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Ethanol: Another ‘Bootleggers and Baptists’ Coalition

Ethanol summit meeting in Sao Paolo in 2019

I recently became acquainted with an arcane language containing symbols like RFS, RINs, eRINs, RVOs, WTE, RNG, even HBIIP.  It is spoken by groups with their own esoteric names, such as RFA and ABFA and WTEA.

There is a reason for this obscurity: This is the language of lobbying for the multi-billion-dollar  “renewable fuel industry (RFI).” These speakers don’t want you to know much about them except when they make public announcements like: “lower-cost, lower-carbon ethanol fuel blends are better for the environment and the family budget.”

I’m going to share some of the 50 years of history of this renewable fuels  lobbying. My purpose is to explain two ideas that help me understand political history. One is the economist’s notion of concentrated benefits vs. dispersed costs. Another is the “bootleggers and Baptists” coalition identified many years ago by economist Bruce Yandle. [1]

While I am singling out one big (and burgeoning) industry, that is because I have been examining it for my environmental blog, and I have more details there (including definitions of most of the terms identified above). But there  are plenty of other similar stories (start with sugar and cotton) .

Continue reading “Ethanol: Another ‘Bootleggers and Baptists’ Coalition”

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The Futility of Congressional Investigations

Congressional Inquiry into the Attack on Pearl Harbor

Congressional hearings are moving into high gear these days. Republicans have a lot of issues about which they want “transparency” and “truth and accountability”; they intend to “pursue the facts no matter where they take us”;  they seek to “investigate the investigators,” etc., etc.

I’m skeptical. Not that they won’t find out what happened—they may well do that—but whether it makes any difference depends on politics. If the politics are with them they will have an impact; if not, they won’t.

I’m going to illustrate my point by sharing the history of a massive congressional investigation that took place 78 years ago. It was a whopper. The investigation went on for six and a half months and the testimony took up 39 volumes. So what happened? The majority party signed the report; the minority party dissented. Nothing much changed, except for the lives of some who were barred or discouraged from testifying and the cryptologist who bore the mental scars of trying to get the facts out for the rest of his life—and undoubtedly some others I don’t know about.

The investigation was the 1945 congressional inquiry into the Japanese attack on Pearl Harbor on Dec. 7, 1941. Continue reading “The Futility of Congressional Investigations”

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Three Themes: U.S. Presidents, War, Economic Development

Today I’m going to summarize three articles on historical issues. One article critiques historians’ rankings of U. S. presidents; one looks at a 1752 essay by David Hume and sees insights into the Ukraine war; and the third explains why most of the theories of economic development since World War II have fallen into the dustbin of history (I wrote that last one).

Are Presidential Rankings Biased?

It is something of an event every few years when the C-Span TV network or the American Political Science Association (APSA) reports on a new assessment of American presidents. The C-Span version relies primarily on historians, the APSA on political scientists, but their evaluations are  similar.  To give you a flavor, the latest rankings by both organizations have the same top four presidents: Lincoln, Washington, Franklin D. Roosevelt, and Theodore Roosevelt. C-Span rates Eisenhower and Truman as no. 5 and 6; APSA chose Thomas Jefferson as no. 5 and Truman as no. 6.

After that, the rankings differ somewhat but they tend to be roughly consistent. Continue reading “Three Themes: U.S. Presidents, War, Economic Development”

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Jack Welch and the Mysterious Business of Business

Jack Welch

Since I haven’t had many deep thoughts lately, I want to share with you some essays about history that have caught my attention. In this case, the history is pretty recent—it’s about the late Jack Welch, CEO of General Electric from 1981 to 2001.

When I was an economics editor at Business Week in the 1980s,  Jack Welch was becoming a legend. My editor-in-chief admired him, talked with him a lot, and featured him as a speaker at magazine functions. In 1999, Fortune called him the “manager of the century.” He was bold, smart, and unafraid.

But did he bring General Electric down?

General Electric  was founded by Thomas Edison and J. P. Morgan in 1892. It developed a ubiquitous brand name and seemed to “own” the field of electric appliances.

By 1981, however, when Welch became CEO, it lacked vigor. It was a $12 billion company, but stodgy and bureaucratic. Welch attacked that bureaucracy, laid off workers,  and started acquiring companies. When Welch left in 2001  the  company was worth $600 billion and in terms of revenues was the fifth-largest company in the U.S.

But gradually  the company fell apart. Continue reading “Jack Welch and the Mysterious Business of Business”

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“Canal Mania”—A Waste of Money?

C & O Canal, Georgetown, a sign of canal mania.

I recently stumbled on the fact that  eight states, mostly in the Midwest,  defaulted on their state bonds in the 1840s. Okay, that may not seem too exciting, but when I learned about it, I also discovered a realm of American history I had not come across before: “canal mania.”

Many of those states had spent a lot of money on canals, much of it borrowed money (bonds rather than taxes), which ultimately they could not pay back. Other problems also plagued these states such as investments in railroads and banks, but canals were big.

Most of these canal ventures were kicked off by one success—the  amazing Erie Canal, which opened in 1825.  A few canals had been built in the East before that, such as the 27-mile canal between the Merrimack River and Boston. But the Erie Canal ran from Albany, New York, across the state to Buffalo: 363 miles. The canal required 83 locks. Continue reading ““Canal Mania”—A Waste of Money?”