offer in the stead of, say, ending subsidies to inefficient biofuels and the encouragement of economic freedom across the globe?
There are alternatives to this food-based fuels scenario. The equivalent of a 3 percent gain in U.S. automotive fuel supplies from ethanol could be achieved several times over -- and at a fraction of the cost -- simply by raising automobile fuel-efficiency standards by 20 percent. We can also shift to highly efficient gas-electric hybrid plug-in vehicles. And if we invest in wind farms, feeding cheap electricity into the grid, cars could run primarily on wind energy, and at the gasoline equivalent of less than $1 a gallon.

These ideas all are economically unfeasible (i.e., expensive) in some way and so rely on government interference in the economy -- or the free market, which Brown just smeared although it feeds the world, would have already adopted all of them. It is particularly revealing that his first "alternative" suffers from exactly the problem he damns oil exploration for, forestalling the End of Oil while at least biofuels do not. His second "alternative" suffers from the same weakness, given that electricity must be generated, and we can't harness enough wind to replace all the power supplied by oil. Also missing as an "alternative" is nuclear power, which other Greens have begun advocating, but which his group dismisses as -- get this -- expensive! Hell. Why not force us to build more nuclear plants, Mr. Brown?

Or better yet, why not consider why -- overregulation by the government due to environmental hysteria -- nuclear plants became so expensive in the first place?

The truth is that there are many sources of energy out there, and oil is simply one of the cheapest. As we run out, it will become more expensive, making other sources more attractive -- so long as the Lester Browns of the world don't get their way and keep us from using or discovering them. The market, if left free from excessive government interference, will take care of the energy problem on its own. In Sumeria, Brown did not choose the best fallen civilization to compare the West to. He should have chosen Rome, whose economy was destroyed by government controls, and where the extensive subsidies became known as "bread and circuses".

It is interesting that for all his protestations against "using food for fuel", Lester Brown's only real idea, to attack capitalism, would end up harming our ability to find more cheap energy and thus continue to produce food in abundance. But then again, if more of us starve to death, our numbers will be more "sustainable", I suppose.

Contrary to Lester Brown's prescription, our "alternatives" do not lie among various foolish government economic policies, but between a free economy and government controls.

-- CAV

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