Tag Archives: industrial policy

Holding Up Political Props Will Not Uphold Human Rights

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When American politicians like Bruce Westerman talk about mining cobalt in the United States, they are almost always talking about copper and nickel mining. According to the US Geological Survey, the US has only 4 percent of the world’s cobalt reserves; and with the notable exception of the Jervois cobalt mine in Idaho and some unexploited reserves in Missouri, “any future cobalt production” would be a “byproduct” of copper and nickel mining.

Most of that mining would be done in the Lake Superior region. In Michigan’s Upper Peninsula, Lundin’s Eagle Mine has produced cobalt-bearing nickel concentrate. Rio Tinto-Talon Metals already control copper and nickel development from Ishpeming to the Keweenaw. In addition to this massive 400,000 acre land package in Michigan, the joint venture also controls the 31,000 acre Tamarack project in Minnesota, the state where most US cobalt reserves are located.

Even here, the primary target resource is nickel, followed by copper, as Tamarack’s own estimates clearly show. In 2017, Antofagasta briefly floated the idea in its annual report that its Twin Metals project near the Boundary Waters would be a significant source of cobalt, but this looks like nothing more than an attempt to position the mine as a source of critical minerals, and the company abandoned that posture. (Trump’s Department of Interior toyed with the idea, too.)

In light of these basic facts, Westerman’s arguments look specious and his moral posture deeply cynical. It’s concerning to see the Chair of the House Committee on Natural Resources use the artisanal, small-scale miners of the Congo as a political prop – I use that word advisedly – and trade on serious human rights concerns without any plan to address them. Amnesty International’s Mark Dummet fears this kind of “wholly self-serving” virtue signaling could even harm the people it pretends to protect.

Westerman seems to be taking his cues from Minnesota Republican Pete Stauber, who made the same argument after the Biden administration announced the 20-year mineral withdrawal to protect the Boundary Waters:

Joe Biden banned mining in over 225,000 acres of Minnesota’s Iron Range, and locked up development of taconite, copper, nickel, cobalt, platinum group elements, and more…not even one month ago, Joe Biden signed an agreement [presumably the Minerals Security Partnership] to fund mining projects in Chinese-owned mines in the Congo, where over 40,000 children work as slaves in forced labor and inhumane conditions with no environmental protections.

Stauber has made similar shows of concern about human rights in the Congo in the past. This time, just a couple of days later, the editorial board of the Wall Street Journal repeated the talking point: “The reality is that if minerals aren’t mined in the U.S., they will be extracted in countries with far less stringent environmental and labor standards.”

A small correction: the reality is that even if minerals are mined in the United States, they will be extracted in countries with far less stringent environmental and labor standards.**

The focus instead should be on taking steps to raise those standards, as Dorothée Baumann Pauly of the Geneva Center for Business Human Rights argues in a new white paper. Trying to eschew artisanally-mined cobalt from the DRC is tantamount to “denial of market realities,”* she writes:

global companies buying cobalt need to encourage the formalization and responsible extraction of the mineral rather than engaging in a futile attempt to avoid cobalt associated with ASM [artisanal small-scale mining] — an attempt that also ignores the sustenance that artisanal mining provides to millions of poor people.

In the Mutoshi pilot formalization program studied by Baumann-Pauly, mechanically prepared (open pit) small-scale mines improved safety. “Formalization stopped children and pregnant women from coming to the mine site.” Other measures encouraged women to participate in mining. The pay these women miners earned could double household income, and in interviews they said the extra income helped offset educational expenses for their children, who were now in school instead of working at a mine site. (Though the pilot program ended during the Covid-19 pandemic, a local cooperative continues to try to enforce these new standards at Mutoshi.)

None of this amounts to a perfect solution, but there’s clearly an opportunity to build on what this pilot accomplished, and it’s encouraging that Microsoft’s Michele Burlington, who accompanied Baumann-Pauly on her trip to the Congo, called for a “coalition” to address ASM in the cobalt supply chain.

If Republicans (or Democrats, for that matter) want to address human rights abuses in the DRC, then they should focus on taking constructive steps. And if they are really concerned about China’s outsize influence in the mineral supply chain, then they might want to take a closer look at China’s ownership stakes in companies like Rio Tinto, the very companies that promise to bring jobs and economic development to their own districts.

*This chart from The Centre for Research on Multinational Corporations (SOMO) nicely illustrates the point.

** A briefing from the Business and Human Rights Resource Centre also warns against the complacency behind these arguments: “assumptions [that] localisation of supply of transition minerals and their production in Europe and North America will guarantee respect for human rights and a sustainable, ethical provision of these materials are misguided.”

Who’s Still Talking about A Green New Deal?

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Almost nobody, as far as I can tell.

Just two short years ago, it seemed everyone at Davos was committed to striking a Green New Deal. This year, the phrase is no longer so fashionable, and you are more likely to come across it in populist rants against globalism and globalists or the Davos agenda.

Writing from Davos in the Wall Street Journal today, Walter Russell Mead eschews the term, arguing instead that any kind of deal that requires “coordination between private sector and political leaders,” and “global coordination” especially, will be repugnant to “the traditional standpoint of American pro-market conservatism.”

No argument there. What Mead doesn’t say, of course, is that the current policy environment favors some private-public coordination and some global coordination and industrial development over other kinds. The laissez-faire, go-it-alone, America First standpoint conservatives hold up for the world to admire is a fiction, rife with contradictions, a form of self-flattery or a story told in pursuit of policy goals. So is the soft denialism of the American right, which holds “that climate change will [not] arrive as quickly or be as devastating as the Davos consensus believes”; but Mead is probably correct that this position will carry the day in the US, at least for the near term.

The question, then, is what sort of deal or climate policy framework should we expect to emerge from this mix of soft denialism and anti-globalism? Nothing too ambitious or coherent, I imagine. The promises of the Green New Deal were abandoned almost as soon as they were made, or shortly after the 2020 election. So now what? I have been tentatively arguing that in the US we’re seeing the emergence of a Green Right. They will focus for the next couple of years on touting jobs in red districts (think infrastructure, mining, and EVs); taking an axe to environmental and financial regulation (e.g., permitting reform and attacks on “woke” ESG); setting border policy to keep migrants and refugees out; and striking an increasingly aggressive posture toward China (at Axios, Jael Holzman has a piece about how that could backfire).

And this program probably has better chances of taking hold in the US than the Green New Deal ever did.

Can America Still Bring Good Things to Life?

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When announcing the appointment of General Electric’s Jeffrey Immelt to lead the President’s Council on Jobs and Competitiveness today, President Obama vowed to put “our economy into overdrive.” He meant what everybody took him to mean: we are now going to get things really going, shift America into high gear, pull out all the stops, discover our inner Edison, “build stuff and invent stuff,” and export it to the world.

But the word “overdrive” is probably not the word the President should have chosen. Or at least it commits him to positions he isn’t going to take – positions I wish he would take.

Indulge me for a moment. Overdrive is not just high gear. Overdrive also means better fuel economy. When you put your car into overdrive you get the best mileage per gallon, because the overdrive mechanism allows “cars to drive at freeway speed while the engine speed stays nice and slow.” Or, as the entry on Wikipedia puts it, overdrive “allows an automobile to cruise at sustained speed with reduced engine speed, leading to better fuel consumption, lower noise and lower wear.”

At the very heart of the President’s metaphor, then, are two ideas: one, economy, a more efficient or economical use of resources (or fuel) and two, sustainability, maintaining a constant speed without causing wear and tear. Right now, we are desperately in need of both: new ways of conserving the resources we have and a more sustainable way forward than the cycle of boom and bust, or dangerous exuberance followed by social collapse.

Those ideas were not on display today in Schenectady. There was some talk about clean energy – a business GE is in, and where, not surprisingly, Immelt thinks a “partnership” between the private and public sector is “essential.” But the main focus was on U.S. manufacturing and U.S. exports, which the President wants to double over the next five years. “For America to compete around the world, we need to export more goods around the world,” said the President. So we need to innovate and invent new “stuff,” or bring good things to life, as the people at GE used to say. “Inventors and dreamers and builders and creators,” we need to expand our manufacturing base and bring American products to the global marketplace.

Reading these remarks, I can almost hear the old General Electric jingle. “We still have that spirit of innovation,” Immelt said. “America is still home to the most creative and innovative businesses in the world,” said the President. We are “still” innovative, both leaders took care to say — almost as if we no longer believe it or doubt it’s true. We’ve still got it. Our force is not spent.

It’s great to be reassured of our continued prowess. There are, however, lots of unexamined assumptions at work here, and chief among these is one I’ve discussed in earlier posts: namely, the assumption that “innovation” is the surest path to “growth,” and that growth – even unsustainable growth – is good in and of itself.

Sustainability doesn’t really enter into this conversation – partly because, I suppose, it really isn’t a conversation. It’s all bluster and boosterism.

Nor would anyone at these events, the President least of all, take a step back and ask whether, while we are doubling our exports, we should also take some steps toward greater self-sufficiency. Doing that, especially when it comes to energy — and energy consumption — would leave us less exposed.

I’m not even convinced doubling our exports or even saying we are going to double our exports is the right thing — for the dollar, for trade agreements we have in place, for the very focus of American industry and innovation. For his part, Immelt has no doubts:

“It’s the right aspiration,” Immelt said of the president’s goal of doubling American exports to more than $2 trillion in five years, during a Nov. 6 interview in Mumbai, where he joined Obama for a meeting with business leaders. “We’ve done it in the last five years as a company.”

Maybe in the long run, or at least in five year’s time, what’s good for General Electric will turn out to be good for the republic. How could it be otherwise?

A Specter (Not Arlen) is Haunting the GOP

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It would be either paranoid or delusional to think that Daniel Henninger had me in mind as he wrote today’s Wall Street Journal column on the ghost of Ronald Reagan, or that he even numbers me among the “joyful Democratic bloggers” who think it’s time for the GOP to leave Reagan behind. But he has managed to draw me out (and not just because I don’t want to be mistaken for a Democrat, or a blogger, or, even worse, confused with the joyful).

You can definitely count me among those who think that expecting Ronald Reagan to lead the GOP out of the wilderness is not a viable political strategy, but just nostalgia, or more waiting for Godot. I said so in a previous post and in a letter responding to a March 5th Henninger column. The letter ran in the Journal under the title “Can’t Live in the Past” and managed to generate some discussion online among adherents to the cult of Reagan; the Journal ran a response from a young woman who held Ronald Reagan in the highest esteem, even though she was a child when he was in the White House, and who took exception to my view that younger voters who turned out for Obama might not exactly be drawn in by paeans to a dead man. My position wasn’t all that far from Jeb Bush’s own: “I felt like there was a lot of nostalgia and the good old days in the [GOP] messaging. I mean, it’s great, but it doesn’t draw people toward your cause.”

I’m still not exactly sure what any of this had to do with the purported subject of Henninger’s original column, which urged Republicans to start talking about economic growth and develop a political platform around growth, but I was delighted to discover that I had managed to hit a nerve.

I’m not out to be a scourge or a gadfly, or simply to irritate. I’d wanted to start a conversation about history, and its claim on the present. Nor am I out to be a mythbuster. There’s nothing wrong with having heroes and stories of the great deeds of great men to inform and guide your politics. In the classical world, that was considered one of the functions of history. I would only caution that you had better not look too closely at those men, because they are after all, men. Even saints err, as one saint (Thomas More) pointed out after studying another (St. Augustine): homo erat, errare potuit. The longer people accept and embrace the fabled past uncritically, the denser the cloud of nostalgia grows, and the further removed your politics will be from history and what really happened.

Again, there’s not necessarily anything wrong with all that. Myths and fables have value, not just cultural but real political value. We believe — or at least we used to be brought up believing — all sorts of things about George Washington and Abraham Lincoln that won’t stand up to very close scrutiny. We even learned them in school; they were moral tales, and they taught us things about the country and about the kind of people we were, the people we should strive to be. Those stories sacrificed some precision about how things really were to tell us how things ought to have been and ought to be.

Being a Reagan Republican may eventually involve the same trade off, and require less in the way of historical knowledge of Ronald Reagan’s presidency or critical interpretation of the past twenty-five years of American political and economic history and more in the way of catechism and fairy tales. To that end, I suppose, Henninger has taken steps in today’s column to start spelling out the articles of the faith, which the late Jack Kemp reduced to a Reaganite trinity: work, save and invest.

The full Kemp phrase, of course, was “incentives to work, save and invest.” Those incentives were to be the result of a government willing to admit the social benefits of modesty — in taxation and regulation of the economy. For now, the American public has elected an immodest government.

Leave aside for the moment that work, save and invest is not exactly a battle cry on the order of we are the change we have been waiting for. Solving that problem is just a matter of working with the material. Consider, instead, the claim for Reagan’s “modesty” and the social benefits it delivered. There are probably less charitable ways to describe Reagan’s approach to taxation than modesty; and modest regulation is really a euphemism for deregulation. But for Henninger the real difference lies in the fact that the new Obama budget sets out a full blown industrial policy; and that makes Obama the enemy of entrepreneurial capitalism:

Mr. Obama’s document genuflects to “the market economy,” then argues that it won’t endure unless we “sacrifice” (through tax increases) to make “overdue investments” (which literally only means public spending) on four explicit goals: green energy, infrastructure, public health care, and education.This calls to mind the way Japan’s Ministry of International Trade and Industry guided that economy from 1949 to 2001. The Obama-Rattner strategy for GM and Chrysler — a rescue if the companies agree to the government’s desire to build more small “green” cars, presumably sold with a large tax credit — is industrial policy. Why be postwar Japan?

It is not conceivable that a Reagan or Kemp would have directed the U.S. economy’s legendary energies into building hybrid cars, windmills and bullet trains.

Republicans these days seem to paint themselves into corners very easily, and this passage proves that the wily Henninger is no exception. Criticize, if you will, the making of industrial policy; but restrain yourself enough so that you don’t start to sound like the enemy of health care reform, or the anti-environmentalist, anti-alternative energy, anti-education party. Why, instead, aren’t we discussing positive Republican ideas and contributions in those areas?

To put it another way, the Republicans would probably benefit handsomely right now from some greening (evangelicals already have), some distance from Big Oil, a serious commitment to education and research, and the honesty to admit that the American healthcare system is broken. But they’re not going there. After all, can you imagine Ronald Reagan or Jack Kemp going there? No, you really can’t. And that’s why it’s time to move on.

What’s more, the notion that Ronald Reagan was a great champion of entrepreneurial capitalism who did not and would never have indulged in setting industrial policy is a Reagan myth — a story constructed by Ronald Reagan himself. The truth is much more complex. As Robert Reich pointed out in an editorial he wrote for the Times in 1985, Reagan may have steered clear of the phrase “industrial policy,” but in the course of his first term he had initiated “a major experiment in economic planning,” and he had done so with “a heavy hand.”

Viewed as a whole, Mr. Reagan’s budget deficit, tax plan and military buildup comprise an extraordinarily ambitious plan for shifting America’s industrial base. This is industrial policy with a vengeance. But because Mr. Reagan is who he is – avowed defender of the free market from the depradations of big government -there are no voices to his right, vigorously denouncing Washington’s vulgar intrusion into the temple of the marketplace. As only Richard Nixon could open relations with Peking, so only Ronald Reagan can make economic planning respectable.

Reagan lives on and continues to haunt — and, I would add, hinder — the Republicans in part because he knew how to tell a good story about himself. He surrounded himself with good storytellers. All good leaders do that; it’s called soft power. And it’s a sign of the GOP’s intellectual poverty and lack of good leadership that they are still telling this same old story, and trying to frighten us from the future with a specter from the past.