There is growing discussion in the United States about reshoring: bringing manufacturing back home so that production occurs domestically and jobs remain in the US.
A lot of people in the U.S. are too young to remember some of the environmental tragedies like Love Canal. We also forget the health costs of mining. I see the economic benefits but also the costs not just to miners but to the land.
Thanks for reading and engaging! You raise an important point. Mining has a legacy problem. Its impacts on land and the environment are real. But the mining industry is the backbone of most other manufacturing. What type of manufacturing can exist without copper, iron, or aluminum? So how can we reverse the historical legacy issue and ensure these are not repeated?
I think the human cost can be mitigated by increased robotics usage. There are ways to mine responsibly and carefully but they are more expensive and slower. It is similar to the rush for data centers and how communities now find themselves in competition with companies over water and power (one reason Meta keeps running those ads about how it provides jobs in small towns). There are always way to do things better but they impact the bottom line and slow the engine of corporate growth.
Resources are complicated because they run out or can be no longer needed and sometimes if an entire economy runs on them that is dangerous. Two examples I'm watching right now are the Saudis trying to move beyond oil and, more urgently, what's happening in Botswana as lab diamonds drive down the cost of natural diamonds.
This is a very clear and helpful framing of reshoring as a set of tradeoffs rather than a slogan — especially the distinction between “bringing it back” and “building it at home.” One additional angle that might deepen the analysis is the incentive structure that led to the current concentration of production in the first place. Since mining investments are long-lived and highly sensitive to policy stability, it would be interesting to explore whether today’s policy objectives materially change the underlying cost, risk, and credibility conditions that originally drove offshoring — and whether those changes are likely to persist long enough to sustain domestic production at scale. That intertemporal dimension seems crucial for assessing how durable reshoring efforts can be.
Good discussion. I think that the "make at home" approach might not necessarily be job creating. Mining would take up capital and labor from other sectors (while higher input prices could reduce employment in down stream production). Especially with the US near full employment, the secondary impacts may be large.
On the environmental point, it's interesting that pollution tariffs could be a good solution here (as long as pollution is taxed on domestic goods as well)
I hadn’t thought about pollution tariffs, thanks for raising this. I don’t think these are operational as of now but could be considered as part of a broader environmental protection policy.
Strictly speaking from a US perspective, the advantage of mining/drilling in foreign locales is the reduced frictions of environmental concerns and oversight. Blood diamonds? Illegally obtained gold/silver? We continue to buy products we know source these even though they may be built in "friendly" nations.
The same could be said of fast fashion, where the business practives of low pay, low cost goods remove the incentive to invest in better pay/ higher quality. (Lululemon's latest junk yoga pants comes to mind.)
But the US still has a large skills gap in many of the industries the current Administration insists can be on-shored tomorrow. The downward effect of promoting jobs in delivering services rather than building "widgets" is coming home to roost.
I would need to trust that there would be a better system for holding mining companies accountable for negative externalities, namely the environmental impacts. Unfortunately, the U.S. has a pretty poor track record there.
And even if we did get there, labor costs and the regulatory environment, as you mentioned, could drive up prices for consumer goods. I’m not sure the American consumer would support domestic mining for these minerals if it meant meaningfully higher prices.
Thanks Michael! That’s an excellent research question.
A recent online survey shows 54% of US based respondents support domestic mining as a national strategy while 87% of respondents said that environmental protection should be prioritized in domestic mining.
Ignoring Environmental protection is a good way to lose capital and labor. I know sustainability has somehow become politicized but many businesses adopted these policies for a simple reason. They reduced risk. I think in the future larger enterprises will be more Environmental conscious while small to mid frims less so.
Thanks for reading and your feedback. I hope all industries would be more environmentally conscious. It’s great if they could do it voluntarily, but perhaps not too realistic. So the question becomes what type of environmental protection policies can incentivize them to be good environmental stewards while doing business?
I use to be a fan of the cap snd trade system, but over the years my view has soured on it. I think we need to get more innovative and aggressive. Our old nudge system was not effective enough.
A lot of people in the U.S. are too young to remember some of the environmental tragedies like Love Canal. We also forget the health costs of mining. I see the economic benefits but also the costs not just to miners but to the land.
Thanks for reading and engaging! You raise an important point. Mining has a legacy problem. Its impacts on land and the environment are real. But the mining industry is the backbone of most other manufacturing. What type of manufacturing can exist without copper, iron, or aluminum? So how can we reverse the historical legacy issue and ensure these are not repeated?
I think the human cost can be mitigated by increased robotics usage. There are ways to mine responsibly and carefully but they are more expensive and slower. It is similar to the rush for data centers and how communities now find themselves in competition with companies over water and power (one reason Meta keeps running those ads about how it provides jobs in small towns). There are always way to do things better but they impact the bottom line and slow the engine of corporate growth.
Resources are complicated because they run out or can be no longer needed and sometimes if an entire economy runs on them that is dangerous. Two examples I'm watching right now are the Saudis trying to move beyond oil and, more urgently, what's happening in Botswana as lab diamonds drive down the cost of natural diamonds.
The robot idea is brilliant. I have also heard of initiatives to use renewable energy for mining operations.
This is a very clear and helpful framing of reshoring as a set of tradeoffs rather than a slogan — especially the distinction between “bringing it back” and “building it at home.” One additional angle that might deepen the analysis is the incentive structure that led to the current concentration of production in the first place. Since mining investments are long-lived and highly sensitive to policy stability, it would be interesting to explore whether today’s policy objectives materially change the underlying cost, risk, and credibility conditions that originally drove offshoring — and whether those changes are likely to persist long enough to sustain domestic production at scale. That intertemporal dimension seems crucial for assessing how durable reshoring efforts can be.
Learning from the past in this way definitely helps! Thanks for providing this important angle.
Good discussion. I think that the "make at home" approach might not necessarily be job creating. Mining would take up capital and labor from other sectors (while higher input prices could reduce employment in down stream production). Especially with the US near full employment, the secondary impacts may be large.
On the environmental point, it's interesting that pollution tariffs could be a good solution here (as long as pollution is taxed on domestic goods as well)
I hadn’t thought about pollution tariffs, thanks for raising this. I don’t think these are operational as of now but could be considered as part of a broader environmental protection policy.
Richardo's Comparative Advantage Theory?
Strictly speaking from a US perspective, the advantage of mining/drilling in foreign locales is the reduced frictions of environmental concerns and oversight. Blood diamonds? Illegally obtained gold/silver? We continue to buy products we know source these even though they may be built in "friendly" nations.
The same could be said of fast fashion, where the business practives of low pay, low cost goods remove the incentive to invest in better pay/ higher quality. (Lululemon's latest junk yoga pants comes to mind.)
But the US still has a large skills gap in many of the industries the current Administration insists can be on-shored tomorrow. The downward effect of promoting jobs in delivering services rather than building "widgets" is coming home to roost.
That’s exactly why these conversations need to happen among economists. Thanks for reading and your analogy on fast fashion.
I would need to trust that there would be a better system for holding mining companies accountable for negative externalities, namely the environmental impacts. Unfortunately, the U.S. has a pretty poor track record there.
And even if we did get there, labor costs and the regulatory environment, as you mentioned, could drive up prices for consumer goods. I’m not sure the American consumer would support domestic mining for these minerals if it meant meaningfully higher prices.
Thanks Michael! That’s an excellent research question.
A recent online survey shows 54% of US based respondents support domestic mining as a national strategy while 87% of respondents said that environmental protection should be prioritized in domestic mining.
Ignoring Environmental protection is a good way to lose capital and labor. I know sustainability has somehow become politicized but many businesses adopted these policies for a simple reason. They reduced risk. I think in the future larger enterprises will be more Environmental conscious while small to mid frims less so.
Thanks for reading and your feedback. I hope all industries would be more environmentally conscious. It’s great if they could do it voluntarily, but perhaps not too realistic. So the question becomes what type of environmental protection policies can incentivize them to be good environmental stewards while doing business?
I use to be a fan of the cap snd trade system, but over the years my view has soured on it. I think we need to get more innovative and aggressive. Our old nudge system was not effective enough.
Perhaps cap and trade is not the best on this case or it could be stacked up with some other policy instrument. Perhaps we need multiple ones.