When you drag commerce into the arena of government, it’s always a home game for the big guys.
When Congress created an ethanol mandate in 2005 and expanded it in 2007, this was widely, and correctly, derided as a political gift to the ethanol industry. But it’s worth noting that big Wall Street players were also pushing for the ethanol mandate.
In fact, Goldman Sachs lobbyist Mark Patterson was lobbying on ethanol within a year of becoming Treasury Department chief of staff in the Obama administration.
When I write about the big guys lobbying for and profiting from big-government, some liberal bloggers yawn and ask “who cares if someone’s getting rich?” (See, for instance, Brad Plumer, Matt Yglesias, Ezra Klein.)
But figuring out who believes they will profit off of a law can help us detect flaws in the law we may not have previously detected. In other words, we should ask “what are these lobbyists seeing that we’re not?”
In the case of the ethanol mandate, that flaw may be the ability of big banks to rig the market in ethanol credits.
Gretchen Morgenson and Robert Gebeloff at the New York Times tell the story:
Again, following the money and the special-interest lobbying leads us to a dynamic where we see the companies supporting the regulations are profiting off them in a way that doesn’t serve the public interest, it seems.
Loren Steffey at Forbes has a good analysis.
footnote: Thomas O’Malley, the refiner quoted above, has an interesting view on regulations, as quoted in the L.A. Times a few years back:
“My view for the industry was: Why in the world would you fight clean fuels? That’s what the consumer wants,” O’Malley, now the chairman of Connecticut refiner Premcor Inc., said in an interview. Make no mistake about it, the more stringent you make specifications, those become barriers to entry…. Strong companies would have an advantage.”
