Blood diamonds and do-gooders

Tim Worstall on conflict minerals – good economics, bad politics.

Earlier this week, Global Witness, the organisation behind restrictions on blood diamonds, called for an EU law to restrict the use of conflict minerals. This would match a US law, called the Dodd-Frank Act, which requires companies to trace the origin of certain metals through their supply chain to ensure they don’t come from known conflict zones.

To be clear, conflict minerals are both horrible and, unfortunately, in most of our electronics. Few would defend them, but the call for a new law was immediately met by criticism. "There are times when the actions of do-gooders makes [sic] me want to kneel down and weep bitter tears of pain," exclaimed Tim Worstall in Forbes, who wrote a riposte to the call for the new law. This isn’t because Worstall supports conflict minerals – he doesn’t – but because he thinks that we can prevent conflict minerals from being used for 300-400 times less money. Fundamentally, this is a debate about how best to create supply chain transparency, an essential component of resource resilience.

In essence, Worstall’s solution is to regulate smelters rather than manufacturers. Because the mineral ores used to create metals have a unique "fingerprint", they can be tested prior to smelting to ensure the fingerprint doesn’t match that of mines from known conflict areas. As there are only around 500 smelters capable of processing the majority of conflict metals, it would only cost around $10m to set up a certification scheme. In contrast, supply chain transparency is expensive: the Dodd-Frank Act is expected to cost $3-4bn.

It’s a neat idea, and the economics certainly stack up. But the politics and policy don’t. Here’s why:

First, public concern matters. As "do-gooders" know, regulation creates the risk of buck-passing. At worst, it invites unethical consumer companies to accept tick box certification and look the other way when this proves meaningless. This disadvantages ethical companies and doesn’t chime with public opinion about the responsibility companies should bear for their supply chains: when the issue of suicides at Foxconn or sweatshop labour arose, the response wasn’t to call for regulation of manufacturing facilities in China or elsewhere, but to put pressure on Apple and western clothing brands. A regulator’s job is infinitely easier when they know that a company breaching regulations will face consumer backlash. The activities of smelters are effectively invisible to the public.

Second, the location of the smelters matters. As Worstall admits, the vast majority are outside the EU and, therefore, outside the jurisdiction of European regulators. Because it’s economically advantageous to smelt conflict minerals, there’s a strong incentive for fraud. We have a readymade example of what this might look like: in Shetland, a fish processor fraudulently avoided EU fishing quotas by using a "secret specially-built underground pipeline which allowed illegally-landed fish to be pumped into the factory from fishing boats, undetected by regulators." If we have difficulty policing illegal fish processing in the UK, it’s hard to believe that EU protestations will affect non-EU smelters. In contrast, business relationships span regulatory boundaries. It makes sense to regulate at the consumption end.

Tim Worstall suggests that we should adopt "the vastly cheaper way that the industry is already addressing the problem." What he doesn’t say is that this programme doesn’t "require members or their supply chains to purchase from the compliant smelter list." This isn’t a conspiracy to promote conflict minerals. Instead, it stems from the fact that smelters are invisible and without public pressure, it’s easier and cheaper to not have to reconfigure sourcing and supply chain relationships. The inability of voluntary regimes to deliver sustainable outcomes across a whole host of globalised supply chains is feeding a wider change in consumer preferences. As one of the company members of the Circular Economy Task Force said, "Five years ago, our customers where asking for recycled content in packaging. Today, they’re asking about the origin of the materials in our products."

Supply chain traceability may not be cheap, but it’s increasingly a condition for good business. Global Witness could bolster its campaign by pointing to the upside of traceability: businesses that understand their supply chains can foresee resource constraints. There’s already evidence that mining companies which report their water use across their supply chains outperform those which don’t. Indeed, much of the economic opportunity in the circular economy lies in better connections across supply chains. Rather than trying just to minimise costs, we should be designing regulation with an eye to the opportunities of more visible supply chains.

Photograph: Getty Images

Dustin Benton is a senior policy adviser at Green Alliance, leading the Resource Stewardship theme.

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Theresa May’s stage-managed election campaign keeps the public at bay

Jeremy Corbyn’s approach may be chaotic, but at least it’s more authentic.

The worst part about running an election campaign for a politician? Having to meet the general public. Those ordinary folk can be a tricky lot, with their lack of regard for being on-message, and their pesky real-life concerns.

But it looks like Theresa May has decided to avoid this inconvenience altogether during this snap general election campaign, as it turns out her visit to Leeds last night was so stage-managed that she barely had to face the public.

Accusations have been whizzing around online that at a campaign event at the Shine building in Leeds, the Prime Minister spoke to a room full of guests invited by the party, rather than local people or people who work in the building’s office space.

The Telegraph’s Chris Hope tweeted a picture of the room in which May was addressing her audience yesterday evening a little before 7pm. He pointed out that, being in Leeds, she was in “Labour territory”:

But a few locals who spied this picture online claimed that the audience did not look like who you’d expect to see congregated at Shine – a grade II-listed Victorian school that has been renovated into a community project housing office space and meeting rooms.

“Ask why she didn’t meet any of the people at the business who work in that beautiful building. Everyone there was an invite-only Tory,” tweeted Rik Kendell, a Leeds-based developer and designer who says he works in the Shine building. “She didn’t arrive until we’d all left for the day. Everyone in the building past 6pm was invite-only . . . They seemed to seek out the most clinical corner for their PR photos. Such a beautiful building to work in.”

Other tweeters also found the snapshot jarring:

Shine’s founders have pointed out that they didn’t host or invite Theresa May – rather the party hired out the space for a private event: “All visitors pay for meeting space in Shine and we do not seek out, bid for, or otherwise host any political parties,” wrote managing director Dawn O'Keefe. The guestlist was not down to Shine, but to the Tory party.

The audience consisted of journalists and around 150 Tory activists, according to the Guardian. This was instead of employees from the 16 offices housed in the building. I have asked the Conservative Party for clarification of who was in the audience and whether it was invite-only and am awaiting its response.

Jeremy Corbyn accused May of “hiding from the public”, and local Labour MP Richard Burgon commented that, “like a medieval monarch, she simply briefly relocated her travelling court of admirers to town and then moved on without so much as a nod to the people she considers to be her lowly subjects”.

But it doesn’t look like the Tories’ painstaking stage-management is a fool-proof plan. Having uniform audiences of the party faithful on the campaign trail seems to be confusing the Prime Minister somewhat. During a visit to a (rather sparsely populated) factory in Clay Cross, Derbyshire, yesterday, she appeared to forget where exactly on the campaign trail she was:

The management of Corbyn’s campaign has also resulted in gaffes – but for opposite reasons. A slightly more chaotic approach has led to him facing the wrong way, with his back to the cameras.

Corbyn’s blunder is born out of his instinct to address the crowd rather than the cameras – May’s problem is the other way round. Both, however, seem far more comfortable talking to the party faithful, even if they are venturing out of safe seat territory.

Anoosh Chakelian is senior writer at the New Statesman.

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