Wednesday, May 07, 2008

Etahanol fizzles out

Here's a link to the Register's editorial today on the fizzling out of the ethanol craze, as it becomes increasingly apparent that government subsidies for ethanol have been a bust when it comes to cleaner air and have had the side effect of making food of various kinds more expensive. If I do say so myself, it's a pretty good combination of a theoretical explanation of how subsidies distort markets and an outline (brief, leaving out lots of details) of the some of the practical impacts of those distortions.

Ethanol may eventually prove to have some genuine value, but it's simply the latest example of the government trying to "force" a politically-selected technology that doesn't have a real market demand -- and it turns out that even with subsidies and mandates it doesn't work either. Someday electric cars and liquefied coal and wind power and various other faddish alternatives to petroleum may be economically viable, but they can only prove their viability in a market free of government distortions.

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