President Trump has just issued an executive order that might make me lots of money. He’s also just issued one, the same one, which has me rather puzzled. Not because I am confused by the president potentially making me richer, but because the logic of the idea seems suspect.
The basic idea is that there are certain critical minerals out there which the U.S. needs — not just desires, but needs. It would, possibly at least, be a rather good idea that such were mined within the country’s borders instead of outside. Or if it is to take place somewhere foreign, at least let’s make sure that it’s being done by friends, not potential enemies.
Economists are usually pretty wary of such claims, for it’s all too easy for people to clamor that their specific product is one of those critical things that must be home-produced. There certainly used to be — might still be, for I’m not going to read the customs code to check — import duties on wool and mohair, on the grounds that if we had a shooting war, we would need a domestic source of things to make military uniforms from. Yup, goat farmers were protected because World War III might come along.
Despite that cynicism, military and security reasons are one of the exceptions that are generally accepted to the idea of free trade. OK, so, critical minerals then.
The connection with your humble writer is that I’ve been involved for decades with one of those critical minerals. I’ll not bore you with which one it is, but think of all that stuff about China and rare earth for a clue. It’s a basic stance of the Pentagon that military stuff shouldn’t be built out of Chinese materials unless it really, really has to be. We’ve had people shouted at because million dollar missiles incorporate a $1 magnet made in China, for example.
We can all wonder how important this is, but at some level it has some importance. The mineral I work with is largely supplied from China, a bit from Russia, and absolutely none at all from the U.S. Yet the military does use it. Further, it wouldn’t be difficult to produce some domestically. I’ve even worked on a plan that would produce all the U.S. could possibly want inside the U.S., a plan that failed due to the cost of getting it through the regulatory system.
The executive order says that the regulatory system should be loosened for those domestic sources of those critical minerals. Bureaucrats should look kindly upon mining and processing applications, that sort of thing. Hey, great. It won’t extend far enough for that plan of mine to be affected, but it might well make the replacement plan easier, so I might well make money. Huzzah, obviously.
But as I say, there is also that puzzlement. The contention behind this executive order is that the regulatory system is too strict. It prevents us from producing, in the U.S., things we can produce, things we use, and thus things we’d like to be producing domestically. But this relaxation to the regulatory system is only concerning these critical minerals.
Do note that it doesn’t say a relaxation of standards — it’s not insisting upon slaughtering the buffalo to get at the gold under Yellowstone (yes, there is some there, but I have no idea how much). It’s only insisting that the bureaucracy pull its thumb out so that beneficial economic activity can take place.
Which is puzzling, isn’t it? Why restrict this idea to critical minerals? Why not just decimate the bureaucracy to get the point across so that we get more beneficial economic activity in all sectors?
If the regulatory bureaucracy is too overbearing, then why pick and choose where it should be trimmed? Why not just get it working more efficiently across all sectors?
Tim Worstall (@worstall) is a contributor to the Washington Examiner's Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute.
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