Advantage Indiana: no legacy systems for ethanol

A little bit of hand-wringing (or perhaps, ahem, tassle-tossing) went on in the Indianapolis Star today regarding ethanol production or the lack thereof. "Indiana could pay a price for joining the ethanol gold rush at a bad time," read the lead from the Muncie Star-Press reprint, another Gannett-owned paper (like the Star).
The headline was even better: "State feels tremors from ethanol shakeout." Given that Indiana was one of the last corn-rich states to get into ethanol production big time, some investors have backed away and a few plants may either not get built or may shutter their fledgling operations.
The story reminded me of an interview I had with Michael Powell, former FCC secretary, shortly after he left office. I asked the question I always wanted to ask the telecom titan: "Mr. Secretary, regarding communications in the 21st century, did the Cultural Revolution in China paradoxically produce a technology advantage?"
Powell's eyes glazed over for a second, then he exclaimed: "Of course! No legacy systems!"
Back to Indiana's ethanol issue for a moment, Christopher Hurt, a Purdue economist, summed it up: "We are calling these growing pains. Almost every industry has to go through a period of excess expansion and over-optimism, and then go through a period of negative markets, losses and generally some bankruptcies and some consolidations."
Transposing Powell's comment, Indiana's late entry into the ethanol market also enabled it to bypass some of the Upper Paleozoic processing technology now underpining ethanol plants in other states. Also, about a year ago the Indiana Economic Development Corporation (IEDC) stopped handing out state-fueled incentives for additional ethanol plants (although it still favors soy biodiesel plants, a completely different situation), so brakes were being prudently applied some time ago.
The upshot? Indiana will do just fine, particularly as it balances traditional grain exports in the growing "fuel vs. food" geo-battle.