Category Archives: Economics

Cause and effect

I haven’t been too impressed with ethanol fuels for a while. My concern back then was “that if governments make emotional knee-jerk reactions, the cure may be as bad as the disease it is designed to alleviate.”

In that context, the current food crisis is a salutory reminder of the nature of cause and effect.  Food riots have occurred in Egypt and Haiti and other countries, and the World Bank has warned the increased cost of food will push 100 million impoverished people deeper into poverty.

As this Washington Post article makes clear, the causes of the crisis are many, including the Australian drought, high oil prices and world economic trade barriers which obscured the rising food prices, preventing the market from making gradual adjustments.

However, another cause is the move in the US to plant crops for biofuels. Apparently one-fifth to one-quarter of the US corn crop will go to the production of ethanol for biofuel, which has contributed to the rise in global corn prices. And one must question how efficient biofuel is, according to these statistics stated in a New York Sun article

“It takes around 400 pounds of corn to make 25 gallons of ethanol,” Mr. Senauer, also an applied economics professor at Minnesota, said. “It’s not going to be a very good diet but that’s roughly enough to keep an adult person alive for a year.”

Some environmental and charity groups have now turned against biofuels as a result of the current crisis. It just proves that there’s no easy solution, and that proper and considered thought needs to be put into alternative fuel sources. This is why I hate scaremongering; it leads to irrational responses where the outcomes can be disasterous. Hopefully this will cause some thought about other options instead of biofuel.

But more than that, I hope that people will not starve as a result of the heightened food prices.

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Filed under climate change, Economics, environment, ethanol fuel, food, politics, society, USA

Illiberalism

I was very surprised to read that US Judge Richard Posner advocates secret trials for terrorists. Obviously, attendees at the Australian Bar Association were surprised too. I don’t agree with Posner’s view: it is vital that trials take place in public, with due process. I had always thought Posner was a libertarian at heart. He is, of course, the doyen of the Law and Economics field.

As I have said before, I once briefly dated a guy who was a libertarian with a law and economics bent. As I argued back then, the problem I have with law and economics is that it presumes people are rational and will act in ways which are self-interested. I think human beings are much more complicated than that. We don’t always behave in rational ways. If we did, society would be much easier to fix, but life would be much more boring.

Funnily enough, that guy later got into New Age stuff…thus proving my point. I believe he does work with crystals (or something like that) these days. On the odd occasions I see him (about once a year), I’m tempted to question him on how he reconciles his ultra-rational past with his ultra-irrational present, but in the end, meh, live and let live.

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Filed under Economics, judges, law, terrorism, USA