Sunday, December 23, 2012

Our Rare Earth China Syndrome

We have a lot of stupid people the United States governments. It’s not their fault. The creators of our Constitution designed a system that should rarely entangle itself in highly profitable transactions that involve innovative products or strategies. As a result, our economy historically bids the most driven and intelligent away from government jobs. Government, then, finds a governing formula that works, and sticks to it, often no matter what.

China, as every American senses, differs. There, the government bears no shame in announcing that it is the sole source of all beneficial economic activity. In this way, the government bids for the most driven and intelligent, because it provides a path to the most highly profitable transactions.

Barak Obama provided a study in contrasts on March 13, 2012, when he talked about a formal WTO request for consultations with China about rare earth metals. Our Washington Troglodytes stumbled into lanthanide policy because of neodymium boron iron magnets. The President packaged the issue as, “China restrict access to rare earth metal bad - stops American green jobs.”

Chinese mining operations have exported cheap rare earths for some time, beginning soon after the American regulatory state saw Barbarella star in a 1979 movie whose title is now a cultural icon.  Much later, the Chinese implemented a raw lanthanide export tax, after they achieved international market dominance. Manufacturers of products containing rare earths have now located in China, to avoid the export tax and blockages in their supply chain. 

The Chinese, I bet, know well that manufacturing operations come and go. I will further bet they will bow to international pressure on raw rare earth export taxes, but only after they have collected the low lying fruit. This fruit is intellectual property associated with things like neodymium boron iron magnet production.  Intellectual property ownership quietly produces returns long into the future.

The stupidity in Washington goes deeper yet. American rare earth deposits are plentiful. A single American rare earth mine throws away all of the neodymium the United States can use. It harvests only lighter lanthanides because neodymium is always found with thorium.

Why do we throw away the neodymium we can use to manufacture high tech magnets? In Washington, “Radiation bad. Will poison air, earth and water - make China Syndrome.” That political formula has worked since the 1980's.

I will give the devil his due. What could go wrong with a plutonium manufacturing facility that must operate at high pressure? Now back to the stupidity. Democrat campaign strategists helped ensure a 2012 Presidential victory by doubling down with massive federal spending in a state that has critical electoral votes. The American bet on the dinosaur Bacock & Wilcox mPower modular light water reactor bears extraordinarily little relation to its market value.

I now introduce you to 江綿恆, son of Jiang Zemin, former General Secretary of the Communist Party of China and President of the People's Republic of China. On October 29, 2012, Jiang Mianheng explained at the International Thorium Energy Organization 2012 meeting sponsored by the Shanghai Institute of Nuclear and Applied Physics and the Chinese Academy of Sciences why China has decided to be the first one, in a rough translation of a Chinese idiom,“To Eat the Crap.”

Our Rare Earth China Syndrome does not involve a stupid use of super-heated plutonium breaking containment that sinks to China. Instead, stupidity in Hollywood super-heats our our intellectual capital, which sinks to China where it forms invaluable intellectual property.  As you read this post, the exclusive right to use disruptive technology is falling to very smart people in China.  

1 comment:

ikaika said...

First Rate Post!