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Metals Investor Forum Janaury 20, 2024: The Nightmare facing the Global West
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The MIF January 20, 2024 presentation, "The Nightmare facing the Global West", makes the case that soon, perhaps this year, the Global West will awaken to the extraordinary geopolitical vulnerability posed by its reliance on raw material supply from the Global East, in particular China and Russia. The problem will become acute if a Trump election victory results in the declaration of America as a MAGA Land that is no longer part of the Global West, which in turn will disintegrate as an "everybody for itself" mentality takes over. Very few people in the Global West understand where raw materials come from nor how their emission footprint depends on the producing nation.
Most people also have no clue about how individual nations compare in terms of GDP. The IMF projected in October that global GDP in 2023 would be USD $104.5 trillion, of which the top 20 nations represented 80.3%. Of the top 20 economies, 12 of them are members of the Global West which represent 50.8% of global GDP, 3 are members of the Global East representing 19.7% of which China dominates by far, and 5 are members of the Global South which represent 9.8% of global GDP.
In total terms the Global West, defined as the United States, Europe, Australia and Canada in 2023 represented 59.1% of GDP, the Global East defined as countries that are full-blown autocracies represented 21.4%, and the Global South, defined as the rest of the world, represented 19.6%. How many people appreciate that the Global West, despite dominating 59.1% of GDP, in most cases produces less than 30% of global raw material supply?
If we end up with a MAGA Land scenario in 2025, will President Trump after throwing Ukraine to Russia go hat in hand to grovel before Putin and Xi for reliable supply of raw materials that the world's biggest economy needs to sustain itself in a deglobalized world? The likelier response is a push to develop domestic raw material supply, which will not be an overnight solution, but a spreading panic about the newly recognized vulnerability being exploited by competing autocracies will push risk capital toward the resource juniors, which are currently languishing in a climate of NIMBY opposition to mining, First Nation agenda prioritization, a shrinking investor audience knowledgeable about exploration, and a hostile financial sector.
The problem does not go away if Biden is re-elected, and actually worsens if the energy transition remains a mandate because the China-Russia alliance is not going to dissolve, nor are China and Russia going to embrace democracy any time soon. Their push to undermine Global West cohesion by fueling polarization and fostering the collapse of democracy will escalate. In addition to waking up to its raw material supply vulnerability, the Global West needs to think hard about what democracy means.
In my MIF presentation I introduced a slide to illustrate the Belief Horseshoe, which is being proposed by contemporary thinkers as an alternative to the conventional depiction of the Belief Spectrum as a straight line with the "Left" at one end, the "Right" at the other end, and a "Center". The Center used to be known as "liberal", but that term has acquired so many connotations since the Enlightenment that it has become meaningless. By bending the Belief Spectrum into a Belief Horseshoe it is easier to see the difference between democracy and autocracy. Many of the people I talk to in the resource junior sector have views that I find shocking and frankly out of character with what I understand these individuals to be all about. The conventional Belief Spectrum forced me to judge myself as right or left of everybody which clashed with my philosophical understanding. Not long ago I read somebody proposing to view the Belief Spectrum as a Belief Horseshoe. The Belief Horseshoe allows me to see people in terms of occupying the upper or lower half of the horseshoe, and not classify myself as left or right of the other person.
More than 4 decades ago during university I foolishly abandoned a computer science track, something that I was actually quite good at, to branch into philosophy in a quest to discover "truth". What I discovered was that the only real truths were logical ones such as the law of contradiction which were method rules that had no content about how things are nor what one should do. Any hope I had about science laws foundered when I came to understand what Thomas Kuhn and Karl Popper were saying, namely that the laws of science are endlessly evolving descriptions of the universe at different scales. What is accepted Newton gravity theory today gets eclipsed tomorrow by Einstein's relativity which in turn does not mesh with the particle scale of quantum mechanics. The simplest description that covers the most observations is the science law that will prevail and get applied to get things done until a broader "description" comes along.
"Truths" that are not falsifiable are just fictions asserted by whomever as absolute, and of these, those that are of an abstract nature are typically associated with the left end of the Belief Spectrum while those which are grounded in a metaphysical realm (ie God) are associated with the right. My most startling discovery, however, was that there are no such things as moral truths, that they are in fact prescriptions uttered by consciousnesses that experience time as future and past rather than just an algorithmically driven here and now. These prescriptions arise from "values" or "rights" chosen by individuals as guides for navigating a finite world. Nietzsche's analysis of "tragedy" as illustrating an individual caught in a situation where no matter what action is chosen it will violate one of two moral principles embraced by the individual helped me understand that moral values that individually make sense are not consistent with each other. Once you understand that you realize that no matter what choices one makes, and that includes actions one does not take, you will always in some way violate the moral values you have adopted. And that means you cannot experience righteous certainty.
By bending the Belief Spectrum into a horseshoe there emerges an inflection point akin to a tightrope which reflects the nightmare of always being wrong in some way. Existentialists like Sartre and Heidegger articulated this but even they could not stand the stress of being tightrope walkers; Sartre ended up sliding down the left side of the horseshoe into the absolutes of Marxism, while Heidegger slid down the right side to become a Nazi sympathizer.
Democracy emerged as a way to deal with the contradictions that moral values such as "human rights" spawn when people try to organize things through a legal system. It occupies the upper half of the Belief Horseshoe and it allows individuals with varying value preferences to vote for different policy goals. The existence of fair elections helps prevent government policy from getting dragged too close to the half way mark of either side of the horseshoe, beyond which there is a slippery slope to the absolute principles Popper deplored as enemies of the open society. The American tradition of pragmatism emerged as a way for politicians to negotiate with each other and compromise to create laws and set policy that did not perfectly conform with the values to which they individually assigned highest priority. This "rational" tradition has come under attack during the past decade through the "irrational" which blinds itself to inherent contradictions.
Autocracy threatens democracy because of the Golden Rule, which Kant reworked to mean that for a prescription to qualify as "moral", it needed to have universal applicability to all beings that qualify as members of the moral community (who qualifies as such is an entirely separate can of worms). Once a moral principle is embraced it spawns a duty to "make it so" which is difficult when one is aware that the good enforcement may create likely has an offsetting harm meted out elsewhere - justice here is injustice there. An authentic existence according to the existentialists is one where the individual lives with the agony of never being righteous, while an inauthentic existence emerges when one slides into the realm of specific true beliefs in order to indulge in righteousness. This is what turns the bottom half of the horseshoe into a world of coercion where the champions of an absolute belief become hate filled thugs harassing anybody who does not comply with the prescriptions associated with those beliefs. Woke monsters and religious zealots occupy the left and right bottom ends of the horseshoe, which in turn attracts nihilists interested only in the exercise of power secured with the help of raging true believers. Lurking in the wings today are Plato's philosopher-kings who are not nihilistic power trippers but are instead delusional know-it-alls contemptuous of democratic processes.
The Global East occupies the very bottom of the Belief Horseshoe and would very much like to extend its influence into the Global South and ultimately the Global West. The Global South hovers at the sides of the Belief Horseshoe, not sure whether democracy or autocracy will butter their bread best. The problem for the Global West is that the Global East controls much of the raw material supply, and even more of its refining and smelting capacity. The Global East can do deals with the Global South that are forbidden under the rule of law embraced by the Global West. Neither China nor Russia are retreating from their ambitions to annex Taiwan and Ukraine, which will prove mere stepping stones for further expansions. If the Global West wants to avoid raw material supply extortion from the Global East it will need to rethink its reliance on raw materials from anywhere but home. The Canadian resource junior sector will die unless there is a massive perceptual turnaround about its potential role securing democracy for future generations.
