Cross-Posted: TobyToons.com (Conservative Political Cartoons)

On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Robert Kagan to discuss his new book, The World America Made, the importance of America’s military muscle, and how the world may change if America is no longer the world’s superpower.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Buy The World America Made on Amazon
The importance of U.S. military might shouldn’t be underestimated
The Return of History and the End of Dreams
Of Paradise and Power: America and Europe in the New World Order
Robert Kagan at Brookings

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As stated in a piece I published at Big Government in November, China has a complete monopoly on the 14 critical rare earth metals producing 97% of current world production. Products as fundamental to America’s industrial future as mobile phones, automobiles, televisions, fluorescent lighting, fiber optics and most of our advanced military hardware require rare earths. This monopoly has the potential to allow China to control production within all these trillion dollar industries by simply selling rare earths in China for far less than they sell them outside of China.

The situation had reached a critical state in 2011. Prices for metals such as neodymium have increased 20 fold in just the last 2 years making their use outside of China prohibitively expensive. The system of export quotas, tariffs and minimum export prices made the cost of rare earths nearly half within China then what they are outside China giving Chinese producers and companies China allows to build plants within China, an overwhelming cost advantage over other global producers; an advantage the WTO now says is illegal. The decision is also a major victory for our military which relies on Chinese rare earths to produce everything from Bradley Tanks and F-22 Fighter Jets to Body Armor and Night Vision Goggles.

Of significant note, the Appellate Board found that China could not use environmental considerations as an excuse to restrict the volumes that its producers exported. Over the last 5 years, China has progressively lowered its total export quota which has the effect of driving up prices, claiming it was doing so for environmental protection. The WTO found that the agreement it signed to join the organization prohibited it from making such a claim.

Some commentators are questioning whether China will in fact honor the ruling. My feeling is they will. China has a history of respecting WTO decisions to maintain their good standing and yesterday China’s Geneva mission issued a statement that while it “deeply regrets” the decision, it would respect it.

The decision on its face only applies to a group metals that does not include the rare earths. It includes such materials as silicon, manganese and magnesium, as well as, minerals such as coke and bauxite. However, the export restrictions on these metals are identical to the ones on rare earths and international pressure to apply them to rare earths has already begun. EU Commisioner Karel De Gucht stated after the ruling was published that, “China now must comply by removing these export restrictions swiftly and furthermore, I expect China to bring its overall export regime — including for rare earths — in line with WTO rules.”

On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Scott Lincicome to discuss a court ruling impacting the Obama administration’s US-China trade practices, how this will impact the American marketplace, and how the Senate may come to the rescue.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

On China Trade, the Obama Administration Just Can’t Stop Digging
Bombshell: CAFC Rules US CVD Law Cannot Apply to China & Other “Non-Market Economies”
China CVD: Time to Unscramble the Eggs

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The hosts and guests of Coffee and Markets speak only for ourselves, not any clients or employers.

Sherrod asked President Obama about his plans for a federal manufacturing and energy policy during a February 2010 Democrat meeting:

President Obama knows what’s best, and seems annoyed by the democracy blocking his path. For all his worries of “falling behind” autocratic China in the race to throw money at unmarketable products, we have to wonder how much of the New York Times coverage he was briefed on the week before!

In the United States, power companies frequently face a choice between buying renewable energy equipment or continuing to operate fossil-fuel-fired power plants that have already been built and paid for. In China, power companies have to buy lots of new equipment anyway, and alternative energy, particularly wind and nuclear, is increasingly priced competitively.

[...]

As in many other industries, China’s low labor costs are an advantage in energy.

Emphasis mine. Impromptu poll: Do you think Sherrod Brown or President Obama comprehend how expensive capital is, or realize China’s population and infrastructure are different from ours? Do you think they would cross Big Labor in order to compete with Chinese manufacturing in a meaningful way?

What the average person might call “reality” is only a cloud of pesky details for Barack Obama and Sherrod Brown to wave aside. Green energy is A Good Thing, so taxpayers should happily spend money on green energy while coal & oil companies take their medicine and ask for more. Pipelines are right out. Sure, we’ll lose the occasional half billion or so funding the endeavors of Obama donors, but that’s part of the fun!

If you suffer through the complete hour-and-fifteen session on the White House YouTube channel, you’ll hear both Sherrod and the president mention glowingly Ron Bloom, Obama’s former “Car Czar.” Bloom, instrumental in bringing the UAW out on top of the Chrysler and GM bailouts, is both an SEIU alum and a Mao enthusiast. Forget about the jobs lost to China; the ghost of Chairman Mao draws in Obama appointees like a siren!

In matters of manufacturing and green energy – as with most everything else – Sherrod Brown is a cheerleader for Obama’s worst Progressive tendencies. For a Senate seat the GOP can retake this November, look no further than Ohio!

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“America has zero production on all the metals that we currently need,” he says. “China, controlling all these materials, is really set to become the Middle East of the 21st century in the sense that they’re going to control alternative energy sources.”

Highlighting the need for rare-earth material in various military technologies, Silver also suggests the creation of a Strategic Metal Reserve.

The segment below, from the Washington Post:

Read Mr. Silver’s previous writings on rare earths here.

On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the iPhone’s manufacturing process, why it can only be done in China, and the reasons technology manufacturing will never return to America.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

How the U.S. Lost Out on iPhone Work
Apple’s results hinge on the iPhone question
Making It in America

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The hosts and guests of Coffee and Markets speak only for ourselves, not any clients or employers.