April 6, 2018

The limits of free markets

Defenders of capitalism, from libertarian free-traders to self-dealing globalists, are agog at the "protectionist" stance of President Trump vis-á-vis China. I see it as a damned if we do, damned if we don't, situation. But there are nuances that don't make the evening news, fake or otherwise.

Most ThreeSourcers are probably aware that China is the world leader in commercial supplies of rare earth metals, used in many of the world's high tech consumer and military products and systems. But why? I, for one, had believed it was a matter of geology and geography and the raw minerals were just preternaturally abundant in the People's Republic. Au contraire.

America's problem has never been a lack of rare earth deposits - it has plenty. The problem has been maintaining a domestic industry to mine the minerals and transform them into final components. For a while, Colorado-based Molycorp made a go of mining rare earths at Mountain Pass [a mine in California]. But it struggled to turn a profit, and eventually went bankrupt. In the middle of last year, a bankruptcy proceeding sold the mine to another China-involved consortium. The Chinese partner in the consortium, Shenghe, will have exclusive sales rights to the mined product for a period of time, according to sales documents.

That brings us up to date, and on to the final question: How do we fix things?

Free market types like to focus on environmental regulations. Mining rare earth metals is a nasty business, with a lot of chemical and radioactive byproducts. Properly disposing of that detritus is extremely costly, which makes mining rare earth metals for profit hard. In fact, regulators closed the Mountain Pass mine and fined it at one point for skirting the rules.

Of course, Molycorp was also badly damaged by the massive price swings brought on by China imposing and then ditching its export quotas.

But regardless, blaming the hippies for America's rare earth metal woes is doubling down on a bad strategy. Blinkered enthusiasm for free market solutions is how we lost domestic operations in the first place. Furthermore, China itself solved the environmental problem by just not caring, and created dystopian wastelands in the process.

The author goes on to draw analogy with nuclear power, and make a case for nationalization. One thing this "Randian" has come to understand is that there really are flaws in unbridled free-markets. Namely, that competing nations have enough money and little enough scruples to take over strategically important segments in toto. Or, stated differently, "The capitalists will sell us the rope to hang them with."

Posted by JohnGalt at 3:05 PM | Comments (2)
But jk thinks:

Yes, government must step in and manage trade. Because they are wiser than the individual citizens, and are driven by purer motives -- well, let's face it, they're just better people.

I've committed the broadest heresy in libertarianism by suggesting that the Bernakeist, 2% inflation-targeted monetary regime is not-the-best, but in the grand scheme of things really not the worst.

The best response to both of us is Milton Friedman's "where are you going to find these angels?" Public Choice theory says that they will be just as self-interested and Hayek has shown they will not have the knowledge required.

You like the current group, fine, but what about the policies of those appointed by President Elizabeth Warren and confirmed by Majority Leader Chuck Schumer?

I'll stick with "unfettered," thank-you, Silence, and thank you brother jg.

Posted by: jk at April 9, 2018 12:27 PM
But johngalt thinks:

Clearly it is a major departure for me to endorse government management of anything, but here is another question for both of us: Should the Pentagon be privatized as well?

I see international trade as a direct analogy to international military combat. Both are pursuits of warfare but with different weapons.

Posted by: johngalt at April 10, 2018 5:07 PM

February 20, 2018

Disband the FBI?

Worth serious discussion if you consider this:

It's a common story. The FBI is one more victim of the March Through the Institutions, the cultural-Marxist initiative in which hordes of leftists infiltrate a trusted institution and corrupt it as a weapon to use against political enemies. We see it in academia, news media, Hollywood. We saw it at the IRS. And the FISA warrant case shows it was very much in effect at the FBI. And like a Hollywood which struggles to create movies worth watching, a news media which canít seem to get the story straight and an education industry which turns out kids who are experts in how they feel about math but not-so proficient in doing it, we've now got an FBI which routinely drops the ball on major cases.
Posted by JohnGalt at 2:58 PM | Comments (3)
But jk thinks:

I don't know if any ThreeSourcers ever got into the TV show "Sleepy Hollow," but it had its charms. Among them, the reincarnated revolutionary officer frequently became visibly upset at entities that contravened the spirit of the revolution. When he first hears "there is a Federal Constabulary," he is quite wounded.

"The American Spectator" is quaintly moderate in the era of President Trump, but I suggest the article ill-served by claiming that the problem with the bureau is its being overtaken with incompetent lefties.

Might be true. I'd suggest there's being a lot of incompetence to go around, and that any organization will become sclerotic without the salubrious if stern incentives of the free market.

Posted by: jk at February 20, 2018 5:44 PM
But johngalt thinks:

A few points:

ANY politicization of the legal system is an unacceptable turn down the highway to tyranny.

Incompetence is almost to be expected in a government agency, but these folks still call themselves, "one of the world's premier security and crime-fighting forces." We should all expect more of them. Squeaky clean, beyond reproach.

Is there a right-wing "march through the institutions" that I'm not aware of? A lefty might say, "Duh. Capitalism." But really, there is no moral equivalency between left and right, or between statism and individualism more specifically.

The evident politicization of the FBI is a national emergency, tragedy, and disgrace.

Posted by: johngalt at February 21, 2018 3:09 PM
But jk thinks:

My objection to the Spectator is more on tone than substance. But it's almost too cold to drink beer, let me carry on:

The implication that the FBI was squeaky clean and not a threat to liberty until " the cultural-Marxist initiative in which hordes of leftists infiltrate a trusted institution [and bla, bla, bla]" does not match my memories of J. Edgar Hoover, Bobby Kennedy, the treatment of Martin Luther King, weaponization against Nixon's "White House Enemies List," &c.

It reminds me of those who pine for the fair and unbiased journalism of Walter Cronkite.

Posted by: jk at February 21, 2018 6:41 PM