Friday, January 26, 2007

Rosia Montana: The Uneconomically Oriented and Their Misplaced Sentimentalism

Modern economics is all about the market process, dissecting it into four co-essential, interdependent, and interactive parts that I will name (1) Who-Does, (2) What-Does, (3) Why-Does, and (4) Range-of-Results. Economists study all four parts of market transactions, and they realize that no one part can exist without the other three.

As an illustration, take this case study. A few days ago, in Scotland I think it was, Global Warming Glitterati showed up in SUVs and other gas guzzlers to listen to Al Gore speak about his movie "An Inconvenient Truth."

Hummer limo
[Thanks to for the photo (not necessarily the Glitterati's car.)]

Numbers 1 and 2 are easy. Who-Does in this case is the buyer and user of each vehicle. Number 2, What-Does, is the act of purchasing and using. Number 3, Why-Does, and Number 4, Results, are where we find some interesting data.

As for No. 3, buyers and users of SUVs just seem to love this type of car, and logic would have us believe that either (a) they do not believe that the SUV causes dangerous global warming, or (b) there are other factors that override their "better" judgment. Our Glitterati most likely fit into (b), somehow exempting themselves from their own rhetoric.

With regard to No. 4, the full Range-of-Results: If you take a simple look into the climate debate, you will see that the jury is not yet in on whether or not SUVs contribute in any way to global warming -- indeed, whether global warming exists, whether indeed it is caused by us, or whether it can be or needs to be "cured." Cool-headed free-market economists realize this, even if our Glitterati do not.

So what is going on here? The answer is fairly simple. The problem with most environmentalists and their cohorts, the politicians and other Glitterati, is that they are hypocritical, confusing a non-existent fifth element that I will call No. 5, Should-Do, with the reality of No. 3, Why-Does, and No. 4, Results. (And they also live by the catch phrase "Do as I say and not as I do.")

This is a common error that all moralists make. A scientist, however, realizes he must not take No. 5 (Should-Do) into account, because No. 5 is irrelevant when looking at economic reality.

In other words, we must make no moral judgment about other people's ethics, because each of us has his own code, and each is perfectly capable of making up his own mind about his moral choices, especially in a free society where uncensored information is everywhere, and in a representative democracy such as ours where individual liberty is king.

Hot-and-bothered environmentalists and their friends the politicians, on the other hand, not only make that judgment about and for us, but they do so while permitting themselves to transgress, acting like a bunch of Jim Bakker evangelists wailing about the dangers of being sent to hell.

Worse: They go a step further. They not only try to scare us; they try to prevent us from making up our own mind, professing to know better what is good for us than we do ourselves, and all the while they are committing the very crime they accuse us of committing.

I'm leading up to something, of course. It is the dispute now taking place in Rosia Montana, Romania, concerning gold mining.

Greenpeace and other activists would like to censor a film about this issue. Yes, I said "censor." They would like to prohibit the showing of a film. Are they against freedom of speech?

I admit the gold mining industry does not have a stellar reputation when it comes to human rights and human decency; but times they are a changin'. As a group, they have come a long way in spite of the fact that we could certainly still find a few examples of problem spots.

One of the more progressive and responsible companies is Gabriel Resources Mining of Canada, but this has not enabled them to remain outside Greenpeace's line of fire.

Greenpeace is an example of an environmental organization that thinks only of Should-Do No. 5, and never the other four, Who-Does, What-Does, Why-Does, and Range-of-Results. They're only concerned with No. 5 and their own self-righteous evangelism.

They and other environmental groups have focused in on the "plight" of Rosia Montana's rural peasants, whose village is sitting on gold and whose wonderful lifestyle will be "ruined" by Gabriel Resources. The truth is that the people of Rosia drive around in horse carriages, they have outhouses instead of bathrooms, and some of the citizens of this village crave the better way of life that mining will bring to them. In fact, it appears that the majority of the village people WANT the miners to come into town and offer them jobs.

And I ask you: What right have we, the Should-Do Police, to say that they can't? What right does anyone have to stop the showing of a film on the subject? Where is Michael Moore when you need him?

There are two sides to every story, and this one is no exception. You know what the greenies want and think. Do you know -- do you care -- about the other side of the story? Well, you should; and here is the place to find it: The Moving Picture Institute, their blog, and their film "Mine Your Own Business" (see the trailer.)

Greenpeace attacks them because their work was funded by Gabriel Resources; and yet Greenpeace is also funded by millionaires and corporations. No one can live without financial resources, and backer money doesn't grow on trees, whether it be for on-the-ground research by partial or impartial scientists, or for self-serving activists with their travel expenses and their aesthete morality-policing.

This independent group of filmmakers has gone over to Romania to get the other side of the story themselves, on the ground, straight from the people of Rosia in person. Who cares who paid for the trip? The evidence is the evidence.

Look at that other side and make up your mind for yourself. Don't let your No. 5 Should-Do Fascist heart get the better of you, before your Cool-Headed, Free-Thinking, Fair-Minded head has had a chance to look at Nos. 1, 2, 3, and 4.


Anonymous Anonymous said...


Interesting point of view but I am of a slightly different opinion.

I think Gabriel Resources had made a really rotten business decision with regards to Rosia Montana. So nasty in fact that they are losing loads of money on it and they might not get anything in return.

I don't know whether it was greed or a lack of experience (they bill themselves as "progressive" and they just might be that, but they have yet to prove it since Rosia Montana would be their first ever project), but in their hurry to get the project going they made three costly mistakes: they greased the wrong palms, they tried to gyp the government of Romania, and their environmental study was so incredibly sloppy it was a cinch to challenge it in Court.

The original contract they had was kind of like this: of the sixteen billion dollars worth of gold in the ground, they were going to give the Romanian government about a billion and a half. The investment would have cost them another half a billion, so they would have made a tidy sum. All Romanians had to do was hand over the dirt.

If Gabriel Resources would have done their political homework they would have known they greased the wrong hands - the corrupt Nastase government was on its way out.

They did have some stamped paper, but those were so badly done, you'd think they were prepared specially to be challenged in Court by whatever ecological organization passed through town.

Now, the Romanian government is looking at the original contract and kicks itself - they are giving away a whole bunch of gold for nothing really, and, of course, they want out of the contract. The contract wasn't put together in good faith by whatever guy worked on it first so they want to wiggle out of it.

The idea is to challenge the ecological viability of the proposal and get out of the contract that would get them a small stake of the deal, a 1200-acre unlined cyanide pond, and a whole bunch of headaches with their Hungarian neighbors whom they've bothered with cyanide before (the Baia Mare incident)while Gabriel Resources runs away with fourteen or so billion dollars of loot.

Gabriel Resources should have been smart enough and make it worthwhile for their real partner - the Romanian government. Instead they made it worthwile to people that are already out of the picture. NOT a smart move at all. Right now, they got no one in their corner.

Now, if Gabriel Resources would have put together a respectable enviromental study back in the year 2000 - something relatively solid that could be defended in Court they would probably be already moving the three mountains they were planning to level and plumping their bottom line. But they didn't cover their tracks well and left themselves open to, well, backtracking.

If they would have studied the Romanian political factors and the Romanian electorate a little bit they would have been even better off - they would have known how to defend their business interests better and network with the right political faction - in this case the Liberal Party. They went to the Social Democrats who incidently were the most corrupt and got totally demolished during the 2003 (or 2004 I'm not so sure)election. Once the Social Democrats completely lost control, all their shady deals came to the surface. Gabriel Resources dealt on the shady side and now it is paying the price.

The contract with PetroMin (the Romanian govt company) is so bad and one-sided, it was bound to surface. The public was outraged, all eco trumpets sounded, and Gabriel Resources was left scrambling to hold on to the deal.

To make matters worse, Gabriel Resources CEO starts accusing the Hungarian government of meddling in Romanian national affairs (e. g. gold mining.) He's naively trying to exploit the Romanian-Hungarian bad blood over Transylvania.

There is nothing that disgusts me more than businessmen trying to shift blame from themselves to boo-boos such as the environmentalists, archaeologists, sentimental fools or similar creatures.

It's Gabriel Resources' shoddy business plan, shoddy business programming, shoddy business deals, lack of political acumen, and general bungling of this entire issue that upset their gold-mine deal.

They've been had - and that happens in business. It happened to me on a lesser scare - and I operate in the US.

They've done a bad job, but they've got loans (by the way, IMF didn't want to touch them with a 10-foot pole when they went to ask for a loan in 2003 - ) and they've got investors, so they're still kicking the cow they've killed themselves telling everyone it was the bad Soros, the enviro beast. And that's disgusting to me.

10:46 PM  

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