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Taking the Critical out of "Critical Materials"

Posted By Derek Scissors, Ph.D. On July 11, 2012 @ 12:00 pm In International | Comments Disabled

Rare earths and other strategic minerals are front and center again, with a bill being brought to the House floor this week.

When Members of Congress consider “critical” materials, they should bear in mind that the materials aren’t actually critical and that government should therefore play a very limited role. There is better and worse legislation on this topic: Better legislation seeks only to streamline the bureaucracy that has expanded around mining, and (much) worse legislation seeks to use strategic minerals as an excuse for subsidies.

Behind the legislation are principles determining what actions the government should take in this area. Government has a vital responsibility to provide for the common defense, but Congress and the executive often try to fulfill their responsibilities with large bureaucracies and a stream of new regulations. Providing for the common defense is indispensable for our nation, but it does not follow that another piece of legislation with another bureaucratic task and another set of rules strengthens us.

Bureaucracies, regulations, and new spending are entirely unjustified when the issue is not vital. Two years ago, the prices of rare earths were soaring, and loud voices insisted the market had failed and the government had to act. [1] That, unsurprisingly, turned out to be completely wrong: The market worked exactly as predicted, and prices have since plummeted [2].

Now the argument has shifted away from market failure and rare earths to defense needs and “critical” materials. Just because we import something doesn’t mean it’s important, even if we get it from China. The Department of Defense sees no imminent security threat [3] in this area—just some possible commercial shortages that hardly rise to the level of “critical.”

It’s of course true that a danger could arise over time, but that also argues against government intervention now. The uses of strategic minerals can change abruptly, and the market for them changes rapidly. Government intervention on the basis of current conditions will very likely leave us worse prepared for a challenge that arises from different future conditions. Congress should tread very lightly on critical materials.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2012/07/11/taking-the-critical-out-of-critical-materials/

URLs in this post:

[1] the market had failed and the government had to act.: http://blog.heritage.org../../../../../2010/10/06/rare-earths-cause-for-worry-not-panic/

[2] The market worked exactly as predicted, and prices have since plummeted: http://www.heritage.org/research/testimony/2011/12/energy-critical-elements-the-market-is-working

[3] The Department of Defense sees no imminent security threat: http://www.bloomberg.com/news/2012-04-04/rare-earth-supplies-in-u-s-to-meet-defense-needs-pentagon-says.html

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