Literally
- The Economic Food Chain
There is a food
chain in the economics of purchasing patterns of consumers
just as there is a food chain from plankton to the
fish that feed on plankton to the predator fish that
eat the plankton eating fish.
As each day brings
another drumbeat of this United States march toward
recession, one of the latest bangs of the drum has
been about retail chains, which sell everything from
sheets to jewelry, shuttering large numbers of stores
across the nation as a reverberation of the rising
cost of one of the most basic needs in life for all
human beings… the cost of food. Here food would
be the plankton and the less plankton there is sends
shock waves right up the food chain to the jewelry
eating predator rich fish. If you do not think the
‘jewelry’ fish are affected, just ask
yourselves what happens to the price of the stock
of Apple when they sell less IPod’s. ‘Jewelry’
fish own stock – lots of it.
A recent article
posted on the website of The New York Times sums up
the collateral damage of an eco-policy decision gone
awry. This article was about the retail chain stores
of all types that were closing branches, about more
employees losing their jobs and another step towards
a slower economy and poorer people.
As the price of
oil has skyrocketed and concerns about carbon based
global warming have become a hot button issue, central
planning by the government eliminated the use of MBTE’s
(methyl tertiary-butyl ether) and mandated a massive
move into ethanol production by using governmental
production subsidies as the carrot hanging from the
stick as the supply side incentive.
Dropping MBTE’s
was a good move as it became apparent that this nasty
chemical compound would find its way into the water
system after being burned by cars, released into the
atmosphere and returned to our soil via the rain.
One of the great natural resources this country has
is our clean and available water. MBTE usage was slowly
poisoning this resource so you have to chalk one up
for the eco-warriors here. Well done.
Where the eco-warriors
went too far was the bold step into the mandating
of massive ethanol usage without fully understanding
the way that, in economics, everything is connected
to everything else. In trying to save our water supply
from MBTE usage we are now jeopardizing that same
water supply with the production of ethanol while
furthermore stuffing food into our gas tanks and raising
the price of food.
An ethanol plant
that produces 50 million gallons of ethanol a year
requires 500 gallons of water per minute. Assuming
that these plants are kept running continuously for
a year, the water usage to produce 50 million gallons
of ethanol a year is 262.8 million gallons of water,
which is over 5 gallons of water used for every gallon
of ethanol produced. Of course a lot of this water
is reused, but that’s still a lot of water which
is one very important type of life sustaining plankton.
Getting back to
how retail stores get shut down as a result of food
all one has to consider is the discretionary income
a family has after buying food. The rise in the price
of food, as a result of the rise in the price of corn,
as a result of corn being stuffed into our gas tanks
leaves the common family with less money to buy sheets,
clothing, furniture, sporting equipment, vacations,
etc… The retail stores close as a result of
lower demand and those working there get laid off.
These new people without a job now have to conserve
money in order to buy our more expensive food and
spend less and another store may close. This is the
retail downward spiral that can slowly grind a national
economy to a halt.
I am not saying
that all our current problems are a result of jamming
our nations most widely produced foodstuff, corn,
into our gas tanks. What I am saying is that this
skyrocketing in the price of all our basic grains
and food stocks has contributed greatly to the slowdown
in consumer spending across the board. The smaller
more immediate move up the food chain of corn is that
we feed it to cows to produce beef, chickens for eggs
and Buffalo Wings and pigs for tasty spare ribs. This
jacking up of the cost of food slows the demand for
items such as a Cisco home wireless router or an IPod,
which then impacts those company’s bottom lines.
The massive push
in ethanol production and use, and even worse the
use of E85, to power our automobiles has been a major
mistake. This policy decision may even go down as
one of the most short-sighted responses to any problem
ever dictated by central planning in history.
Just think about
it – first you need food and water and then
a place to sleep and be safe. After that you need
gas/fuel to get to work, etc… Trying to solve
a problem of not enough fish eating fish by using
up all the plankton only to decrease the fish that
the predatory fish feed on thereby destroying the
ecology that produced the food in the first place
for the predatory fish has to be one of the dumbest
ideas ever. So – you just tried to increase
the number of predatory fish and ended up crippling
the very eco structure that produces them in the first
place.
It is all an eco-economy
ladies and gentlemen. This is but one example of a
decision, pushed by politics, eco-warriors and other
players into creating a Frankenstein Monster which
if left unchecked will become even worse than the
original problem.
Maybe the next
time some knee jerk reaction to a problem, that sounds
all cozy and perfect, is put into action – someone
will actually think ahead as to what the ramifications
would/could actually be.
Personally, I
find the taste of a juicy steak, an ear of corn and
a glass of water favorable to drinking ethanol when
I have to fill my stomach. I don’t need ethanol
to live but I do need to eat.
