America’s private sector financiers, whom I will categorize for the purposes of this essay as the Wall Street crowd, seem to have reverted to the thinking and actions of 1928. They, not the elected officials in Washington, chart the course of the American economy and impose upon the elected officials their views. Their biggest supporter is the current President of the United States, who is the first businessman with no political experience ever elected to that high office. His approach to solving political, economic, and social problems is that of a successful CEO. He is a results-oriented manager and has no problem abandoning politically driven solutions in favor of quick fixes, regardless of immediate political or even economic consequences.
His greatest strength lies in exposing the fact that his opponents never think of long-term consequences and are literally ignorant of Industrial or manufacturing economics that impact technology. In fact, his actions have made more and more of the American public aware of the fact that they have ceded the control of the largest economy in the history of the world to a group of elected individuals and bureaucrats incompetent intellectually to manage such an economy.
The mistake that both the President and his detractors make, and one that is increasingly imperiling the course of America’s economic future is to consider the world as only divided into resource-producing economies and industrial manufacturing economies. This was the same division accepted by the then coming victors in the Second World War, towards its end, as they met to determine how to control the post-war global economy so as to avoid the revival of the economic situations that they believed had caused that war.
The failure of National Socialism and the rejection of its now forgotten “new order” in European economics, which was basically German economic imperialism enforced by military hegemony, added to the temporary military dominance of the eastern portion of the European continent by the Soviet Union at the end of the war, allowing the Russian version of Communism to proceed. Simultaneously, the abrupt American withdrawal from open-ended military support for the Nationalist Chinese allowed the Communist Chinese under Mao Zedong, supported by the Soviet military’s material and managerial assistance, to rapidly take over China. Both the Russian and Chinese states were thinly disguised empires, each as autocratic as National Socialist Germany had ever been. The then-dominant self-styled “socialist” power, the Soviet Union, proceeded to bankrupt itself, albeit over half a century, by embarking not on an economic but on a military competition with the United States. The Chinese socialist state proceeded to match the early history of the Soviet Union and almost obliterated itself in famine and poverty. But the Chinese were rescued from the demise of their Soviet-style state in the very last decade of the 20th century, when a sage leader altered their economic direction. By the beginning of the 21st century, China had embarked on a Western-style reinvention of its “socialist” Economy with “Chinese Characteristics.” In part, emulating late 19th-century Japan, China imported Western industrial capitalism defined as a form of socialist “economics with Chinese characteristics.” The Chinese Communist Party retained absolute political control but allowed individual Chinese entrepreneurs to rapidly propel the Chinese economy into the 21st century, and supported this transformation with a nationally mandated emphasis on STEM education.
The results have been as astonishing to the rest of the world as the Japanese defeat of the Imperial Russian Navy at the Battle of Tsushima in 1905, which shocked the Eurocentric world of that time.
But contemporary Chinese economic imperialism, as evidenced by its current control of the so-called critical materials necessary for the maintenance of industrial economies, has now run into the same barriers as European imperialism of the nineteenth and early twentieth centuries.
The global south, as the nations comprising the majority of the human population are now called, is in the process of rebelling against both American and Chinese economic imperialism. These nations, which were once sources of raw materials and sites of consumption of manufactured goods for European empires and now for the Chinese empire, are rebelling. They want to emulate, not worship, the industrialized, technology-driven consumption of societies in both the United States and the People’s Republic of China. In order to do this, they now recognize the need to expand their domestic economies by adding downstream processing of their natural resources, both mineral and food, for the production of sufficient end-user products in their own countries, to rapidly raise their standards of living. This will support the rise of their societies into modern, industrial, technology-based consumer economies. Their common goal is to reach the level of prosperity first achieved in the United States and soon to be achieved in the People’s Republic of China.
The financiers of both of today’s industrial imperialist states are resisting this trend as best they can. Mostly by trying to continue supporting the raw-material imperialism of the rapidly retreating past. Thus, the Chinese have made enormous, unrepayable loans under the guise of their Belt and Road Initiative to the resource-producing nations of the global south. When those nations default on their loans, the Chinese can simply take over the production of those resources and limit the ability of the supplier nations to industrialize and modernize, and to become International competitors in manufactured goods. The United States simply assumes that the natural resource-producing nations will be glad to support the American economy in return for economic assistance and military protection from China. Neither of the two economic imperialist nations seems to care about the rapid growth of desire for independent economic life and progress towards a high-level consumer economy in the global south.
The current American initiative to create an international critical materials stockpile consortium dedicated to advancing and maintaining the American domestic economy will fail because it ignores the social and economic aspirations of the seemingly subordinate nations
With perhaps a visceral understanding that this period of economic imperialism is coming to an end, the American federal government is hedging its bets through pork-barrel politics. It is raining money on newly formed (by financiers, not technologists) companies and groups with little apparent capability to “solve” America’s now-suddenly recognized domestic production deficits in natural resources necessary to support its manufacturing economy.
The United States’ enormous natural resources of both fuel and non-fuel minerals have been marginalized by an influential grouping of mostly elitist social do-gooders who have played right into the hands of self-interested financiers by touting economically suicidal policies that affect themselves very little but can be and are becoming devastating to the economic lives of ordinary citizens.
Are there critical minerals, materials, and metals? Only in the sense that the so-designated materials are necessary to maintain the quality of life and the standard of living in today’s United States. The small but not insignificant demand for these materials by the United States military is necessary only to maintain that military’s technological superiority over the militaries of the rest of the world.
If globalization continues to fracture, it will impact the prices of minerals, both fuel and non-fuel, and food.
For individual nations, domestic self-sufficiency in both categories, minerals and food, will become a necessity if they are to maintain their current levels of prosperity and to grow that prosperity.
The so-called developed nations with high labor and living costs we’ll have to subsidize the production of those resources necessary to maintain their consumer economy. The current resource supplying nations will have to focus investment on going downstream from simple resource production to technological manufacturing competence.
In my opinion, the best businesses in the future will be:
- mining
- refining
- downstream processing into end-user products for manufacturing and
- manufacturing engineering and technology providers
For American and European nations to be self-sufficient in natural resource production, their economies will likely need to subsidize it.
Even so, the comfortable lead that those parts of the world have in the above four categories should provide the next generation’s leading profitable business venture.
The Overblown “Investments” in high-speed computing, glamorized by Wall Street as artificial intelligence, are already being moderated by the sudden discovery by the financiers that the electrical power required by the servers for this technology will dramatically impact the supply and therefore the cost of electricity for the ordinary citizen. This will quickly bring the AI crisis to a halt, as the story of how clean energy will prevent the now-fading climate crisis comes up against the enormous cost of fueling today’s AI crisis
The foolish allocation of capital to service America’s crisis pornography is now revealing the limitations of capital formation and deployment.
The historical truism that comes to mind is that no matter what the economic system, only the lowest cost and most robust business ventures will and can survive.
Too Big to Succeed is my analysis of the current promotion of untested suppliers of critical minerals, materials, and metals. The coming failure of most of these ventures will have destroyed useful capital. The beneficiaries will be the nations of the Global South as their competition for the manufactured goods of the developed nations fades due to the high cost of such goods from the developed nations, based on the enormous waste of capital by those developed nations.
The geological distribution of natural resources has nothing to do with the political boundaries of today’s nation-states. I suspect that the nations of the global south will, in time, organize trading networks among themselves to distribute the natural resources they control in a way that benefits them first and their grouping later.
The eurocentric resource imperialism that has dominated global history for the last several centuries is now entering its terminal phase.
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