Prohibition politics

Saturday, July 28th, 2007

In Prohibition politics, Donald J. Boudreaux notes that the popular understanding of how Prohibition ended — that the public recognized its futility, and politicians then repealed it — is a myth:

But contrary to popular belief, the 1920s witnessed virtually no sympathy for ending Prohibition. Neither citizens nor politicians concluded from the obvious failure of Prohibition that it should end.

As historian Norman Clark reports:

“Before 1930 few people called for outright repeal of the (18th) Amendment. No amendment had ever been repealed, and it was clear that few Americans were moved to political action yet by the partial successes or failures of the Eighteenth. … The repeal movement, which since the early 1920s had been a sullen and hopeless expression of minority discontent, astounded even its most dedicated supporters when it suddenly gained political momentum.”

What happened in 1930 that suddenly gave the repeal movement political muscle? The answer is the Great Depression and the ravages that it inflicted on federal income-tax revenues.

Prior to the creation in 1913 of the national income tax, about a third of Uncle Sam’s annual revenue came from liquor taxes. (The bulk of Uncle Sam’s revenues came from customs duties.) Not so after 1913. Especially after the income tax surprised politicians during World War I with its incredible ability to rake in tax revenue, the importance of liquor taxation fell precipitously.

By 1920, the income tax supplied two-thirds of Uncle Sam’s revenues and nine times more revenue than was then supplied by liquor taxes and customs duties combined. In research that I did with University of Michigan law professor Adam Pritchard, we found that bulging income-tax revenues made it possible for Congress finally to give in to the decades-old movement for alcohol prohibition.

Before the income tax, Congress effectively ignored such calls because to prohibit alcohol sales then would have hit Congress hard in the place it guards most zealously: its purse. But once a new and much more intoxicating source of revenue was discovered, the cost to politicians of pandering to the puritans and other anti-liquor lobbies dramatically fell.

Prohibition was launched.

Despite pleas throughout the 1920s by journalist H.L. Mencken and a tiny handful of other sensible people to end Prohibition, Congress gave no hint that it would repeal this folly. Prohibition appeared to be here to stay — until income-tax revenues nose-dived in the early 1930s.

From 1930 to 1931, income-tax revenues fell by 15 percent.

In 1932 they fell another 37 percent; 1932 income-tax revenues were 46 percent lower than just two years earlier. And by 1933 they were fully 60 percent lower than in 1930.

With no end of the Depression in sight, Washington got anxious for a substitute source of revenue.

That source was liquor sales.

Jouett Shouse, president of the Association Against the Prohibition Amendment, was a powerful figure in the Democratic Party that had just nominated Franklin Roosevelt as its candidate for the White House. Shouse emphasized that ending Prohibition would boost government revenue.

And a House leader of Congress’ successful attempt to propose the Prohibition-ending 21st Amendment said in 1934 that “if (anti-prohibitionists) had not had the opportunity of using that argument, that repeal meant needed revenue for our government, we would not have had repeal for at least 10 years.”

There’s no doubt that widespread understanding of Prohibition’s futility and of its ugly, unintended side-effects made it easier for Congress to repeal the 18th Amendment. But these public sentiments were insufficient, by themselves, to end the war on alcohol.

Ending it required a gargantuan revenue shock — to the U.S. Treasury.

So don’t expect drug prohibition to end anytime soon.

Political Liquor’s Economic Hangover Just Beginning

Thursday, July 12th, 2007

Dr. Henry I. Miller says Political Liquor’s Economic Hangover Just Beginning — that is, our ethanol policy is going to have all sorts of unpleasant consequences:

From pre-school to planning funerals, green is in. Very in. But green policies and decisions need to be based on more than a vague desire to save the planet. The principles of the natural sciences and economics must play an essential role — a part of policy-making that often eludes politicians. The latest examples are the federal government’s efforts to reduce the United States’s dependence on imported oil (now more than 60 percent) by shifting a big share of the nation’s largest crop, corn, to the production of ethanol for fueling automobiles.

Good goal, bad policy. In fact, in the short- and medium-term, ethanol can do little to reduce the vast amount of oil that is imported, and the ethanol policy will have widespread and profound ripple effects on other commodity markets. Corn farmers and ethanol refiners are ecstatic about the ethanol boom, of course, and are enjoying the windfall of artificially enhanced demand. But it is already proving to be an expensive and dangerous experiment for the rest of us.

The U.S. Senate is debating new legislation that would further expand corn ethanol production. A 2005 law already mandates production of 7.5 billion gallons by 2012, about 5 percent of the projected gasoline use at that time. These biofuel goals are propped up by a generous federal subsidy — via tax credits — of 51 cents a gallon for blending ethanol into gasoline, and a tariff of 54 cents a gallon on most imported ethanol, to keep out cheap imports from Brazil. This latest bill is a prime example of the government’s throwing good money after a bad idea, of ignoring science and economics in favor of politics, and of disdain for free markets.

President Bush has set a target of replacing 15 percent of domestic gasoline use with biofuels (ethanol and biodiesel) over the next 10 years, which would require almost a five-fold increase in mandatory biofuel use to about 35 billion gallons. With current technology, almost all of this biofuel would have to come from corn because there is no other feasible, proven alternative. However, it is unlikely that American farmers will be able to meet such demands: Achieving the 15 percent goal would require the entire current U.S. corn crop, which represents a whopping 40 percent of the world’s corn supply. This would do more than create mere market distortions; the irresistible pressure to divert corn from food to fuel would create unprecedented turmoil.

Thus, it is no surprise that the price of corn has doubled in the past year — from $2 to $4 per bushel. We are already seeing upward pressure on food prices as the demand for ethanol boosts the demand for corn: Nationally, food prices were up 3.9 percent in April, compared to the same month a year earlier. Until the recent ethanol boom, more than 60 percent of the annual U.S. corn harvest was fed domestically to cattle, hogs and chickens, or used in food or beverages. Thousands of food items contain corn or corn byproducts. A spokesman for one of California’s largest cattle ranches and feedlots noted that since the end of 2005, the company has experienced a 36 percent increase in the cost of feed, “which translates to an additional expense of $101 per head raised.” Reflecting these trends, the National Cattlemen’s Beef Association has demanded an end both to government subsidies for ethanol and to the import tariff on foreign ethanol.

The poultry industry is also squawking. The National Chicken Council is demanding remedies from senators who represent the big southern poultry states, and the National Turkey Federation estimates that its feed costs have gone up nearly $600 million annually.

The law of unintended consequences strikes again.

Fruity cocktails count as health food, study finds

Saturday, April 21st, 2007

Fruity cocktails count as health food, study finds:

Adding ethanol — the type of alcohol found in rum, vodka, tequila and other spirits — boosted the antioxidant nutrients in strawberries and blackberries, the researchers found.

Any colored fruit might be made even more healthful with the addition of a splash of alcohol, they report in the Journal of the Science of Food and Agriculture.

Dr. Korakot Chanjirakul and colleagues at Kasetsart University in Thailand and scientists at the U.S. Department of Agriculture stumbled upon their finding unexpectedly.

They were exploring ways to help keep strawberries fresh during storage. Treating the berries with alcohol increased in antioxidant capacity and free radical scavenging activity, they found.

The Incredible Shrinking Engine

Wednesday, March 14th, 2007

Researchers at MIT are designing The Incredible Shrinking Engine:

Overall, higher compression will lead to a more efficient engine and more power per stroke. But increasing the pressure too much causes the fuel to heat up and explode independently of the spark, leading to poorly timed ignition. That’s knock, and it can damage the engine.

To avoid knock, engine designers must limit the extent to which the piston compresses the fuel and air in the cylinder. They also have to limit the use of turbo?charging, in which an exhaust-driven turbine compresses the air before it enters the combustion chamber, increasing the amount of oxygen in the chamber so that more fuel can be burned per stroke. Turning on a car’s turbocharger will provide an added boost when the car is accelerating or climbing hills. But too much turbocharging, like too much compression, leads to knock.

An alternative way to prevent knock is to use a fuel other than gasoline; although gasoline packs a large amount of energy into a small volume, other fuels, such as ethanol, resist knock far better. But a vehicle using ethanol gets fewer miles per gallon than one using gasoline, because its fuel has a lower energy density. Cohn and his colleagues say they’ve found a way to use both fuels that takes advantage of each one’s strengths while avoiding its weaknesses.

The MIT researchers focused on a key property of ethanol: when it vaporizes, it has a pronounced cooling effect, much like rubbing alcohol evaporating from skin. Increased turbo­charging and cylinder compression raise the temperature in the cylinder, which is why they lead to knock. But Cohn and his colleagues found that if ethanol is introduced into the combustion chamber at just the right moment through the relatively new technology of direct injection, it keeps the temperature down, preventing spontaneous combustion. Similar approaches, some of which used water to cool the cylinder, had been tried before. But the combination of direct injection and ethanol, Cohn says, had much more dramatic results.

The researchers devised a system in which gasoline would be injected into the combustion chamber by conventional means. Ethanol would be stored in its own tank or compartment and would be introduced by a separate direct-injection system. The ethanol would have to be replenished only once every few months, roughly as often as the oil is changed. A vehicle that used this approach would operate around 25 percent more efficiently than a vehicle with a conventional engine.

Moonshine As A Business

Saturday, February 10th, 2007

When Joseph Michalek moved from New York to North Carolina, he soon encountered the local corn whiskey, infused with fruit — a new kind of moonshine the old-timers called sissyshine.

Michalek saw the opportunity to produce Moonshine As A Business:

In 2005, he started Piedmont Distillers in Madison, north of Greensboro — the first legal distillery in the Carolinas since before Prohibition.

Michalek produces Catdaddy: Carolina Moonshine, which is being sold in more than 200 North Carolina ABC liquor stores and outlets in York County, S.C. Catdaddy is moonshiner slang for the “best of the best.”

He won’t divulge his startup costs or his sales, but it’s now being sold in a half-dozen states. Last year Piedmont sponsored a NASCAR Nextel Cup Series race car. Michalek works with four full-time employees.

He produces Catdaddy in small batches — 300 gallons, triple-distilled in a German copper pot still. A batch yields about 1,500 bottles, which are filled, corked and packaged by hand in Madison’s former train station. A 750 milliliter bottle costs $19.95.
Real moonshine comes in two “flavors” — legal and illegal. The essential difference is one is taxed and one is not.

You can go into most any liquor store and buy moonshine such as Georgia Moon Corn Whiskey, Platte Valley Corn Whiskey or Catdaddy. The federal tax on a gallon of whiskey is $15.50.

It is legal to own a still; you can buy one online for less than $800. If you want to produce any alcohol in your still, you need a federal permit. Under the alternative fuels law, you can make up to 10,000 gallons a year of ethanol, which can power engines when mixed with gasoline.

“Yes, you can have a still, but it must be permitted and you can produce spirits for fuel use only,” said Art Resnick, director of public and media affairs for the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury Department. “Let’s make this perfectly clear: It’s illegal to make moonshine, which is untaxed spirits.”

Even if a person wanted to make moonshine at home and pay federal taxes, it’s not that simple. It requires a federal distiller’s license and is cost-prohibitive for anything other than a business.

Springtime for Ethanol

Tuesday, January 23rd, 2007

Springtime for Ethanol notes that the fashionable alternative fuel “yields a third less energy than petroleum-based gasoline and still relies on a federal subsidy of 51 cents a gallon to remain competitive.”

Creating Ethanol from Trash

Sunday, January 21st, 2007

Creating Ethanol from Trash may become economically viable via arcs of plasma:

The technology, developed originally by researchers at MIT and at Batelle Pacific Northwest National Labs (PNNL), in Richland, WA, doesn’t incinerate refuse, so it doesn’t produce the pollutants that have historically plagued efforts to convert waste into energy. Instead, the technology vaporizes organic materials to produce hydrogen and carbon monoxide, a mixture called synthesis gas, or syngas, that can be used to synthesize a wide variety of fuels and chemicals. The technology has been further developed and commercialized by a spinoff called Integrated Environmental Technologies (IET), also based in Richland, WA. In addition to processing municipal waste, the technology can be used to create ethanol out of agricultural biomass waste, providing a potentially less expensive way to make ethanol than current corn-based plants.

The new system makes syngas in two stages. In the first, waste is heated in a 1,200 ?C chamber into which a small amount of oxygen is added–just enough to partially oxidize carbon and free hydrogen. In this stage, not all of the organic material is converted: some becomes a charcoal-like material. This char is then gasified when researchers pass it through arcs of plasma, using technology developed in the 1990s at MIT’s Plasma Science and Fusion Center. The remaining inorganic materials, including toxic substances, are oxidized and incorporated into a pool of molten glass, made using PNNL technology. The molten glass hardens into a material that can be used for building roads or discarded as a safe material in landfills.

The next step is a catalyst-based process for converting syngas into equal parts ethanol and methanol. Ethanol is now widely used as a fuel additive, and it can also be used as a substitute for gasoline in some vehicles. Methanol is important for producing biodiesel and is currently made from methane in natural gas.

There is enough municipal and industrial waste produced in the United States for the system to replace as much as a quarter of the gasoline used in this country, says Daniel Cohn, a cofounder of IET and a senior research scientist at the Plasma Science and Fusion Center.

According to Jeff Surma, another cofounder and the CEO and president of IET, the multistage system makes it possible to produce fuels from waste at competitive costs. The economics look even better when including the fact that cities and manufacturers will pay to have waste removed, he says. This makes possible costs of between 10 and 95 cents per gallon of fuel, depending on the size of IET’s system and how much it is paid to take waste. IET is currently in talks with a major Midwest utility and several municipalities interested in employing its technology, Surma says.

A colleague dubbed it the trash laser beam. (Hat tip to FuturePundit.)

MIT ethanol analysis confirms benefits of biofuels

Thursday, January 11th, 2007

MIT ethanol analysis confirms benefits of biofuels — sort of:

Using a technique called life cycle analysis, she looked at energy consumption and greenhouse gas emissions associated with all the steps in making and using ethanol, from growing the crop to converting it into ethanol. She limited energy sources to fossil fuels. Finally, she accounted for the different energy contents of gasoline and ethanol. Pure ethanol carries 30 percent less energy per gallon, so more is needed to travel a given distance.

While most studies follow those guidelines, Groode added one more feature: She incorporated the uncertainty associated with the values of many of the inputs. Following a methodology developed by recent MIT graduate Jeremy Johnson (Ph.D. 2006), she used not just one value for each key variable (such as the amount of fertilizer required), but rather a range of values along with the probability that each of those values would occur. In a single analysis, her model runs thousands of times with varying input values, generating a range of results, some more probable than others.

Based on her “most likely” outcomes, she concluded that traveling a kilometer using ethanol does indeed consume more energy than traveling the same distance using gasoline. However, further analyses showed that several factors can easily change the outcome, rendering corn-based ethanol a “greener” fuel.

Why cellulosic ethanol will not save us

Wednesday, November 8th, 2006

Tad Patzek, professor of Civil and Environmental Engineering at UC Berkeley, explains why cellulosic ethanol will not save us:

Today it is commonly believed that burning freshly cut plants is morally superior to burning old fossil plants. Even more curiously, some are convinced that stripping ecosystems of gigantic quantities of biomass can go on year-after-year, forever, and with no consequences.

MIT’s pint-sized car engine promises high efficiency, low cost

Monday, October 30th, 2006

MIT’s pint-sized car engine promises high efficiency, low cost:

For decades, efforts to improve the efficiency of the conventional spark-ignition (SI) gasoline engine have been stymied by a barrier known as the “knock limit”: Changes that would have made the engine far more efficient would have caused knock — spontaneous combustion that makes a metallic clanging noise and can damage the engine. Now, using sophisticated computer simulations, the MIT team has found a way to use ethanol to suppress spontaneous combustion and essentially remove the knock limit.

When the engine is working hard and knock is likely, a small amount of ethanol is directly injected into the hot combustion chamber, where it quickly vaporizes, cooling the fuel and air and making spontaneous combustion much less likely. According to a simulation developed by Bromberg, with ethanol injection the engine won’t knock even when the pressure inside the cylinder is three times higher than that in a conventional SI engine. Engine tests by collaborators at Ford Motor Company produced results consistent with the model’s predictions.

With knock essentially eliminated, the researchers could incorporate into their engine two operating techniques that help make today’s diesel engines so efficient, but without causing the high emissions levels of diesels. First, the engine is highly turbocharged. In other words, the incoming air is compressed so that more air and fuel can fit inside the cylinder. The result: An engine of a given size can produce more power.

Second, the engine can be designed with a higher compression ratio (the ratio of the volume of the combustion chamber after compression to the volume before). The burning gases expand more in each cycle, getting more energy out of a given amount of fuel.

The combined changes could increase the power of a given-sized engine by more than a factor of two. But rather than seeking higher vehicle performance — the trend in recent decades — the researchers shrank their engine to half the size. Using well-established computer models, they determined that their small, turbocharged, high-compression-ratio engine will provide the same peak power as the full-scale SI version but will be 20 to 30 percent more fuel efficient.

The ethanol myth

Thursday, September 21st, 2006

In The ethanol myth, Consumer Reports shares its findings from its test of a flexible-fuel Chevy Tahoe:

When running on E85 there was no significant change in acceleration. Fuel economy, however, dropped across the board. In highway driving, gas mileage decreased from 21 to 15 mpg; in city driving, it dropped from 9 to 7 mpg.

You could expect a similar decrease in gas mileage in any current FFV. That’s because ethanol has a lower energy content than gasoline: 75,670 British thermal units per gallon instead of 115,400, according to the National Highway Traffic Safety Administration. So you have to burn more fuel to generate the same amount of energy. In addition, FFV engines are designed to run more efficiently on gasoline. E85 fuel economy could approach that of gasoline if manufacturers optimized engines for that fuel.

When we took our Tahoe to a state-certified emissions-test facility in Connecticut and had a standard emissions test performed, we found a significant decrease in smog-forming oxides of nitrogen when using E85. Ethanol, however, emits acetaldehyde, a probable carcinogen and something that standard emissions-testing equipment is not designed to measure.

How To Survive an EMP Attack

Saturday, September 9th, 2006

David Shenk looks at How To Survive an EMP Attack:

The nightmare scenario is this: A rogue nation like North Korea or a stateless terrorist like Bin Laden gets hold of a nuclear weapon and decides not to drive it into a large city but rather to launch it on a Scud-type missile straight into the atmosphere from a barge off the East Coast. With sufficient megatonnage and sufficient altitude, this single EMP attack could debilitate electrical and computer systems over half the United States, including the entire Eastern Seaboard. No one would be killed by the explosion itself, but tens of thousands could die quickly from electrical malfunctions in hospitals and elsewhere. And while no one can say for sure in advance, many think that the electrical grid could be disabled for months or even years. In an instant, the world’s superpower could become a candle-powered 19th-century museum.

Don’t try to compare this to an ordinary blackout, when an end is always in sight. You have to imagine a s t r e t c h b l a c k o u t—months or years. ATMs, computers, and cars would be parked indefinitely. Cash, bicycles, and bottled water would become the currency of the day. Bloggers would switch to pens and poster board. Families with emergency reserves of cash, food, water, medicine, etc. would be breathing a lot easier than the rest of us. Even when electricity returned, most hard drives would not: Only nonmagnetic backups (paper, CD-R, microfiche, etc.) and specially shielded hard drives would be sure to survive a massive EMP attack.

So, how to you prepare for such an attack?

Short of installing your own ethanol generator and shielding your entire house in lead, what can an individual do to prepare for an EMP or cyberattack? Less than you think. This is a case where we have to rely on the professional paranoids—the software wizards in anonymous Virginia and California office buildings who are devising defenses against all the clever electronic assaults they can imagine. Still, you can take a few precautions. Start with the same disaster kit you should already have handy for other emergencies: nonperishable food, water, flashlight, radio, batteries, medicine, cash (small bills), and so on. Now throw in a regular computer backup—ideally onto a nonmagnetic medium such as CD-R.

I’m not sure his advice is much help.

New Interview with Milton Friedman

Tuesday, September 5th, 2006

Arnold Kling cites a passage from a New Interview with Milton Friedman:

But it’s always been true that business is not a friend of a free market…

the real problem here is where do you find the support for free markets? If free markets weren’t so damn efficient, they could never have survived because they have so many enemies and so few friends. People think of capitalism or free markets as something that obviously is supported by business. People think that if a business party is a party in politics, it will promote free market. But that’s wrong. It will be in the self-interest of individual businesses to promote a tariff here and a tariff there, to promote the use of ethanol…

By the way, Milton Friedman is 94 years old.

New Interview with Milton Friedman

Tuesday, September 5th, 2006

Arnold Kling cites a passage from a New Interview with Milton Friedman:

But it’s always been true that business is not a friend of a free market…

the real problem here is where do you find the support for free markets? If free markets weren’t so damn efficient, they could never have survived because they have so many enemies and so few friends. People think of capitalism or free markets as something that obviously is supported by business. People think that if a business party is a party in politics, it will promote free market. But that’s wrong. It will be in the self-interest of individual businesses to promote a tariff here and a tariff there, to promote the use of ethanol…

By the way, Milton Friedman is 94 years old.

The False Hope of Biofuels

Tuesday, July 4th, 2006

In The False Hope of Biofuels, James Jordan and James Powell note that some studies show that “it takes more energy to make ethanol than one gets out of it”:

But allowing a net positive energy output of 30,000 British thermal units (Btu) per gallon, it would still take four gallons of ethanol from corn to equal one gallon of gasoline. The United States has 73 million acres of corn cropland. At 350 gallons per acre, the entire U.S. corn crop would make 25.5 billion gallons, equivalent to about 6.3 billion gallons of gasoline. The United States consumes 170 billion gallons of gasoline and diesel fuel annually. Thus the entire U.S. corn crop would supply only 3.7 percent of our auto and truck transport demands. Using the entire 300 million acres of U.S. cropland for corn-based ethanol production would meet about 15 percent of the demand.