Heya!
Before I go out with my cameras to several temples in the city to witness Vesak Day, I would like to direct your attention to my column at The Malaysian Insider. I will be there every Monday to advance libertarianism in Malaysia!
The crux of that particular article which goes by the title Food? Fuel? Dilemma? is that free prices will help determine production with regard to the concern revolving around food and biofuel. By free, it is freedom, not free, a giveaway.
As I was doing some research, I stumbled upon an amusing article about biofuel, incentives given to it and the unintended consequence. It is old but the lesson is for all of us to learn for all times.
Fast-rising worries over global warming have created a biofuel boondoggle.
Called “splash and dash,” “touch and go,” or an unfair trade practice, it features biofuels traders who exploit a US tax credit, European drivers who get cheaper diesel fuel, and American taxpayers, who are footing the bill.
It also illustrates a cautionary tale of how government incentives, no matter how well-intentioned, can sometimes be subverted into windfalls for the few.
“You have US taxpayers providing a very nice tax incentive, and they’re not receiving any energy-security benefit or added fuel to the marketplace or benefits to US development in return,” says Joe Jobe, chief executive officer of the National Biodiesel Board, which represents US biodiesel producers.
[…]
Created under the 2004 American Jobs Act, the “blenders tax credit” was supposed to boost US production of biodiesel by encouraging US diesel marketers to blend regular petroleum diesel with fuel made from soybeans or other agricultural products. It succeeded, perhaps too well.
Attracted by the $1-per-gallon subsidy, US diesel-fuel marketers mixed away, setting off a nationwide boom in biodiesel refinery building. But no one anticipated splash-and-dash.
The maneuver begins with a shipload of biodiesel from, say, Malaysia, which pulls into a US port like Houston, says John Baize, an industry consultant in Falls Church, Va. Unlike domestic diesel-biodiesel blends, which typically contain from 1 to 10 percent of biodiesel, the Malaysian fuel starts off as 100 percent biodiesel, typically made from palm oil.
[…]
The US importer of the load applies to the Internal Revenue Service for the credit — a dollar for each of the 9 million biodiesel gallons, Mr. Baize calculates. The next day the tanker can set sail — dash — for Europe. There, the US importer resells the biodiesel, taking advantage of European fuel-tax credits that, in effect, keep biodiesel prices above US prices.
[…]
European officials are also unhappy about the practice. Such “touch and go” maneuvers could quickly become a much larger problem, warned Raffaello Garofalo, secretary general of the European Biodiesel Board, in a March 19 letter to the European Trade Commissioner.
European manufacturers are worried about all US biodiesel imports — not just the splash-and-dash variety — because the subsidized fuel is flooding their markets, cutting into their domestic biodiesel business and lowering prices.
[…]
So rich is the US subsidy, however, and awash in biodiesel is the European market at present, that a third form of imported biodiesel is now reportedly hitting European shores — at US taxpayer expense. European biodiesel producers themselves are shipping fuel to US ports to get the US blenders credit and then bringing it back to Europe for sale, according to British press accounts.
But US biodiesel manufacturers and Congress may not be in a hurry to close the loophole, some insiders say. That’s because the blenders credit not only benefits splash-and-dash traders, it gives US producers of soybean-based biodiesel a distinct export advantage, industry insiders say.
[…]
Ultimately, this rise of US exports points to a larger American problem: a serious imbalance between domestic biodiesel production capacity and demand, some experts say. [Biofuel boondoggle: US subsidy aids Europe’s drivers. Mark Clayton. Christian Science Monitor. June 8 2007]
During a visit to Saskatoon, Saskatchewan, on July 17, 1969, Trudeau met with a group of protesting farmers, angry that the federal government was not doing more to market their wheat, to one of whom he responded, “Why should I sell your wheat? It’s your wheat.” [Pierre Trudeau. Wikipedia. Accessed May 14 2008]
How many leaders nowadays have the courage to say such thing?
Ahli Parlimen Tony Pua berjaya menanyakan soalan yang dekat dengan hati seorang libertarian beraliran minarkisme:
Ekonomi Malaysia sekarang amat bergantung kepada penggunaan kerajaan ataupun “public sector spending”, berbanding dengan negara-negara di Asia. Mengikut perangkaan daripada Merrill Lynch, sumbangan penggunaan keraajaan di Malaysia adalah sebanyak 24 peratus, berbanding dengan Taiwan 15%, Singapura 14%, Thailand 12% dan Hong Kong 10%. Pergantungan ekonomi Malaysia kepada sumbangan kerajaan adalah tidak sihat dan apakah langkah-langkah yang akan diambil oleh kerajaan supaya sumbangan penggunaan yang lain dapat ditingkatkan? [My First Supplementary Question! Philosophy Politics Economics. May 13 2008]
Beliau berjanji untuk menerangkan lebih lanjut tentang jawapan yang diterima beliau dari Timbalan Menteri Kewangan esok setelah Hansard dikeluarkan oleh pihak Parlimen.
p/s — Tony Pua berkongsi dengan para pembaca tentang jawapan yang diberi oleh Timbalan Menteri:
Apabila kita melihat dari segi GNP, kita melihat dari 2 sudut. Satu dari sudut output ataupun pengeluaran yang ini sumbangan dari sektor-sektor industri dan sektor-sekto industri sebagaimana kita maklum sektor perkhidmatan telah meningkat tinggi. Ini bermakna faktor key yang utama dalam pembangunan negara kita. Dari segi rancangan Malaysia, sektor perkhidmatan sekarang yang menymbang lebih kurang 53% kepada KDNK telah meningkat 59% pada tahun 2020 itu target negara kita.
Kemudian kita melihat dari sudut GNP dari sudut perbelanjaan. Perbelanjaan seperti mana yang saya nyatakan tadi, perbelanjaan swasta dari segi konsumer begitu tinggi iaitu pembelian dan pelaburan. Buat masa ini kita masih bergantung kepada kerajaan kerana kita sebuah negara ekonomi yang sedang membangun jadi kita perlu input-input kerajaan sebagaimana yang saya nyatakan tadi dalam RMK ke-9, kita belanja lebih kurang dalam RM40 bilion pada tahun 2007 dan seterusnya dalam koridor raya nanti kita akan laksanakan perbelanjaan lagi. Ini kita nampak perbelanjaan oleh pihak swasta lebih banyak dan tinggi berbanding dengan pihak kerajaan.
Di samping itu, kos ke 3 iaitu dari segi ekspot dan impot negara kita. Pada tahun ini, net ekspot negara kita hanya 0.7% dan ini dijangka akan level pada tahun hadapan kerana sepertimana kita tahu terjadinya re-section di dunia dan ia jadi leveling. [My First Supplementary Question! Philosophy Politics Economics. May 13 2008]
Yang pastinya, soalan tentang apa yang kerajaan akan lakukan untuk mengurangkan perbelanjaan awam tidak terjawab.
Saya tertarik dengan ayat berikut: “Buat masa ini kita masih bergantung kepada kerajaan kerana kita sebuah negara ekonomi yang sedang membangun jadi kita perlu input-input kerajaan…”
Saya tidak bersetuju dengan pendapat itu tetapi saya tidak berhasrat untuk membincangkan mengapa saya berpendapat sedemikian kerana saya kesuntukan masa untuk membincangkan perkara yang berat.
Walau bagaimanapun, nampaknya, pemikiran Keynesianisme masih lagi kuat di dalam kerajaan kita. Saya telah menyangkakan bahawa para Keynesian sedang ditendang keluar dari kerajaan tetapi malangnya, kesimpulan itu dibuat secara terburu-buru. Pembatalan perbelanjaan awam itu mungkin hanya satu permainan politik dan bukannya pengeseran dasar yang jujur.
KUALA LUMPUR: Padiberas Nasional Berhad (Bernas) has blamed private commercial millers for the recent rice shortage in the local market.Bernas managing director Bakry Hamzah said private millers who controlled 55% of the local rice market had significantly reduced their production in expectation that prices would rise. [Bernas blames private commercial millers for rice shortage. The Star. May 9 2008.
Really?
Meanwhile, Malaysia spooked the global rice market:
CHICAGO, May 8 (Reuters) – U.S. rice prices soared 3-1/2 percent or 75 cents per hundredweight, Thursday’s daily maximum, after Malaysia bought a large amount of rice from Thailand and cyclone-ravaged Myanmar abruptly turned from rice exporter to a country in need of food donations.
[…]
“The Malaysian purchase was more than expected and sooner than expected … another good example of how aggressive rice buyers are right now,” a Chicago rice trader said. [U.S. rice soars 3-1/2 pct as Malaysia buys. Sam Nelson. Reuters via Guardian. May 8 2008]