Diogenes
Nemo me impune lacessit
Here's something that's pretty close to an iron law of politics: When the economy is bad, voters get mad at politicians. And when the economy is good ... well, we get slightly less mad at politicians.
Which might sound uncharitable, but in America "slightly less mad" is as good as it gets. After all, we used to tar and feather the tax collectors.
Now, this seems like a pretty tidy system. If politicians know that voters will reward them when the economy is doing well and punish them when it’s doing badly, well, that’s just called accountability.
But, in some cases, that accountability breaks down. Because it turns out that there are lots of instances where politicians are directly responsible for increasing our cost of living — and yet most of us never know about it.
And it’s not some grand conspiracy. It’s just old-fashioned politics … that tends to fly under the radar.
One example of this is food.
In the mid-2000s, Congress attempted to wean America off of fossil fuels by passing a law requiring that “biofuels” like ethanol be mixed into our gasoline.ii
What does that have to do with food? Well, here’s the thing: Most ethanol comes from corn.iii
The result: by 2023, about 37 percent of all the corn grown in the United States was used for ethanol — which, by increasing demand, drives up corn prices for everyone who … y’know, eats it.
Now, you might think “So, we get better, cleaner fuel and pay a little bit more for corn. How big a deal can this really be?” And the answer to that question is … pretty big. Here’s why.
For one thing, ethanol actually doesn’t work that well as a fuel source. It gets you about 30 percent less energy than gasoline and generates carbon emissions estimated to be at least 24 percent higher than gasoline.
And for another … the impact on prices is probably way bigger than you’d think. Because while Americans only eat about 10 percent of the corn we grow, we use nearly four times as much for animal feed — which means things like eggs, dairy, and meat also become more expensive.
What does that look like in practice? Well, as the proportion of our corn going to ethanol went like this, the cost of corn went like this:
Now, there’s an obvious question here: If this was bad for the environment, bad for consumers, and bad for the world’s poor … how did it happen? And the answer to that question is … it was very good for people who grow corn. In fact, 75 percent of the country’s ethanol comes from farmers in just six states.
And that turns out to be the key. Economists refer to this as the problem of “dispersed costs and concentrated benefits.”
Even policies that are bad for society as a whole will oftentimes get enacted anyway because a small group of people reap lots of benefits — and thus lobby to keep the program going — while the rest of society foots the bill in increments small enough that politicians hope we won’t notice.
And if this sounds dimly familiar … it’s because it’s basically the skit from Office Space.
And once you’re aware of this, you start to see the pattern everywhere.
