Competitiveness Reduction Act – WSJ

The heart of the so-called Inflation Reduction Act commits nearly 400 billion taxpayer dollars to try to shove U.S. consumers away from fossil fuels, which the U.S. has in abundance, and toward alternative energy sources that rely on minerals largely produced overseas. The law ostensibly encourages American production, but good luck getting new mines approved in the U.S. The Journal’s Allysia Finley recently noted China’s large role in producing and refining minerals needed to make solar panels and batteries.

But China’s regime won’t be the only government seeking to exploit the politically created demand for minerals. Eko Listiyorini reports for Bloomberg:

Indonesia may impose a tax on nickel exports this year, President

Joko Widodo

said, as the biggest producer of the electric-vehicle battery metal looks to refine more at home…

The world’s epic shift into [electric vehicles] has spurred a surge in demand for battery metals including nickel, lithium and cobalt. While Indonesia has benefited from rising prices of nickel, also used to produce stainless steel, Jokowi wants the nation to move up the EV supply chain. Ultimately, he wants to stop all exports of raw materials.

Indonesia wants to add more value locally to increase state revenues and provide more job opportunities, Jokowi said Thursday.

“That’s what we want also with bauxite, copper, tin, crude palm oil and others,” he said. “We are not being closed, we are being open indeed.”

Perhaps this market will stay open, indeed—if foreign firms want to pay up for minerals. Mr. Jokowi wants a lot, and Mr. Biden is giving him leverage to try to get it. Indonesia’s president also wants

Tesla

to start building cars there, rather than just buying parts or materials.

Speaking of Tesla purchases, Biden fans may be about to realize that there is no environmental free lunch. In July Reuters reported:

Dozens of non-governmental organizations (NGOs) have sent an open letter to

Elon Musk,

urging the Tesla… chief to not invest in Indonesia’s nickel industry on environmental concerns.

The letter by the NGOs, including Wahana Lingkungan Hidup Indonesia (WALHI) and Friends of the Earth United States, follows Indonesian President Joko Widodo’s meeting with Musk in Texas in May to discuss potential investments.

Indonesia has the world’s biggest nickel reserves and Widodo is keen to develop a nickel-based EV industry at home…

However, environmentalists are concerned that the process would involve disposing… mining waste into the ocean.

The NGOs said in the letter that environmental damage results from the total area of the forest converted to nickel mining, causing increased deforestation and the threats of polluted water in the river, lake, and the beach.

One does not have to endorse the claims of NGOs to realize that all energy production carries costs and benefits. For all the U.S. taxpayer expense of the Biden energy transition, will the world really be better off?

Speaking of critical ingredients in electric-car batteries, the Journal’s Ryan Dube recently reported on “the so-called Lithium Triangle, which overlaps parts of Chile, Bolivia and Argentina. Production has suffered at the hands of leftist governments angling for greater control over the mineral and a bigger share of profits, as well as from environmental concerns and greater activism by local Andean communities who fear being left out while outsiders get rich.”

Sounds like another market that may not exactly be open indeed.

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Don’t Forget the IRS Transition
The new Biden law also turbo-charges the Internal Revenue Service budget for auditing. Even if one thinks this is a worthwhile cause, economist Tyler Cowen asks the question that should be asked more often about all federal agencies: Why hasn’t technology allowed the government to perform its functions with far fewer employees? Writes Mr. Cowen:

It’s easy to say that the IRS has not had the staff or the money to do the necessary upgrades. But hold on: These software upgrades are supposed to save money by enhancing productivity, letting organizations do more work with fewer people. A reasonable person can be forgiven for asking whether an agency with a $13.7 billion budget really doesn’t have enough to front some cash.

You might argue that IRS was too liquidity-constrained to shell out the cash up front, but is that argument believable? The improvements from better software usually pay off rather quickly, precisely because the software is labor-saving. The US has plenty of small to mid-sized businesses and non-profits with shrinking staffs and budgets. Yet most of those institutions have been able to upgrade to better software, often repeatedly. Unlike the IRS, many state tax agencies at least use scanners, and those are hardly the wealthiest or most nimble institutions in American society.

When I see that the IRS reduced staff by 22%, I imagine an alternate reality in which the IRS had replaced a good deal of its office staff with better information technology, as many American businesses started to do in the 1990s. In this parallel universe, the staff of the IRS is down and the productivity of the IRS is up, as has happened to so much white-collar office work. But that is not the world we live in.

No it is not. There are still more than two million federal civilian employees.

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Mr. Freeman will host “WSJ at Large” Friday at 7:30 p.m. EDT on the Fox Business Network. The program repeats at 9:30 a.m. and 11:00 a.m. EDT on Saturday and Sunday.

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James Freeman is the co-author of “The Cost: Trump, China and American Revival.”

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