AI, Rare Earths, and Economic Statecraft with Michael Every & Craig Tindale | RR 22

Quick Overview

The discussion concludes that Western nations face a severe challenge in securing critical materials like rare earths because market forces alone cannot compete with state capitalism, which allows geopolitical rivals to produce necessary inputs at a loss to achieve control, necessitating a strategic pivot towards economic statecraft and choosing sides in the US-China contest.

Key Points: Market forces will not solve critical materials supply issues because Western expectations for 20-30% returns conflict with rivals prepared to produce everything at a loss in perpetuity to achieve control. China controls the choke points for rare earth metals and chemicals, producing 50% to 100% of supply, and controls off-takes even when mines are located in Western nations. The concept of the 'golden screw' illustrates that lacking one critical material, like scandium or tellurium, breaks down the entire system, highlighting supply chain fragility. Economic statecraft requires grappling with the uncomfortable reality that relying on free markets while rivals use state capitalism leads to losing control of upstream, midstream, and downstream choke points. The US is pivoting aggressively towards economic statecraft, leveraging legacy military power to flip pressure points like Venezuela and Iran, signaling to China that resource supply lines may be threatened if the current game continues. Europe is struggling to act cohesively due to vested interests and adherence to regulated markets, viewing the conflict as US vs. Europe rather than recognizing it as fundamentally US vs. China. AI offers a potential benefit by providing exponentially finer granularity on the economic system's mechanics, forcing clarity on the material reality underpinning financial narratives, which may eventually drive necessary ideological change.

Context: This conversation features global strategist Michael Every and private investor Craig Tindale discussing the intersection of critical materials, industrial capacity, and geopolitical power, framing these trends as indicators of systemic instability. Craig Tindale focuses on identifying choke points in critical metal markets based on Chinese industrial strategy and Western tech demand, while Michael Every analyzes the necessity of distinguishing between standard economic policy and economic statecraft in response to these material constraints.