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Do our good times depend on China, or US green stubbornness?

  • July 9th, 2014

NBR reports an academic lashing out at our Trade Minister for failing to agree that the sky is falling in China. Two things incline me to sympathise with Tim Groser, over the professor;

First sign – the professor's pique that the Minister "sat there in front of me, looking at his watch and checking his cell phone. It was really quite rude I thought"  Diddums. Ministers must multi-task. Tim Groser would assuredly have heard the arguments before. But even if the Minister agreed, what did the Prof expect him to do?

The address might have been more valuable if the Prof had explained how a Trade Minister in a free economy stops trade from heading where the best returns are, even if everyone agrees there is concentrated country risk. Does the Professor expect the Minister to order some or all exporters to refuse to satisfy some Chinese customers and divert the product to buyers offering materially less? Perhaps the Chinese can steer their business people like that, but not free country governments.

Perhaps this is unfair on both – perhaps the Professor offered valuable but unreported suggestions for distorting our trade away from the current best buyers. If so, we should be debating some other dirigiste policies, including central planning to deal with a premature end to the dairy and beef bonanzas. To me that seems equally problematic and at least as likely as a collapse in Chinese demand.

Burning food for fuel is poor policy, but our beef and dairy prices probably depend on it. Forty percent of the US corn crop goes into bio-fuels. If that corn were released back for human and animal food, our dairy and beef prices would surely tumble.

Our Green Party voted for bio-fuel quotas while I was in Parliament. They knew when they did it that it would increase food prices and cause some humans to starve. But of course all worship demands sacrifice. And Gaia does not mind the sacrifice of wicked humans, so her servants the Green Party can be indifferent to real effects. The religious intent is what matters.

Similar green pressure in the US for mandatory 'renewable' biofuel quotas has diverted that vast country from growing food. Largely due to bio-fuel requirements US grain prices rose 140 percent between January 2002 and February 2008, Globally, biofuel production doubled from 2006 to 2011 though the 247 million acres of land used around the world for bio-fuels still produced less than one-half of one percent of the world's energy

Growing food to burn for fuel produces 0.3 watts per square meter.
For comparison, solar panels have a density of 6 watts per square meter. To fuel all US transport with corn-based ethanol would need 37 percent of the continental United States (not just their arable land). Soy biodiesel is even worse, requiring a third more than the size of the United States.
The environmental problems with biofuels go further. Ethanol in fuel increases combustion pollutants.

But New Zealand is living in the silver lining of this disastrous policy. We in New Zealand may selfishly hope that the US greens do not come to their senses. We should be grateful even if we deplore the economics, the science and the morality of biofuel quotas driven by their anti-enlightenment religion.


Source: Robert Bryce, "Biofuels Are a Bad Idea,"


  • les
  • August 4th, 2014
  • 11:50 am

where are these ‘free economies’ and how are they defined?Thanks in advance.

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