[SEL] Corn-gas a BUST!

[Rob Skinner]

On Sep 26, 2007, at 8:10 PM, JIM KIRKES wrote:

> Sugar cane has a much higher yield than corn and so gets a
> better deal for the consumer.  Corn is a loser sugar cane
> just might come out ahead.

Except, Jim, that sugar cane is artificially and prohibitively  
expensive in the United States.  In an act of FARMER WELFARE,  
Congress has placed quotas and tariffs on sugar, driving the prices  
through the roof.



Should we trade at all
By Walter E. Williams
Wednesday, October 25, 2006


There are only a handful of products that Americans import that  
cannot be produced at home and therefore create jobs for Americans.  
Let's look at a few of them.

We import cocoa from Ghana and coffee from African and Latin American  
countries. We import saffron from Spain and India and cinnamon from  
Sri Lanka. In fact, India produces 86 percent of the world tonnage of  
spices. There's absolutely no reason these products cannot be  
produced by Americans, and we could be cocoa, coffee and spices  
independent.

You say, "Williams, that's crazy! We don't have the climate and soil  
conditions to produce those products. Many spices, for example,  
require a moist tropical environment." No problem. We have the  
technology whereby we can simulate both the soil and weather  
conditions. We could build greenhouses in which to grow cinnamon  
trees and get our scientists to create the same soil conditions that  
exist in Sri Lanka. Greenhouses could also be built to simulate the  
climate conditions in Africa and Latin America to grow cocoa and  
coffee. In the case of cocoa, the greenhouses would have to be  
Superdome size to accommodate trees as high as 50 feet.

You say, "Williams, that's still crazy! Imagine the high costs and  
the higher product prices of your crazy scheme." I say, "Aha, you're  
getting the picture."

There are several nearly self-evident factors about our being cocoa,  
coffee and spices independent. Without a doubt, there would be job  
creation in our cocoa, coffee and spices industries, but consumers  
would pay a much higher price than they currently do. Therefore,  
nearly 300 million American consumers would be worse off, having to  
pay those higher prices or doing without, but those with the new jobs  
would be better off.

So let's be honest with ourselves. Why do we choose to import cocoa,  
coffee and spices rather than produce them ourselves? The answer is  
that it is cheaper to do so. That means we enjoy a higher standard of  
living than if we tried to produce them ourselves. If we can enjoy,  
say, coffee, at a cheaper price than producing it ourselves, we have  
more money left over to buy other goods. That principle not only  
applies to cocoa, coffee and spices. It's a general principle: If a  
good can be purchased more cheaply abroad, we enjoy a higher standard  
of living by trading than we would by producing it ourselves.

No one denies that international trade has unpleasant consequences  
for some workers. They have to find other jobs that might not pay as  
much, but should we protect those jobs through trade restrictions?  
The Washington-based Institute for International Economics has  
assembled data that might help with the answer. Tariffs and quotas on  
imported sugar saved 2,261 jobs during the 1990s. As a result of  
those restrictions, the average household pays $21 more per year for  
sugar. The total cost, nationally, sums to $826,000 for each job  
saved. Trade restrictions on luggage saved 226 jobs and cost  
consumers $1.2 million in higher prices for each job saved.  
Restrictions on apparel and textiles saved 168,786 jobs at a cost of  
nearly $200,000 for each job saved.

You might wonder how it is possible for, say, the sugar industry to  
rip off consumers. After all, consumers are far more numerous than  
sugar workers and sugar bosses. It's easy. A lot is at stake for  
those in the sugar industry, workers and bosses. They dedicate huge  
resources to pressure Congress into enacting trade restrictions. But  
how many of us consumers will devote the same resources to unseat a  
congressman who voted for sugar restrictions that forced us to pay  
$21 more for the sugar our family uses? It's the problem of visible  
beneficiaries of trade restrictions, sugar workers and bosses,  
gaining at the expense of invisible victims -- sugar consumers. We  
might think of it as congressional price-gouging.