Thursday, March 01, 2007

An economics lecture from El Presidente

In the listing of symbolic milestones in the collapse of American conservatism, add this one to the list: Fidel Castro showing a better command of neoclassical economics than the supposed free market conservatives at National Review. Mario Loyola thinks he is mocking Hugo Chavez and Fidel by discussing a section of a transcript of one of their recent phone conversations, where the topic turned to ethanol, which Fidel and Hugo decided to bash. First off from Loyola --

Correct me if I'm wrong, but don't all Americans who love Castro and Chavez also love ethanol...?

Well he's wrong. Even the Castro and Hugo lovers, whoever they are, probably know that there's a large amount of policy stupidity attached to ethanol, a fuel source that is only viable in the US with massive government subsidies, and a fuel source that requires considerable energy to produce. But then Fidel goes on to explain what the fundamental problem is --

also reveals how confused Castro is ....

Castro: Well, and of course, the idea of using food to produce fuel is a tragic one; it is dramatic, no one can be sure how high food prices will get when the soy is turned into fuel, especially because it is needed in the world, to produce eggs, to produce milk, to produce meat, and it is another tragedy, in addition to the many tragedies existing in the world today. I am glad that you have decided to stand up for the species, because it is hard to fight for the salvation of the species, because there are new and tough problems, and you have turned into a preacher, a real great preacher, a defender of the cause, even a defender of the life of the species. For that, I congratulate you.

[Loyola] I don't know much about the environment, but I do know one thing: What most countries need in order to produce sufficient quantities of eggs, milk, and meat, is not more soybeans, but rather a president who is as different from Fidel Castro as humanly possible.

But Castro is completely right. If more crops are switched into fuel production, than the price of foodstuffs has to rise. He's even right on the soybeans, because soybeans are used for cattle and chicken food and thus are part of the chain of production for milk, meat, and eggs; less land allocated to soybeans or more soybeans allocated to fuel production = lower supply of animal feed. Facts of economics that would be true whether or not Fidel was President.

Would Loyola prefer it if Fidel had phrased the argument like this? --

The problem is we got a lot of hog growers around the United States and a lot of them here in North Carolina who are beginning to feel the pinch as a result of high corn prices. A lot of the cattle people around the United States -- I have got a few of them in my home state of Texas -- they're worried about high corn prices affecting their making a livelihood. In other words, the demand for corn, because of agricultural use, and now energy use, is causing corn prices to go up. I bet you the Agriculture Commissioner is hearing from folks.

And so how do -- the question then is, how do you achieve your goal of less dependence on oil without breaking your farmers -- without breaking your hog raisers -- corn farmers happen to like it, but I'm talking about the -- (laughter) -- people dependent on corn.

Presumably he would, those being the words of the Environmental Messiah, George W. Bush.

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