Julian Simon, Lithium, Afghanistan

By June 18, 2010Economy

The New York Times prompted a flurry of speculative stories with its recent report, “U.S. Identifies Vast Mineral Riches in Afghanistan“:

WASHINGTON — The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world…

Other media outlets rushed to replicate the story, e.g., Associated Press, “Afghan mineral wealth may be at least $3 trillion,” and NPR, “Afghan Mineral Wealth Could Top $1 Trillion.” (Somewhere in that $1 trillion to $3 trillion range.) And the Times looks like it’s going to be riding the story for a while, as in the subsequent report, “Afghanistan Moves Quickly to Tap Newfound Mineral Reserves.”

Except, well, newfound? As Wired reported, “No, the U.S. Didn’t Just ‘Discover’ a $1T Afghan Motherlode

[The] military (and observers of the military) have known about Afghanistan’s mineral riches for years. The U.S. Geological Survey and the Navy concluded in a 2007 report that “Afghanistan has significant amounts of undiscovered nonfuel mineral resources,” including ”large quantities of accessible iron and copper [and] abundant deposits of colored stones and gemstones, including emerald, ruby [and] sapphire.”

Not to mention that the $1 trillion figure is — at best — a guesstimate.

Whether it’s new news or old, Afghanistan’s mineral wealth seems to hold so much promise — but only promise, potential and possiblities if the “vast” wealth cannot be developed. Congo’s tremendous resources haven’t done that country much good.

At its annual dinner last night, the Competitive Enterprise Institute honored two Canadians, Stephen McIntyre and Ross McKitrick, for their diligence in revealing the scientific shortcuts and fraud promoted by global warming researcher-activists — such things as the “hockey stick” claims about warming and later the details in the Climategate e-mail scandals.  The two received the Julian Simon Memorial Award, named after the late economist.

In his acceptance speech, McKitrick, professor of economics at the University of Guelph in Ontario, paid tribute to Simon’s ideas in comments that are directly relevant to Afghanistan’s potential.

What [Simon] taught us was that the abundance of resources in a nation is not just an accident of geography or history. Resources are not simply found, they must be developed and put to productive uses through the application of human ingenuity and creativity. Nations that enjoy the benefits of plentiful resources are those that preserve freedom, support entrepreneurship, encourage risk-taking and allow citizens to enjoy the fruits of their own work. In other words, the abundance of resources is a consequence of the ideas a nation lives by.

Afghanistan’s resources may well be vast, its potential great. The question is: Will it preserve freedom, support entrepreneurship, encourage risk-taking and allow citizens to enjoy the fruits of their own work? Will Afghanistan gain the rule of law? If so, more than vast resources, the country may achieve vast wealth — and vast freedom.

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