It was an odd setting for a policy pronouncement, but on the sidewalk outside the Historical Building here, former Massachusetts Gov. Mitt Romney embraced ethanol subsidies. It came just days after and blocks from where his rival for the Republican presidential nomination, Tim Pawlenty, said the subsidies should be phased out.
“I support the subsidy of ethanol,” he told an Iowa voter. “I believe ethanol is an important part of our energy solution for this country.” Iowa leads the nation in the production of corn, a main source of ethanol.
Mr. Romney and a crowd that had come to see his first Iowa speech of the year had been evacuated from the Historical Building by a fire alarm. Amid the tumult, a woman asked if he was going to take any questions. He said given the circumstances, the question and answer part of the program appeared out of the question. So she presented him a typed out note demanding his position on ethanol, one she had intended to present at the presidential forum that had just abruptly ended.
The closest thing to a state religion in America today isn’t Christianity – it’s corn.Whether liberal or conservative, Democrat or Republican, urban or rural, virtually everyone in the business of offering opinions is in ﬁrm and total agreement that America’s ills, from Islamic terrorism to global warming to economic stagnation in the heartland, could be solved by a hefty dose of 200-proof grain alcohol.
Virtually everyone, however, does not include economists worthy of their No Free Lunch buttons. To them, the dizzying array of federal, state and local subsidies, preferences and mandates for ethanol fuel are a sad reﬂection of how a mix of cynical politics and we-can-do-anything American naiveté can cloud minds and distort markets. If ethanol had economic merit, no government assistance would be needed. Investors would pour money into the ethanol business and proﬁ ts would be made, even as alcohol displaced oil in the markets for liquid fuels.
If ethanol lacks economic merit, however, no amount of subsidy is likely to provide it.