Fuel from Food and the Ethanol Debate

Here's a real good article from America's heartland, my birthplace, Kansas City. Loss of fuel economy from ethanol-blended gasoline hits motorists in the wallet

No surprise there. Too bad the only thing people will look at is the price at the pump when filling up.

I did come across another real good article that truly spelled out how when a idea sounds great at first, then over time, we see the consequences of such action. Burning our food for fuel is, in my opinion, the most idiotic and foolish policy we put into practice.

The Law of Unintended Consequences and an IPO
By Paul Goodwin

We have fun with laws all the time. Think of the bumper sticker that says: "Gravity, It's Not Just a Good Idea, It's the Law." Or how about the law that says that your supermarket line is the one that will have the price check? Or even the one that says that toast that falls off the table will fall buttered-side down (probably one of the many variants of Murphy's Law)?

There is, however, one law that's been a favorite of mine since I ran into it in a college history class. It's The Law of Unintended Consequences.

The classic example of the LUC is the Treaty of Versailles that ended the First World War. The victorious allies were somewhat peeved with Germany, and celebrated by imposing harsh reparations and economic restrictions to punish it. (Just a bit of trivia: one of the provisions of the Treaty was that Bayer, the German pharmaceutical giant, was forced to give up two patented pain relievers. The first was being sold under the trademark Aspirin. The second was trademarked Heroin. But more about that later.)

The popular LUC theory is that the huge monetary reparations and strict industrial limitations placed on Germany created the economic chaos that allowed the Nazis to come to power and start WWII. (Some historians disagree about this, but historians will disagree about just about anything, so they don't get a vote.)

True or not, it's the perfect story to illustrate how ignorance, stupidity, short sightedness, malice and the vagaries of chance can turn well-meaning attempts at rule-making into a source of negative outcomes.

Another classic example of bad results from good intentions is America's 13-year experiment with outlawing the sale of alcohol, known variously as the 18th Amendment to the Constitution, The Volstead Act or just plain old Prohibition.

It's universally accepted now that Prohibition was a dismal failure, succeeding only in allowing organized crime to grow into a profitable colossus, encouraging the production of untold gallons of questionable (and sometimes dangerous) brews and liquors, and turning millions of Americans who just wanted a little drink into criminals.

My favorite current example of the Law of Unintended Consequences at work is the adoption of ethanol as the replacement for the 10% of MTBE added to U.S. gasoline supplies. Since MTBE has been shown to be a persistent pollutant of ground water supplies, a change seemed like a good idea, and ethanol was a renewable, plant-based, U.S. product that would help farmers and reduce dependence on foreign oil. Clearly a win/win proposition.

Well, not so much. It turns out that the prime source of raw material for ethanol production is corn. Corn production, in turn, is sensitive to applications of fertilizer.

As the price of corn rose in response to this new demand, the price of fertilizer skyrocketed, tripling in some cases. Together with the diversion of massive amounts of corn from the human food chain to the automotive drive chain, rising prices for fertilizer have increased food prices worldwide, contributing to inflation, hunger and poverty.

And the price of fertilizer is still going up.

The Law of Unintended Consequences is a serious business, but not a solemn one. It can produce misery, and dire results, but it also yields the kind of ironic outcomes that make great stories.

To get back to my bit of Bayer trivia, I like to point out that there have been two attempts to produce a non-addictive form of opium. Everyone wants the pain relief that opium brings, but addiction is a high price to pay. So a German pharmacist, convinced that it was the impurities in opium that made it bad, refined it and named the resulting compound for the Greek god of dreams, Morpheus. Thus was morphine born.

Working on the same principle of purification, Bayer further refined morphine and named the resulting compound after the German word heroisch, which means "heroic." It's not a name most people would apply to heroin these days, but that's the way the Law of Unintended Consequences works.