Not Ethanol But a Carbon Tax

There is understandable and altogether justified concern for global warming in many countries today. What one sees less of is well-considered arguments for the policy responses that individual governments may take or for a degree of coordinated action to respond sensibly to this issue. As this article by Jeff Jacoby of the Boston Globe reports, many people have considered that resorting to bio-fuels in general and ethanol in particular is one of the ways. Then things began to go wrong because the assumption was that corn growers must be granted subventions.

This would not be a defensible approach from first principle for many reasons but it has now turned out that the calculations were wrong and lots of public funds have gone to waste. Many politicians who supported this approach appeared to be merely intent on distribution of public funds to their constituencies. On the other hand, there was serious objection to the support for ethanol based on the flawed thinking that the rise in prices would lead to food shortages in low-income countries whose citizens would be priced out of the food market.

Since the piece is very well written, there's not much to add save that the approach to ensuring the reduction of use of carbon fuels is clear. It has been argued on this here before, a carbon tax would be a superior instrument.