Rubber was oil before oil. As Edmund Morris wrote in his biography of Thomas Edison, in the early parts of the 20th century rubber was arguably the most coveted industrial input in the world. In Morris’s words, “What petroleum would one day be to developed nations, rubber presently was: a raw material essential enough to provoke armed conflict.” How things change.
Change is useful to keep in mind as American pundits wring their hands about China and “rare earths.” In a recent column for the New York Post, National Review editor Rich Lowry described U.S. reliance on China’s “rare earths” in “Suicide of the West” terms. In his words, the outsourcing of effort “ranks as one of the most fantastically stupid and self-damaging strategic missteps of our time.” Lowry could possibly be persuaded to rethink his alarm, and not just because of Afghanistan, Iraq, crisis-inducing bailouts (2008) and lockdowns (2020), not to mention the quadrupling of the federal government's cost since the 21st century dawned.
All that’s required to shrink overdone fears about so-called “rare earths” is basic economics. Unless China literally blockades all of the United States, its rare earths will continue to be utilized stateside as though extracted or produced in Akron, OH.
That is so because short of China quite literally hoarding those rare earths, there’s no accounting for the final destination of them. In other words, if you’re producing you’re trading with the world. Always.
Think the 1973 OPEC embargo of the U.S. by the Arab members of the cartel. Americans consumed every bit as much “Arab oil” during the embargo as they did before. And for obvious reasons: while the Arab members of OPEC stopped shipping oil directly to the U.S., those they did ship it to did not. And the Arab nations knew this would happen. Does anyone seriously think they wanted to kiss off the biggest market in the world? Embargoes are symbolic, particularly embargoes of the United States.
Lowry writes that the United States “must push on all fronts to address a truly dangerous strategic vulnerability,” since the rare earths “are crucial for the manufacture of cars, smart phones, drones, medical devices, and, most importantly, high-tech weapons.” No, not really.
Precisely because they’re crucial to so much U.S. production, the "rare earths" will assuredly make it to the richest, most acquisitive nation on earth. It speaks to another truth about production: if you’re producing, you're importing from the rest of the world. Always. Production is reality, and it overpowers rhetoric.
Lowry is oddly cheering price floors from the Trump administration and all manner of other measures to get the “U.S.” back into the rare earths game, which means Lowry is calling for economically crippling government intervention to attain commodities that will always and everywhere reach the U.S. simply because as the U.S., it’s the most coveted market in the world. Translated, “China’s” not giving up the U.S. market anytime soon, other than with symbolic gestures that are economically meaningless.
Could China hoard the rare earths? No doubt it could, but only at substantial economic cost to China, a country that is still incredibly poor relative to the United States. And it would hoard on the assumption that rare earths will forever remain rare. Lots of luck there. Things change. Think Akron, OH.
According to Morris, it was once “Rubber Capital of the World.” Now it’s largely forgotten. One guesses pundits outside the U.S. once lamented Akron’s dominance. Needlessly, and that’s because things change.
Since they do, Lowry needn’t worry. Exponentially more dangerous than imports is industrial policy meant to free us of imports.
