Category Archives: Economics

Miscellaneous economy stuff

Minerals and Net Zero

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McKinsey & Company, the high pockets consulting company, has expressed concern regarding the Climate Funding Industry’s net zero by 2050 goal and the minerals available to achieve it. This particular concern is buried well down in the report.

Raw materials. Demand for critical minerals, like lithium, cobalt, and rare earths, is expected to surge, but current supply is only about 10 to 35 percent of what would be needed by 2050. This is a Level 2 challenge, where supply would need to be scaled, alongside managing demand for such minerals.

McKinsey defines a Level 2 challenge as one that

require[s] the deployment of known technologies to accelerate, and for associated infrastructure and inputs to be scaled.

One of the problem here, though, is that mining minerals like lithium, cobalt, and rare earths is an immensely toxic operation, both in producing and handling these raw minerals and in the collateral production and handling of the hugely toxic mining tailings that are inextricably associated with the mining process. Those tailings, too, while not precisely forever chemicals, do last a very long time and are subject to leaching out of whatever supposedly sealed off storage area they might be in, whether from long-term deterioration of the isolation materials or from human error (vis., EPA’s failure with the Gold King Mine near Silverton, CO).

Then there’s the end-of-life disposal of the materials and devices containing these minerals when those materials and devices have worn out or failed. The minerals are still in those devices, they’re still toxic, and we still don’t have the technologies needed adequately to handle that waste.

Then there are the intermediate steps of…assembling…those minerals into the finished net zero-supporting products. They’re toxic to handle there, too, for all that they’re much more easily handled safely than while digging them out of the ground and processing them into usable form.

And that bit about managing demand—that sounds akin to managing third world demand for fossil fuels, too—they shouldn’t have any; they should be consigned to poverty, or the rest of us consigned to poverty forking over the trillions of dollars it would take to prop them up.

Much of that mining, too, is done with child and other slave labor, but that’s really a side issue in this context. It would be straightforward enough to force an end to that, if only by mining elsewhere with legitimate labor forces and technologies. The switch needs only political will and actual sincerity, vice virtue signaling, on the part of the Climate Funding Industry members.

It seems we can’t get there from here (never minding that we really don’t need to).

Oops.

 

H/t Watt’s Up With That

Paul Paints with a Too-Broad Brush

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Former President and Republican Party Presidential candidate Donald Trump is painting with too broad a brush with his blanket tariffs. Kentucky’s Republican Senator Rand Paul is painting with too broad a brush in his criticism of Trump’s tariff proposals.

Tariffs operate solely in the international trade arena, for all that they have domestic effects. Part of what’s not recognized by either man, although less so by Paul than by Trump, is that international trade has very little to do with economics and very much to do with foreign policy.

Paul is correct that protectionist tariffs are net detrimental to domestic economies. (I claim that protecting nascent industries with tariffs is beneficial, but only if they’re withdrawn when the nascent industries are better developed. The difficulty of withdrawing protectionist tariffs when they’re no longer needed, though, more than overwhelms that temporary benefit.) Trump is mistaken to push the blanket protectionist tariffs on all imports, including imports from friends and allies.

Paul’s China People’s Republic of China tariff example, though, illustrates his broad brush error.

Consider a [PRC]-made widget priced at 50 cents competing with an American-made version at $1. By slapping a tariff on the Chinese widget, raising its price to $2, American manufacturers have the freedom to raise theirs as high as $1.99. The consumer is left with no real choice but to pay more.

Reasonable men can debate the size of that tariff, but such a debate misses the essential fact that the PRC is an enemy nation bent on supplanting us in the world and dominating our foreign and domestic policy decisions. We have no business feeding the enemy nation’s economy. That alone argues for the high tariff and not settling for a countervailing one of merely 50 cents to make the imported price the same as the domestic one.

There’s more to this, though.

Consider [PRC]-made electronics. When tariffs are imposed on products like smartphones and laptops, as Donald Trump is proposing to do, American consumers end up paying higher prices. … [The PRC] accounts for more than 90% of US laptop and tablet imports.

Especially in the electronics industry—an industry that reaches far beyond consumer computers and cell phones into all types of communications devices, chip manufacturing, main frame assembly, data centers, artificial intelligence, and on and on—the national security risk of trading at all with the PRC is far too high to be mitigated with jawboning and pretty pleases alone. That risk, after all, runs to cyber espionage and insertion of sleeperware into our several network nodes, intellectual property and data theft, and including spyware and other malware on imported devices’ chips at the very least.

Tariffs set high enough to discourage imports from an enemy nation like the PRC are an entirely valid foreign policy move. That the tariffs might raise domestic prices is a cost of our national security, of our maintaining our independence of action.

It’s Just an Anecdote

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One instance doesn’t make a trend, but still….

An electric emergency vehicle belonging to a fire department in Germany caught fire and burnt down the new fire station.
The fire…started from a vehicle that “contained lithium-ion batteries and an external power connection.” The blaze destroyed nearly a dozen emergency vehicles and caused between $21.5 million and $25.9 million in damage.

It’s just an anecdote, but how many gasoline- or diesel-powered emergency vehicles have burned down their hosting fire stations, much less destroyed millions of dollars in equipment?

Government Investment Nanny

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The Federal government regulates who it will permit to invest in private investments—startups, pre-IPO opportunities, loans to private companies, and the like. These are highly risky investments, and they have high payoff possibilities, even if those possibilities are low. The Feds limit those who it permits into these private opportunities to folks with $1 million in net assets, not including their primary home residence, or at least $200,000 in yearly income, or $300,000 for a joint household.

Now there’s a move afoot to add a government-regulated glorified intelligence test as an alternative path for investors to make these investments.

A group of lawmakers has proposed legislation that would allow any investor capable of passing an exam to buy private securities—an array of investments like shares in pre-IPO startups or loans to private companies that are considered riskier because they have looser disclosure rules than public securities and can be harder, and sometimes impossible, to sell in a pinch.

Passing an exam as a prerequisite to being allowed to invest in a class of securities—passing an exam as a prerequisite to being allowed to vote in an election. That Jim Crow era requirement has long since been done away with. Except now Congressmen want to revive the practice for investing.

Private securities—meaning outside the scope of government regulation. This is something far too many politicians can’t stand; it limits their power to dictate to us; it limits their power, period.

The idea is that the ability to make these high-risk, high-reward bets should be open to all sophisticated investors, not just those with the biggest bank accounts.

Of course the definition of who’s sufficiently sophisticated, the definition of “sophisticated” itself is carefully left to government personages.

Patrick Woodall, Americans for Financial Reform‘s Managing Director for Policy (AFR is vehemently pushing for even more government regulation of our financial decisions):

Knowledge cannot protect people from the potential losses if they invest in risky, opaque, and illiquid, private offerings[.]

Neither can government. Nor should government try. The decision to run those risks are ours alone.

This is nanny-state-ism intruding into us private citizens’ own affairs far beyond regulation of public company-related investments. Companies are private rather than publicly owned explicitly to get out from under the government’s thumb, and citizens invest here—or would if we could—explicitly to stay out from under the government’s thumb—especially when that thumb operates, according to government, for our own good.

No.

We average Americans do not need government protections from ourselves. We are fully capable of making our own decisions, and we are fully capable of handling, and fully and responsible for, the outcomes of our decisions. We are not wards of the state, much as one of our major political parties is bent on reducing us to that condition.

Who’s in Charge in Arizona?

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Arizona citizens will be voting this fall on a ballot measure that would

require legislative approval for any regulation that the state Office of Economic Opportunity projects would impose costs of $500,000 or more over a five-year period. Lawmakers or anyone subject to the proposed rule could request a cost estimate. If lawmakers failed to ratify the rule before the end of the legislative session, the promulgating state agency would have to issue a notice of termination.

That seems entirely reasonable, restricting as it does unelected bureaucrats in unelected “independent” State agencies from acting on their own recognizance to limit citizen activities.

However.

Republicans hold a majority in the Arizona House and Senate and this year passed a bill to require legislative approval for costly regulations. Democratic Governor Katie Hobbs vetoed it, claiming such a check “would create an unnecessary burden on state agencies that would inhibit their ability to carry out duties in a timely manner.”

And

Two Arizona Sierra Club chapters betray what opponents fear when they claim Prop. 315 “undermines the autonomy of state agencies.”

The Sierra Club chapters’ managers have said the quiet part out loud.

This is the Progressive-Democrat and her Leftist…supporters…insisting that the citizenry exist to give government agencies something to do; those agencies aren’t at all beholden to the State’s citizens or their elected representatives.

As the WSJ editors put it in the link above, The issue is who decides—elected officials, or unelected regulators? Or perhaps those regulators favored by Progressive-Democrat politicians?
The Know Betters in Arizona’s governor’s office have answered that plainly. The citizens of Arizona need to apply their answer in a couple of weeks, loudly and clearly.