Allan C. Brownfeld

Allan C. Brownfeld is a syndicated columnist and associate editor of the Lincoln Review, a journal published by the Lincoln Institute of Research and Education, and editor of Issues, the quarterly journal of the American Council for Judaism.

Subsidizing Ethanol: The Unintended Consequences of Interfering with the Market

In 2005, the Republican-led Congress and President Bush backed a bill that required widespread ethanol use in motor fuels. This year, the Democratic-led Congress passed, and President Bush signed, energy legislation that boosted the mandate for minimum corn-based ethanol use to 15 billion gallons, about 10 percent of motor fuel, by 2015. This was strongly supported by farm-state lawmakers and those worried about energy security and eager to substitute a home-grown energy source for a portion of U.S. petroleum imports. To help this process, motor-fuel blenders receive a 51 percent subsidy for every gallon of corn-based ethanol used through the end of 2010; this year production could reach 8 billion gallons.

Now, however, we observe what can be called the unintended consequences of politically interfering with the marketplace. With food riots erupting in many parts of the world, with a weak dollar, high-energy costs, low crop yields in places such as Australia -- the subsidization of ethanol by diverting food to fuel has clearly contributed to and exacerbated the situation.

"The price of grain is now directly tied to the price of oil," says Lester Brown, president of Earth Policy Institute, a Washington research group. "We used to have a grain economy and a fuel economy. But now they're beginning to fuse."

Those who use corn to feed cattle, hogs, and chickens are being squeezed by high corn prices. In April, Tyson foods reported its first loss in six quarters and said that its corn and soybean costs would increase by $600 million this year. Egg producers are passing high corn prices on to consumers. The wholesale price of eggs in the first quarter soared 40 percent from a year earlier, according to the Agriculture Department. The retail prices of many food items, from cereal to salad dressing, are moving upward because of more expensive ingredients such as corn syrup and cornstarch.

The problem with subsidizing the production of ethanol is multi-dimensional, leading not only to increased food costs but also to increased energy costs. Economist Walter Williams declares that:

Ethanol contains water that distillation cannot remove. As such, it can cause major damage to automobile engines not specifically designed to burn ethanol. The water content of ethanol also risks pipeline corrosion and thus it must be shipped by truck, rail car, or barge. These are far more expensive than pipelines. Ethanol is 20 to 30 percent less efficient than gasoline, making it more expensive per highway mile. It takes 450 pounds of corn to produce the ethanol to fill one SUV tank. That's enough to feed one person a year. Plus -- it takes more than one gallon of fossil fuel -- to produce one gallon of ethanol. After all, corn must be grown, fertilized, harvested, and trucked to ethanol producers -- all of which are fuel-using activities.

In Williams' view:

Ethanol is costly and it wouldn't make it in a free market. That's why Congress has enacted major ethanol subsidies . . . which is no less than a tax on consumers. In fact, there's a double tax -- one in ethanol subsidies and another in handouts to corn farmers to the tune of $9.5 billion in 2005 alone.

A quarter of American corn is now turned into ethanol, and that is set to rise. Last year the federal government mandated that ethanol production grow five-fold by 2022. Ed Feulner, president of the Heritage Foundation, points out that:

The food crisis should surprise no one. When 25 percent of a staple crop is taken off the table, shortages result. . . . Unfortunately, the cornfield isn't the only place where federal policy causes troubles. Our country is also seeing a shortage of wheat -- partly because many wheat farmers have switched to corn, and partly because Washington pays them whether they grow wheat or not. . . . Corn is the answer to our food problems, not our fuel problems.

Last year, two economics professors predicted the current food shortage. C. Ford Range and Benjamin Senauer wrote in Foreign Affairs:

By putting pressure on global supplies of edible crops, the surge in ethanol production will translate into higher prices for both processed and staple foods around the world. Biofuels have tied oil and food prices together in ways that could profoundly upset the relationships between food producers, consumers, and nations in the years ahead, with potentially devastating implications for both global poverty and food security.

There are also negative potential implications for the environment involved with government subsidization of ethanol. Dr. William Laurance, a scientist with the Smithsonian Tropical Research Institute, reports that "Biofuel from corn doesn't seem very beneficial when you consider its full environmental costs." He notes that the $11 billion a year American taxpayers spend to subsidize corn producers "is having some surprising global consequences." That included Amazon forests being clear cut so farmers can plant soybeans.

Scientists are showing that ethanol will exacerbate greenhouse gas emissions. A February report in the journal Science found that "corn-based ethanol, instead of producing a savings, nearly doubles greenhouse emissions over 30 years. . . . Biofuels from switchgrass, if grown on U.S. corn lands, increase emissions by 50 percent." Princeton's Timothy Searchinger and colleagues at Iowa State University find that markets for biofuel encourages farmers to level forests and convert wilderness into cropland.

Editorially, the Wall Street Journal declares that:

Congress' ethanol subsidies are merely force-feeding an industry that is doing more harm than good. The results included distorted investment decisions, higher carbon emissions, higher food prices for Americans, and an emerging humanitarian crisis in the developing world. The last thing the poor of Africa and the taxpayers of America need is another scheme to conjure gasoline out of corn and tax credits.

The state of Texas is now in official opposition to the federal ethanol mandate. Governor Rick Perry has petitioned the Environmental Protection Agency for a one-year reprieve. Because of the federal mandate to add ethanol to gasoline, Texas ranchers are being forced into bidding wars with ethanol plants for the grains they feed their cattle. Governor Perry calculates that the mandate for ethanol may push the price of corn to $8 a bushel (it's at $6 now, up from $2 in 2004), and could cost the Texas economy nearly $3.6 billion this year.

In May, Senator Kay Bailey Hutchison (R-TX) called for a freeze on ethanol mandates and quickly got the support of two dozen of her Republican Senate colleagues, among them Senator John McCain -- who has traditionally opposed ethanol subsidies. Needless to say, farm state senators -- of both parties -- led by Senators Charles Grassley (R-Iowa) and Tim Johnson (D-SD) are defending ethanol as representing a small fraction in the rise of food prices. Senator Hillary Clinton (D-NY) has opposed ethanol subsidies in the past, but embraced them prior to the Iowa caucuses. Senator Barrack Obama (D-IL) proposed mandating a staggering 65 billion gallons a year of ethanol. His energy plan calls for "expanding federal tax credit programs" for ethanol and proposes "an additional subsidy per gallon of ethanol" for locally-funded ethanol plants. By mid-May, as the facts of ethanol's real impact upon the economy and food supply became increasingly clear, Obama suggested that perhaps helping "people get something to eat" was a higher priority than biofuels.

Finally some lawmakers are moving to suspend the law mandating the growth of ethanol production. Neither economically nor morally can we afford to subsidize the burning of so much corn while people go hungry. Did anyone who produced the ethanol subsidy not think ahead -- and foresee that farmers would plant a lot of new corn on acres where they once grew other food crops such as soybeans, and that they would sell all of the new corn to ethanol distilleries? The result, which should have been anticipated but was not, is that there are fewer acres devoted to food crops, and there is less corn available for feeding livestock at a time when worldwide demand for meat and milk is rising. Lower supply plus greater demand, they seem to have ignored, equals higher prices.

Congress -- both Republicans and Democrats -- has created an artificial demand for ethanol to satisfy the farm lobby -- and business interests such as Archer Daniels Midland (ADM), the country's largest producer of ethanol. Soaring food prices have sent farmers' incomes to record heights, yet Congress lavished additional welfare upon them by passing a new, five year $280 billion farm bill.

"When millions of people are going hungry," Palaniappan Chidambaram, India's finance minister declared, "it's a crime against humanity that food should be diverted to biofuels."

An Examination of the Long Tradition of Conservative Thought in the Black Community

Though black conservatives are becoming the prominent voices within African American politics and culture, few realize that the black conservative tradition predates the Civil War and is an intellectual movement with deep historical roots.

In an important new book, Saviors or Sellouts (Beacon Press), Professor Christopher Alan Bracey, who teaches law and African and African American Studies at Washington University in St. Louis, traces the evolution of black conservative thought from its origins in antebellum Christian evangelism and entrepreneurialism to its contemporary expression in policy debates over affirmative action, law enforcement practices, and the corrosive effects of urban black artistic and cultural expression.

Dr. Bracey, no conservative himself, but a fair-minded scholar, examines black neoconservatives such as Shelby Steele and John McWhorter and reveals the philosophies of prominent political conservatives such as Clarence Thomas, Colin Powell, and Condoleezza Rice, as well as intellectuals such as Thomas Sowell, Anne Wortham, and Walter Williams. He has a revealing chapter on the infotainment effect of Bill Cosby, Chris Rock and a number of bloggers.

"Black conservatives are quickly becoming the most visible and prominent voices within African American politics, culture and society," writes Bracey.

The rising tide of black conservatism will invariably shape policy that will define the social, political, and economic future of African Americans as well as other socially disfavored groups. . . . I believe it vital that we all understand and appreciate the historic role of black conservatism in promoting racial empowerment in this country and give this tradition its proper respect.

The most prominent writings on American race relations in recent years, in Bracey's view, are by self-proclaimed black conservatives. Among them are: John McWhorter's Losing the Race: Self-Sabotage in Black America; Shelby Steele's The Content of Our Character: A New Vision of Race in America and White Guilt: How Blacks and Whites Together Destroyed the Promise of the Civil Rights Era; and Thomas Sowell's Black Rednecks and White Liberals. Beyond this, notes Bracey:

Even comedian Bill Cosby seems to have embraced conservatism with newfound fervor, offering a scathing critique of African American cultural practices that he deems destructive to the black community. Enter the blogosphere, and one finds a small but vibrant and growing community of black conservatives eager to present and exchange ideas on conservative strategies for racial empowerment. . . . For an increasing number of African Americans, conservatism has become a credible, compelling alternative to traditional liberal modes of political, cultural and economic empowerment.

Those who say that black conservatism is a fringe and inauthentic voice of the African American community, Bracey argues, ignore the real historical context:

This prevailing view . . . obscures the important, and often overlooked legacy of black conservatives that has existed since the Founding of the Republic. Indeed, from the Founding until the early 20th century -- nearly 150 years -- conservatism was the dominant mode of black political engagement with white society. Black conservatism, like any other intellectual movement, is perhaps best understood as a shifting, organic mood or consciousness developed over time by African Americans in response to specific lived conditions. . . . Black conservatism has proved remarkably durable and consistent over the years, and modern black conservatism ought to be viewed as part of the important black political tradition.

The touchstone of black conservative discourse, Bracey points out, has been the African American Protestant ethic -- a kind of middle-class morality. The foundation for success, in this view, are respectability, proper deportment, and a serious commitment to a healthy and productive lifestyle. In the colonial days, Richard Allen, whose leadership rested upon his role as pastor and status as a successful businessman, repeatedly told his congregation that hard work and "middle class propriety" was vital to free blacks, and that blacks were morally and spiritually obliged to make good use of the privileges of freedom.

"Perhaps the earliest example," writes Bracey:

. . . is David Walker's 1829 APPEAL, in which he recounts the various forms of white and black "wretchedness." Recent works of Shelby Steele, Thomas Sowell, and comments by comedian Bill Cosby express similar sentiments. What each of these exponents of the genre share is a twofold conviction that problems and obstacles faced by blacks can be best mitigated or resolved by blacks themselves, and that white racism is just an irritant that lacks the determinant power to define African Americans individually or collectively.

The Rev. Jupiter Hammon developed and advanced the precepts of black conservatism a full century before the best-known proponent of this philosophy, Booker T. Washington. Hammon, a slave his entire life, was born in 1711 and lived and died at Lloyd Manor House, an estate located in Oyster Bay, a small Long Island cove. Slaves owned by Long Island members of the Anglican Church were schooled by a handful of British missionaries. Hammon was the first published African American writer. Beginning in 1760, Hammon published four poems, two essays and one sermon that addressed the full range of sociopolitical questions facing African Americans.

According to Hammon, free blacks bore the responsibility to uphold moral standards and remain industrious in order to dispel prevailing notions about the natural inferiority of blacks and the concomitant inability to manage their personal affairs. For Hammon, living an ethical and productive life was the surest path to exposing the hypocrisy of white America's disrespect for blacks and failure to live up to its own ethical and religious ideals. "In Hammon," notes Bracey:

. . . and in much of black conservatism, one finds a preference for a slow, organic, and moralistic program of black improvement premised upon cooperation rather than confrontation and conflicts with whites.

In a direct response to the suggestion to colonize Africa offered by William Thornton on behalf of the American Colonization Society, Richard Allen openly declared his patriotism and desire to pursue racial empowerment on American soil:

. . . however unjustly her (Africa's) sons have been made to bleed, and her daughters to drink of the cup of affliction, still we who have been born and nurtured on this soil, we, whose habits, manners and customs are the same in common with other Americans, we can never consent to take our lives in our hands, and be the bearers of the redress offered by that Society to that much afflicted country.

In 1795, Allen opened a day school for 60 children, and in 1804 founded the "Society of Free People of Colour for Promoting the Instruction and School Education of Children of African Descent." By 1811 there were no fewer than 11 black schools in the city of Philadelphia.

Later, writes Bracey:

. . . a new and distinct form of black conservatism -- one grounded in the "southern way of life" -- emerged and eventually supplanted its northern counterpart as the dominant political philosophy in African American life in the early 20th century. The leading exponent of this new southern black conservatism was Booker T. Washington. Born a slave in Hale's Ford, Virginia, Washington worked in salt furnaces and coal mines as a child to help support his family after emancipation. At age 16 Washington left home and began formal schooling at the Hampton Institute in Virginia, where he supported himself by working as the school janitor. As a child of Reconstruction, Washington was imbued with a deep skepticism of political and legal rights. . . . After 1877, it became increasingly clear to black southerners that the bestowal of rights was far more limited and, indeed, mutable, than liberal proponents cared to admit. The gap between northern idealism and southern reality grew, with the erosion of newly acquired rights and the rise of racial terror and violence toward blacks.

For Washington, economic advancement seemed to be surer, less reversible means for blacks to progress. He saw progress for blacks taking place within southern black institutions, which by definition were less reliant upon the favor of whites. By the time of his death, Washington left behind a network of institutions that preserved his views on racial advancement. Of particular note were the Tuskegee Institute and the National Negro Business League. The Tuskegee Institute embodied Washington's pragmatic, anti-utopian philosophy of self-help, education, morality, entrepreneurship, and hard work. The National Negro Business League, founded in 1910, served as a coordination center for his vast network of confidants, political operatives and business leaders to spread black conservatism in both the North and South. With the blessings of leading conservative, white philanthropists such as John D. Rockefeller, Collis Pin Huntington, and Julius Rosenwald, Washington expanded his web of influence and power with the creation of the National Teachers Association, the National Negro Press Association, Negro Farmers Association, and the Negro Organization Society. The last organization, which he founded in 1913, epitomized Washington's commitment to self-help. Its motto was, "Better homes, better schools, better health, and better farms."

While many historians contend that Washingtonian black conservatism faded with his death in 1915, Bracey shows that though the focus of black political thought shifts from the accommodationism of Washington to the NAACP in the North and the rise of the civil rights movement, "the prevailing narrative fails to account for the extended legacy of black conservatism."

Bracey reports that black conservatives were skeptical, during the years of the Harlem Renaissance, of the argument that art produced by Negroes was racially distinctive in any meaningful sense. Her writes:

This argument was put most forcefully by conservative George S. Schuyler, a man who became the dominant voice of black conservatism in the middle of the 20th century.

In an article titled "The Negro Art Hokum," Schuyler argued that the category of Negro art was, at bottom an act of self-deception. According to Schuyler, there is nothing "expressive of the Negro soul" in the work of black artists whose way of life was not so different from that of other Americans. Schuyler argued:

He is not living in a different world as some whites, and few Negroes would have us believe. When the jangling of his Connecticut alarm clock gets him out of his Grand Rapids bed to a breakfast similar to that eaten by his white brother across the street . . . it is sheer nonsense to talk about "racial differences" between the American black and the American white man.

In Bracey's view:

The conservative cultural critique of the Harlem Renaissance in some ways foreshadowed modern conservative criticism of gangsta rap and other forms of urban artistic and cultural expression. . . . John McWhorter, a conservative black social critic, notes that "rap's core message seems to encourage a young black man to nurture a sense of himself as an embattled alien in his own land. It is difficult to see how this can lead to anything but dissention and anomie.". . . Juan Williams' observation that "behind the thumping beat is a message that building a family, a community, and political coalitions are all bad bets" and that rap also projects the idea that "parents nurturing children and believing in education as a long-term investment is also for suckers" reveals a normative commitment to racial empowerment that is strongly rooted in black conservative values -- values championed by traditional black conservatives nearly a century ago . . .

Bracey discusses a host of prominent black conservatives in American politics in recent years -- Clarence Thomas, Condoleezza Rice, Colin Powell, and Edward Brooke, among others. When he was the only black in the U.S. Senate, Senator Brooke (R-MA) maintained that racial empowerment could be brought about only when blacks developed the skills necessary to compete effectively with whites. "Unless a program is specifically designed to encourage outcasts to engage in individual competition," argued Brooke, "it cannot be successful." He also chastised liberals for ignoring the importance of individual self-development and focusing instead on group-based relief.

Discussing the post-civil rights era black conservatives, Bracey declares that they:

. . . retained the inward focus of early black conservative thought, directing much of their energy to the tasks of self-critique of the black community. In contrast to the liberal focus on external causes of black disempowerment, black conservatives of this era preferred to identify areas within the black community that could be strengthened spiritually morally, and/or culturally. . . . Black conservatives of this era genuinely believed that progress would only come about when blacks learned to do for themselves.

Professor Bracey is not a conservative, but the reader gets the feeling that as he pursued his subject he became increasingly positive in his assessment of the role black conservatism has played in history. He concluded that:

The longevity of black conservative thought and the increasing prominence of modern black conservatives in the American public sphere are indicative of the attractiveness of modern black conservatism. . . . First and foremost, black conservatism vindicates the deeply-held desire of blacks to view themselves as architects of their own destiny. . . . Many blacks today are weary of being viewed as victims and the perennial object of liberal charity. White liberals and the civil rights establishment remain deeply invested in the idea that blacks continue to suffer under the weight of racial oppression. Many blacks are increasingly turned off by this image of black society. . . . Liberals can no longer afford to dismiss modern black conservatism as marginal or inconsequential to public conversation on racial issues. . . . It is imperative to move beyond ideological wrangling and acknowledge that both liberals and conservatives possess a rich arsenal of ideas for racial empowerment. *

"Nothing is more terrible than ignorance in action." --Goethe

We would like to thank the following people for their generous support of this journal (from 5/7/08 to 7/10/08): William D. Andrews, Lee R. Ashmun, A. D. Baggerley, D. J. Cahill, Edward J. Cain, James R. Gaines, John Geismar, John H. Hearding, Norman G. P. Helgeson, Thomas E. Humphreys, E. J. Jacobson, Ralph Kramer, James A. Lee, Paul W. McCracken, Thomas J. McGreevy, Delbert H. Meyer, Clark Palmer, Samuel R. Putnam, David Renkert, Irene L. Schultz, Richard H. Segan, David L. Smith, Carol C. Weimann, John V. Westberg, Robert C. Whitten.