I have to take issue with something Cliff says in his home page article today demanding more mandates on the auto industry (which is more than just Detroit, we should remember.) He asserts, “Those who claimed that using some corn to make ethanol was causing higher food prices were either misinformed (any number of journalists) or lying (those paid to protect oil’s monopoly).” I’m not sure whether Cliff thinks I am misinformed or lying, but the fact remains that ethanol is still causing food prices to be higher than they should be. As Cliff notes, when demand drops, prices fall, but to say that this proves ethanol had no role in increasing corn prices beggars belief. Demand was high and supply was lowered thanks to the ethanol boondoggle. Now, demand has fallen, but supply is still constrained. It is very good, of course, that the price drop means that the world’s poor have some relief, but they could have yet more without the ethanol boondoggle. As University of Illinois economist Steve Irwin points out, ethanol policies are actually the dominant backstop of corn prices, preventing them getting back to the equilibrium level. It is particularly significant that they have supplanted export demand. Using corn ethanol as fuel remains a significant tax on food, with its worst effects on the poor of the world. The fact that we’ve gone from crazy prices to just foolish prices as a result of the recession doesn’t change that.