When Government Gets Involved In Business

Things start to fall apart.

From the article;

One factor being blamed for the price hikes is the use of government subsidies to promote the use of corn for ethanol production. An estimated 30% of America’s corn crop now goes to fuel, not food.

Well, maybe if government didn't subsidize the idea, then it would succeed or fail on its own merits in the marketplace. But, can't have that, can we? Gotta have that gubmint in there telling us what to do, what to sell, where to sell it ... running our lives.

"It takes around 400 pounds of corn to make 25 gallons of ethanol," [Benjamin] Senauer, also an applied economics professor at Minnesota, said. "It’s not going to be a very good diet but that’s roughly enough to keep an adult person alive for a year."

Regardless of whether I agree with Senauer's political position, I hate the sort of foolish, emotionalist arguments as he makes here.

Yeah, 400 pounds of corn might keep someone alive for a year, but, at the end of that year, the adult who's only had corn will be in serious shape from vitamin deficiencies.

That adult is going to need more than just 400 pounds of corn to keep himself going.

The most obvious impact the food crisis has had in America, aside from higher prices, is the imposition of rationing at some warehouse stores to deal with a spike in demand for large quantities of rice, oil, and flour. The CEO of Costco Wholesale Corp., James Sinegal, is blaming press hype for the buying limits, which were first reported Monday in The New York Sun.

I agree with Sinegal. I, too, think that the food "crisis" in the US is due to media's incessant need for a shocking headline and to get the scoop.

There were banks before the Depression that were in no danger of defaulting, but, because of word of mouth, a run would develop on a perfectly healthy bank, destroying it.

Now, with the Internet and media operations competing for an ever smaller piece of the pie, a run on anything can happen within minutes.

Speaking in Kansas City, Mo., yesterday, the federal agriculture secretary, Edward Schafer, blamed emotion for the spurt of rice buying at warehouse stores. "We don’t see any evidence of the lack of availability of rice. There are no supply issues," he told reporters, according to Reuters.

Emotion and fear has caused a spike in demand - I wish I'd bought rice futures - fueled in a major part by media's need for attention. I read yesterday that Philipinos in the US were scarfing up rice at stores like Sam's, WalMart and CostCo and shipping it to their families in the Philipines. There really can't be too much of a crisis in the US, if these people feel secure enough in their own needs to ship the rice overseas.

And, what I believe are irresponsible articles like this from the Wall Street Journal do nothing but throw gas on the fire.