How Protests Against Mining Operations Can Subsidize Oppression
Violence is dangerous and risky. While some self-destructive individuals commit violence for no gain, sophisticated organized violence needs profit to compensate members of gangs and other organizations for the risk of the violent acts they commit.
So where does the money to pay gang members to intimidate, attack and kill those who interfere with an organization come from?
Sometimes, it’s plain theft – burglary or intimidating businesses for “protection money”.
The more interesting case, which I’ll focus on here, is where criminal gangs run a profitable business (other than outright thievery), whose profits they can use to pay off heavies and hit men to commit violent acts on behalf of the gang.
But what about business competition? If violence is costly, then surely a peaceful business that can produce the same goods with less overheads for violence will be able to undercut violent competitors on price and drive them out of business.
Thus:
Provided law enforcement effectively prevents robbery (including shoplifting), ransoming and racketeering, businesses will adopt models that fund ever less violence.
So, what allows violent gangs that profit from businesses other than outright theivery to exist?
The answer: they can only exist if no nonviolent business model is available. This will be the case if the activity they profit from is illegal and customers are willing to pay a price that exceeds the cost of non-compliance. Every business needs to enforce contracts, whether with customers, employees or suppliers. Legal businesses can sue transgressors in court, but illegal businesses must use thugs and hit-men to punish those who break their word. Furthermore, much of a gang’s valuable “property” (such as drugs, arms, smuggled goods, etc.) is illegal contraband, so gangs cannot report the theft of their valuables to the police. Thus, an initial opportunity to profit from illegal activities creates a situation where rival gangs can steal each other’s contraband without police intervention leading to increased violence and gang war.
For this cycle of violence to initiate, there first must be:
- A profitable business model requiring violence (i.e. no viable non-violent version)
- Sufficient market demand to raise prices high enough to cover the overhead of non-compliance and violence
- No available legal substitute at a price lower than the production price (including all overheads) of the illegal good or service
Using legal violence to suppress a good’s supply will thus raise prices and give rise to illegal violence to supply that good – regardless of the law.
Prohibitions enforced by violence will often give rise to violent reactions.
A ban on regulated brothels funds street-hookers and sex slavery; a ban on drugs funds drug gangs; a ban on weapons funds gun runners; tariffs of all kinds fund smuggling rings; migration restrictions fund people-trafficking and on…and on… and on…
Hardcore libertarians conclude from this: “don’t prohibit anything.” One may adopt this position, but even if one doesn’t, goods or services should probably not be prohibited without at least estimating the consumer response. Will consumers pay a higher price to purchase the prohibited service illegally, or will they substitute it with a legal good or service instead? Without estimating the consumer response, a prohibition may have disastrous consequences – in extreme instances, the proliferation of crime may resemble a low-key insurrection.
Another problem with shadow industries is the lack of reporting. If someone gets their house burgled, their child kidnapped or their business held to ransom, they will likely report it. However, shadow industries can turn a healthy profit while satisfying the interests of most participants. A shadow industry can exist without creating wronged, indignant individuals who report misdeeds to police. And those who are wronged (e.g. beaten up over drug debts), usually participate in the industry, can be blackmailed and are reluctant to report, even serious wrongs, to the police (seen as the “enemy”).
Some things like child prostitution should be prohibited. But governments must choose their battles wisely and prepare legal, socially accepted avenues for demand substitution – or design campaigns to reduce demand. Prohibiting supply without also drastically reducing demand is a recipe for organized crime.
Mining and The “Resource Curse”
So, what does this all have to do with mining?
Environmentalists campaign against mining companies the whole world over. Their strategies typically involve mobilising grassroots mass-opposition against mining projects and supporting infrastructure (such as Canada’s keystone pipeline), lobbying for laws that raise the cost of mining and filing court case after court case against mining projects.
However, all these strategies rely heavily on a democratically enfranchised population and the rule of law. In countries with a centralized elite, a disenfranchised population, high levels of corruption, and a de facto absence of law, campaigns against mining companies often end with key environmental campaigners sadly being assassinated.
So our understanding of “the resource curse”, the theory that mineral resources produce corruption, may need revision. Resources are everywhere, but NIMBYs in well-governed democratic countries with a strong judiciary, block access to local resources and challenge new mining projects in municipal government and in court. The net result of this comprehensive campaigning against all mining projects in the developed world is:
- A reduction in the supply of minerals
- That raises the price
- With windfall profits for governments that crush grass roots opposition against local mining projects.
Thus, just as prohibition funds violent crime, grassroots democratic and legal opposition to mining projects funds despotism, opacity and corruption.
Violent actions give rise to violent reactions.
Violent grassroots opposition gives rise to the violent suppression of that opposition – if not in the same country, then in a different one.
Environmentalists don’t just resist mining projects everywhere. They also support expanding resource intensive industries like renewable energy and lithium ion batteries. Where will the minerals for the batteries and wind turbines come from? The magic metal tree?
A contradiction lies at the heart of environmentalism. Its campaigns increase global demand for mined goods, by advocating rapidly rolling out renewables, battery-powered cars and a HVDC super grid, yet at every opportunity it fights to reduce supply. Something has to give – and that something is democracy. The two-pronged effort to increase global demand for commodities and reduce their supply will produce massive cash transfers to dictators that crush locals who oppose mining projects.
The blanket, global, grassroots opposition that mining companies face against new projects everywhere has a similar effect to alcohol prohibition – times 100. We’ve waged a futile war against the supply of minerals while ignoring the demand, with disastrous humanitarian costs. If we want to stop funding dictatorships with blood diamonds and oil money, then environmental groups need to establish a league table of mining companies and projects all over the world and work with companies to promote projects with a comparatively low environmental impact and campaign in support of them to help assuage local opposition.
Only then can the resource curse be lifted.
A Peaceful Place to Mine
The rapid maturation of underwater mining technology and the exploration of underwater mineral resources could greatly curb the violations of indigenous land rights. Mining the oceans could end the battle between mining companies and locals with the accompanying corruption, bribery and militant suppression. Finally, minerals could be extracted from a region in no one’s back yard. Yet, despite the potential of underwater mining to reduce global corruption, promote democracy and protect human rights, environmentalists oppose it in a vague knee-jerk fashion to “save the tube worms.”
It’s time to grow up. If we truly support renewable energy, it’s time to decide where to mine the minerals we need to build that infrastructure.
John
Disclosure: I own a few shares in the underwater mining company, Nautilus Minerals.
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