Friday, May 6, 2011

Herman Cain's Energy Insecurity

Herman Cain highlighted last night one of the more infuriating misconceptions during this presidential race. If you watched the group survey after the debate you heard a lot of "Herman Cain is a business man and we need a business man in the White House." But knowing business does not necessarily translate into knowing economics. Knowing management and marketing strategies is not the same as knowing good macroeconomic policy.

This was especially apparent when Cain brought out the tired old trope of energy independence. Every President since Nixon has promised this, yet we have decided to import more oil, not less. There are a lot of bad reasons to try and achieve energy independence. You can here from Robert Bryce on the subject here or here.

But there is another reason that is underscored by our current problems with sugar. According to the Wall Street Journal in "Sugar Squeeze in US":

A potential drop in home-grown sugar coupled with government caps on imports of the sweetener could drive up prices, just before the peak Christmas season.
A harsh winter has caused headaches for U.S. sugar-cane and sugar-beet farmers. Record cold last December damaged sugar cane in Florida, taking about 260,000 short tons of raw sugar out of production, according to the U.S. Department of Agriculture

The US has a horrible protectionist system for sugar, what you may call "Sweet Tooth Independence," which has not only resulted in us paying higher prices for sugar and sugar byproducts as well as having the unintended consequence of the creation and upsurge in use of high fructose corn syrup, it has made us less "Sweet Tooth Secure."

If our energy policy looked like our sugar policy then a large scale disaster or attack on our domestic supplies coupled with the legal inability to trade in energy could put us in quite the energy bind. Plummeting supplies would bring about skyrocketing prices without imports to offset the reduction. We're better off with a highly decentralized supply of energy where we produce some and import the rest from (in order) Canada, Mexico, Saudi Arabia, Venezuela, Nigeria, Angola, Iraq, Algeria, United Kingdom, and Brazil. (That's just the top 10. You can't attack them all at once and I'm pretty sure nobody wants to attack Canada anyway.)

So before you vote for somebody because their a "businessman," listen to what their saying.

No comments:

Post a Comment