Thursday, July 16, 2009

Capitalism Beats Alarmists Again

Remember when alarmists told us that biofuels made from corn would drastically increase the price of that basic staple?

The best measure for whether or not that has held true is to go down to WalMart and see for yourself. Look at the price of an ear of corn. Earlier this year it was something akin to forty or fifty cents per ear. That's not really too bad and the early prices for fresh corn are usually higher.

This week I bought some ears for twenty cents a piece. That seems about right for this time of year and it should keep dropping as we move into harvest season. Now I thought that we were supposed to have a worldwide disaster because of the switching of production to biofuels. Of course people around here know that a lot of land lies fallow. If you increase the price for corn, you will see people increasing production. Is that what happened here?

Perhaps. Perhaps not. The bottom line is that capitalism has provided corn for fuel as well as corn for food without raising prices in the long run. Most alarmists base their predictions on models that do not take into account rises in production. The media will usually report the alarmists' point of view because it makes for more interesting copy. In the boring old real world, as long as we keep it, capitalism will provide food and fuel as efficiently as possible.

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