Why not repeal the Dodd Frank conflict minerals rules?
One of those differences between political, bureaucratic, action and markets. In a market environment the Dodd Frank rules on conflict minerals would be dead and buried now. They’re not:
Securing peace will be tricky. The roots of the Congolese crisis are deeply tangled in the colonial Scramble for Africa. But perhaps an easier place to start, one that helps explain the longevity and ferocity of the conflict, its links to the living rooms of the West and even, to an extent, why Amani’s family had to die, is the coltan mines at Rubaya, 30 miles west of the village of Kabale Katambi.
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Then a local farmer discovered that the mountain had a rich seam of coltan. Everything changed. It was the turn of the millennium and the technological revolution in the West had unleashed an insatiable appetite for the most important mineral extracted from coltan ore: tantalum, a key energy-regulating component in every electronic gadget from mobile phones and laptops to games consoles.
Coltan, like its other minerals, should have made Congo rich. Instead, in the first decade of the 21st century, it became a source of misery and bloodshed as rebels, often with links to neighbouring Rwanda, fought over mines, government soldiers forced locals to dig at gunpoint and armed groups, hungry for a share, proliferated.
Those of us with long memories might recall the Blood in the Mobiles campaign. Or other arguments about these “conflict minerals”. The basic being that the ores are so rich they can be mined with bucket and shovel by people poor enough to need to do so. Thus armed gangs vie to control such mines, the money raised buying the armaments to maintain control of those ores. It’s the resource curse all over again with contending stationary bandits fighting for control.
Varied solutions were proffered - one of us suggested, not wholly jokingly, a couple of divisions of Marines. Another potentially sensible suggestion was to sign the whole thing over to some vast mining giant - capitalists would be the top stationary bandit.
The solution politics hit upon was that Section 1502 of Dodd Frank. Everyone listed on the US stock market who used any of the conflict metals (tantalum, tin, gold, tungsten) had to sign off on a declaration that they did, or did not, use from those conflict mines. This then meant that every listed company had to gain a letter from each and every supplier - yes, each and every - as to whether they did. As the SEC stated, this cost $4 billion in the first year alone. There were mutterings about reform but nothing very much happened.
As the reporting at the top shows this has not worked. So, we should get rid of it rather than spending hundreds of millions to billions each and every year on a paperchase that achieves nothing. Well, other than that fat consultancy we’ve heard rumours one of the activists in favour of the bill founded.
And that, as we keep insisting, is the difference between a market and a bureaucratic, political, system. Markets kill things that don’t work - they go bust. That’s probably the greatest service that markets deliver to the wider economy too - killing bad ideas. As we can see we’re currently well into the second decade of a bureaucratic process that clearly doesn’t work but there’s absolutely no groundswell or intention of doing away with the failure. Even though there should be.
If bureaucratic, political, systems will not kill even well meaning failures then we should not be using bureaucratic, political, systems should we? That Section 1502 of Dodd Frank is not already dead is the proof of that contention.
Tim Worstall