"Environmental experts and local officials say the cost of the cleanup should not be shouldered by the Chinese government alone, but also by the rare earths industry and the global companies and consumers that benefit from these technologies."
The mining companies should bear the cost, since it was a cost that they simply ignored at the time. If that cost had been factored into their business, prices for their materials would have been higher (and the consumers would have paid).
Instead, like many businesses, they took responsibility for only the costs that they had to. In general, consumers should not shoulder the burden of corporations' bad business practices.
If true costs were considered, there would be far less materialism (and corresponding pollution).
All that said, sometimes everyone has to contribute to right a wrong. However, it's not ok that everyone pay for one party's past wrongs only to see other parties continuing to repeat those wrongs.
The eternal problem of externalities. They ought to be priced into the cost of the rare earths, but doing so means you lose out to your less scrupulous competitors.
Capitalism 101, get rich by plundering the earth (and leave someone else to clean up the mess). Mining is a truly nasty business, and not just environmentally.
No small problem is that of assigning value to a clean environment, or to sustainable practises. ETS anyone?
Everyone is complicit in everything to a slight degree. That's simply no longer a useful thing to say, nor is it a means to dismiss an argument that something should not be done. It's just a statement that disentangling yourself from the system comes at an extremely high cost, if it is possible at all.
And others among us think the negative in certain aspects of the system can outweigh the positive and things could be improved, and it doesn't mean that we should live in the wilderness hunting our own food if we want to criticise any aspect of said system.
The computer mrspuratic is using exists thanks to products from current mining... true. But it could also exist thanks to products from more sustainable mining, if the world worked differently. It's not like he was given a choice.
So your kind of argument, if you intend it to discredit criticism or making other people appear incoherent with their principles, is basically a fallacy.
Mining companies don't have more choices than the consumer. The mining companies are also forced into making the choices they do or go out of business based on the reality around them.
Only a little. Mining can be less environmentally harmful if we make that our priority. China didn't care and bankrupted the environmentally concious competitors.
Let's not forget, that the buyers of the minerals had total choice where to get their supplies from. They could have purchased from American or other mines, but chose to go with the cheapest - knowing both that doing this would bankrupt safer mines, and leave environmental waste in China.
The Chinese mines are not blameless, but they are only part of the 'profit at all costs' mindset that many shareholders demand.
They didn’t really have a choice though. Oh sure, those companies could pay twice as much as their competitors, but they would simply go out of business and not exist anymore. So if they existed before, they can’t exist now.
It’s all predicted by the free market: the mines that had higher costs because they followed environmental regulations can’t compete with those that don’t, likewise companies that purchase from more expensive sources can’t compete with those that purchase from cheaper ones, since ultimately consumers are going to choose the cheaper product.
Hence the need for regulation and perhaps even trade restrictions to force the right choices to be made.
No it is not predicted. The free market does not require you to use the cheapest supplier, it requires you to use the best for your situation. Sometimes it is worth paying for quality. If using the cheapest supplier causes your customers who care about the environment to boycott you, then using that cheap supplier isn't a good decision.
So the failure comes back to people not actually caring about the environment in China.
If the rare earths produced from the Chinese mines and refiners were of lesser quality, then you would have a point. If the refining process requires them to poop in their own backyard, then you might not even be aware of that until many years later, let alone have a free market interest in preventing them from doing that.
> So the failure comes back to people not actually caring about the environment in China.
Some people, many people in China do care about the environment, they just have lacked the power to do much about it. But yes, again, short term interests win out when the long term consequences are far away in space or time. And then it’s just a classic prisoners dilemma: you can think long term, but your competitors will just put you out of business short term so it isn’t a workable solution.
My company is very careful that our suppliers don't use slave labor. We have mapped out supply chain down 6 levels in some cases to ensure this. Slave labor is cheaper, but we won't use it even indirectly.
Rewards for not getting caught for cheating is a fundamental problem that no system can solve.
There are systems that get closer than others. We tend to use words like fascist to describe them for good reason: the downsides are often worse than the problems. This isn't to say we shouldn't work on the problem, we just need to be careful that our ends are not worse.
Did you know by just being alive you are destroying the earth? Clearly anyone that dosen't immediately kill themselves has no grounds for criticizing anything.
Pricing externalities has become such a common comment.
Does anyone know good examples (family led also, but successful mostly) of pricing externalities?
I mean the alternative is regulation and/or legislation. Those work pretty well when a reasonable (ie production still happens) of harmful processes/methods. Eg banning CFCs in certain products. I know of examples where these were deployed.
Tldr: what is the best, big example of a real, functional price system for "externalities?"
I don't want to jump to conclusions, but it feels like this line of thinking is similar to state "retraining" to deal with unemployment due to economic changes. Very popular rhetorically, but very few encouraging examples.
> I mean the alternative is regulation and/or legislation.
This isn't an alternative, this is precisely how you price in externalities. No company in a competitive market will do it of its own volition, when it has no reason to (no punishment) and every reason against (competition).
Looking from a different perspective: an externality happens when a transaction between two parties has a hidden third party that is made to pay the price without gaining anything from it. That third party usually is "society at large", or "some subpopulation within society at large". The role of the government is to be a representative of the society. A regulatory measure like e.g. carbon tax is essentially the government stepping in on behalf of the society and saying "if you want me to accept all this negative value, you have to compensate me for it fairly". It's a proper market mechanism.
I'm not sure how else one "prices" an externality. Require the company to clean up after itself - that costs money, the company then internalizes that cost into their operating structure and the cost of their products.
I think we hear a lot of them but don't see them in practice because it would reduce profits. It's like any other solution to a problem of capitalism.
Regarding regulation: something like a carbon tax is arguably pricing-in of an externality, but mandated by the government. That's actually what I think of when I suggest this, because I don't expect captialist actors to deal with these problems without being forced to somehow. In the free market, if an externality can be ignored to gain a competitive advantage, it will be.
That's what I meant, except a mature, existing example.
Carbon tax is the biggest question on the table. A lot of economists like it because theory. I'm skeptical, tbh, even of quasi-dynamic versions (like taxing fuel), and I tend to think taxes/subsidies (for example) on the purchase of vehicles would work better.
Open to have my mind changed though, hence the question. Where have laws been used to successfully create externality price system?
To directly answer your question, at least in the US, waste removal is something we’ve largely managed to handle this way. For the most part, almost no one burns their trash, or dumps it in rivers/oceans/lakes, or on the street, all of which are common practices historically (and still practice elsewhere, unfortunately). We have rules about how landfills need to be managed, we pay companies to haul it away and dump it (either through property taxes or directly paying a waste company).
Notably, we are not doing this when it comes to CO2, we’re still just dumping it in the common atmosphere even though the costs to everyone will be absurdly high.
There have been a number of attempts at carbon pricing. One example is the UK
>In 2013, the UK became the first EU country to introduce a carbon price floor, now set at £18 a tonne
Some results:
>In 2012, the UK ranked 20th out of a list of 33 rich countries in terms of low-carbon electricity use. In 2017, it jumped to 7th. No other country has ever climbed up the rankings so quickly, according to a study by Imperial College London.
and
>UK power from green energy set to surpass fossil fuels in 2019
so it seems to be working at least somewhat. But:
> the UK measure has come under mounting pressure from troubled steel companies and other heavy power users who claim green levies make electricity more expensive, giving international rivals a competitive advantage.
So overall it seems successful but it's complicated. A lot of other schemes also seem to have complicated effects so it's hard to say yeah it's all good but overall they are probably an improvement on doing nothing.
So rather than a cost proportional to how much waste you actually create, you'd rather have it be an equal tax on all drivers? That would eliminate the whole benefit of a carbon tax for middle class: If you're just driving to work every day then you shouldn't have to pay as much as the people and organizations who are creating substantially more waste than you are. I think this approach would ostracize drivers even worse than current approaches.
I'm not proposing anything, just discussing. To me, the first question is "will this work?" not "is this just/fair." Fairness and justice have to come in too, but the first question to ask if you're deciding about creating a price system is "can we?"
We can obviously do fuel taxes. We do. That correlates pretty directly to emissions (within the domain of driving), but... we have experience here. We know that the demand elasticity to price is low in the long term and extremely low in the short term.
Ie, You need a very big/painful tax to achieve a relatively small decline in emissions.
There are questions of fairness/justice in all scenarios. Proportionality to waste is one issue. Proportionality to income is another. Different people will have different perspectives. But, before we even get to those, the question to answer is "what's our incentive?" Which (imo)needs to be answered in terms of reduced emission volume.
In the forth quarter of 2018, 46.89 million iPhones were sold worldwide. That's just the iPhones. Wouldn't it be great if products from Apple were easier to repair or upgrade instead of encouraging consumers to buy the latest model? It would also make it easier to recycle. How much mining would that prevent?
iPhones have industry leading service lifetimes, often being passed on to other family members and there's a healthy second hand market. More Android phones are sold every year than iPhones and on average they are used for less than half as long[1] (average lifespan of a phone less than 2 years, iPhone economic lifetime 67 months).
iPhones also have industry leading ratings in recyclability[2]. That is probably the most important factor because it means the materials, including rare earths, could have an in-use life many times longer than that of the phone itself.
OPs criticism was aimed at Apple, but whether they take advantage of the option is really on the owners. Apple is pushing this aspect fairly hard though, because it's another way they can differentiate their product and due to the costs involved it's not something cut rate OEMs can compete on effectively.
On the other hand Apple is already a lot better than the average Android phone when it comes to the availability of software updates, especially security updates by the vendor.
However, we still have a long way to go. It looks like mobile phones will last longer now that we are seeing diminishing returns from the yearly updates.
Perhaps vendors can be forced to release the software as open source when they no longer support it with security updates?
I still use my iPhone5 as a 2nd phone, and it's still totally usable after 10 years with the original battery and updates from Apple available until recently. I totally see myself buying 2nd hand iphones to my kids as a cheap solution to keep them off my phone (they're thankfully still young enough not to care about the fashion and brands)
In places like China, where labor is very cheap, they're most likely disassembled into parts, which are then used to repair other iPhones - much like it happens with Android phones. In places where labor isn't cheap, I can't imagine where else would they go but a landfill.
Hand an iPhone in to an Apple Store or some affiliated retailers, or online and they will recycle it for you for free. They built a family of robots to automate disassembling them.
China was happy to ignore environmental standards in order to corner the market in rare earth minerals. American miners couldn’t compete because they were already “internalizing” the environmental costs, and were priced out of the market.
Once China had put everyone else out of business (and blocked foreign businesses from mining inside China), it started not only reducing output to increase prices, but also started to very slowly apply environmental standards it previously ignored.
The Chinese government also showed how willing they were to now use this almost complete monopoly for political purposes in 2010.
And now in 2019 they’re calling for consumers and global companies to contribute to the costs of “internalizing” the pollution?
Now you realize how the game theory of economics is fundamentally at odds with the natural world and sustainability. It always pays to defect now, and the loudest voices are usually the rich players who moan about economic growth and "burdensome regulations". Mining and logging in the US was very much like this before regulation, but that was on a much smaller scale, with simpler technology and less energy available to scale up. My advice: pay attention closely to environmental policy and don't let regulations be rolled back in the name of growth!
The resolution to the economic prisoner’s dilemma is religion, which evolved to coordinate the globally shared values needed to defeat a backstab/backstab situation. For example “thou shalt not murder” is win/win.
Policy doesn’t even need to be rolled back much of the time: they can just stall progress while they figure loopholes around the existing policies. Which has been the GOP strategy for almost 40 years.
Don't blame the GOP, both parties have been doing it for the last 200 years (the republican party isn't that old, but the Whigs before them as well). They target different areas to stall progress. Sometimes the stalling is good, sometimes is bad - and it is often a matter of opinion which is good or bad.
I mean, sure; the democrats do some of this but the entire GOP strategy over the last 40 years has been to bring the government to a standstill to avoid passing anything.
The GOP strategy succeeds in the case of “passing GOP-sponsored laws” and in the case of “doing absolutely nothing”. The Democrat strategy only succeeds in the “passing Dem-sponsored laws” case — it disheartens the Dem base to see an ineffective government while confirming the pre-held anti-government bias of the GOP base.
Also, I would avoid this argumentation approach related to modern politics in the future; “whataboutism” which is widely recognized as a GOP propaganda technique. The Progressive agenda is not actually about getting even, it’s about fixing a system that has oppressed the middle and working class into a rent-seeking economy with little social mobility. We don’t care that it’s “always been done this way;” the “old guard” of the Democratic Party is only slightly less of a problem than the GOP.
We’re trying to fix the systemic issues in our electoral process, which also includes the Democrat “superdelegate” nomination process designed to weed out populist candidates. Like it or not, we’re in a populist era...
> Environmental experts and local officials say the cost of the cleanup should not be shouldered by the Chinese government alone.
The Chinese companies and government knew what they were doing and benefited greatly from their actions. I would argue that they are exactly the ones that should be shouldering the the cost... alone.
Seems like you agree then that the cost should not be shouldered by the government alone, but also by the companies who benefited.
The article mentions that most mining operations were illegal until recently and the Longnan government only managed to shut down the last of them in 2017. Some local officials probably lined their pockets by looking the other way, but the central government likely didn't see any of those profits.
Now that the industry is controlled by state-owned companies, stricter regulations were introduced, which is exactly the opposite of what you'd expect if the government were willing to tolerate the pollution in exchange for profit.
The central government almost certainly ‘profited’ (ie. benefited) from this whole situation.
1) Strategically, it cornered the market and has been able to use that dominance to great geopolitical effect.
2) Economic development: environmental regulation and ‘fair’ competition with foreign firms would’ve held back the industry in China, costing jobs and the bottom line for the Chinese state. The breakneck economic growth has been achieved in large part because the Chinese state put economic development ahead of all other concerns.
3) Internal politics. The basic balance between local and central government since the 1990s were that local governments had to fend for themselves financially, and in return central government wouldn’t bog them down with regulation and oversight. The lack of environmental regulation of what is a nationally and strategically vital industry reflects that balance.
that sounds exactly like the strategy used by large corporations like Amazon and Starbucks to rid the marketplace of smaller competitors. Things like elaborate tax structures and subsidies not available to small businesses https://www.independent.co.uk/news/uk/crickhowell-welsh-town...
They don't exist anymore though. According to Australia, all of the rare earth expertise is in China now, so it's not as simple as just reopening, and in fact might be very difficult
This is a changeable situation. Expertise can be obtained. We have plenty of experts in Engineering, physics and chemistry. Everything about mining and processing comes down to those. Experts in the field know exactly what is important to know and and won't try something that seems good but doesn't work out. However there is no reason a few years of investment can't create experts of our own from the basic principals we already have.
Note that we have experts in mining and refining scattered around the country. While the specifics of rare earths are different from iron or gold, many details are close enough for round one, from there is is just improving the processes.
The US Mountain Pass mine in California is operational. They send all of the output to China for processing. That will change in a few years as the US brings new domestic processing facilities online. The US chemical company, Blue Line Corp, has partnered with Australia's Lynas to build a facility in Texas. They're forecasting two years from now to have it running. That facility should enable the most critical / sensitive domestic demand to become entirely independent of China.
That person, looks like they have some environmental role, seems to be talking about future mining. That future mining should internalize the externalities in its price, which seems fair enough.
I don’t think they are asking companies to help with their current cleanup. (That would expose them to similar claims in other countries which serve their industries).
But your major point is right that they were more than happy to dump rare earths to corner a market and are now suffering the consequences of that policy.
Which is why tariffs make a lot of sense. Yet there has been this massive movement of reaganite/right wing tariffs bashing for decades now - where the mantra of tariffs causing economic harm is mindlessly repeated. You would think they didn't generate tax revenue (and thus reduce taxes/improve economics elsewhere), and where not easier to collect than many other taxes.
I'm not denying the dangers. I can see how countries could fall into populist/short term positions or get involved in harmful escalating tit-for-tat increases, but this is a strawman when it comes to having moderate tariffs.
I agree with you. Strict environmental and employment standards in US and EU make no sense if companies can just relocate to China and pollute & abuse people there.
I'm a strong proponent of "fair" trade (not "free" trade) for this reason - I'm OK with production moving elsewhere because salaries are lower, there's more resources and/or better climate for production, but it's completely unacceptable if it's done to skirt local environmental/employment/anti-corruption laws, and should be taxed heavily.
I don't quite understand your criticism of "right wing tariff bashing" though - Trump's the one who's bent on introducing tariffs, whereas past governments (including left-wing Obama) were happy to play along...
I'd argue that trump is a break from those past dogmas and regulatory capture (to some extent). Certainly he wasn't approved by the media - who are controlled by big business via advertisements.
Trump is rightwing in the same way that the german national socialists were right wing. i.e. Not really economically, or at least big business has to be aligned with the nation. I am not drawing an equivalence - he is to the Nazis what Bernie Sanders is to the Soviets i.e. not comparable in scale at all.
Honestly if country A can make a product X% cheaper than country B because of having less stringent regulation (be it environmental, quality, labor laws...) it's just logical to me that country B should impose a tariff of X% on that product.
I'm not much of a free-market capitalism, but if you have to be, then a free market is not a free market if not everyone is playing by the same rules, right?
That sounds sensible but the devil's in the details. How do you figure how much of X% is environmental? Do you insist the Chinese have similar pay and conditions for workers? How do you check where the rare earths you are buying in say Singapore actually came from?
Which is why precautionary and moderate tariffs are suitable, with some discretion for cases where things are especially egregious and/or where the economics are different (low margin vs luxury goods need different levels of tariff).
Probably ideally tariff levels should not directly made by the executive, but rather some kind of review system - (although quangos are another problem).
It's not to prevent a competitive industry which can just produce something cheaper but also to prevent governments which actively use banned practices to give their nation an unfair advantage. More here:
I'm a free market capitalist. The response we give is if country A is cheaper we should let them do it and concentrate on what we can do well instead. Even if county A is better in everything, they have limited resources so they are better off buying from us something they could do better just so they can concentrate on what they do well while we get good at something we can do but not as well. In the end the efficiency of scale allowed be working together is better for both of us.
It probably makes sense to ignore the above for things like guns and ammo - in case the other country decides to use this monopoly on military supplies against us in war. This is a worst case though, and is rarely required in the real world.
> This is a worst case though, and is rarely required in the real world.
Is it though? We're currently talking about the national security concerns coming from frickin magnets. We could have the same conversation for soybeans or steel or manure. There are a lot of things that are crucial in a country's functioning.
That argument assumes that country A's economy does not affect lives of citizens in the purchasing country (B?). Global warming, among other effects, violates this assumption. Carbon pricing + tariffs on carbon make complete sense even in the free market capitalist mental framework.
Interesting, although I wish more thought is put into the cost model upfront for any kind of mining that harms the environment prior to these excavations. By taking under consideration the cleanup process at the beginning, it eliminates the need to fight for funding after the mining is done. Although in communist countries all the government cares is to rip the benefits and not worry about the after effects.
"Environmental experts and local officials say the cost of the cleanup should not be shouldered by the Chinese government alone, but also by the rare earths industry and the global companies and consumers that benefit from these technologies."
The mining companies should bear the cost, since it was a cost that they simply ignored at the time. If that cost had been factored into their business, prices for their materials would have been higher (and the consumers would have paid).
Instead, like many businesses, they took responsibility for only the costs that they had to. In general, consumers should not shoulder the burden of corporations' bad business practices.
If true costs were considered, there would be far less materialism (and corresponding pollution).
All that said, sometimes everyone has to contribute to right a wrong. However, it's not ok that everyone pay for one party's past wrongs only to see other parties continuing to repeat those wrongs.