Posts Tagged ‘East India Company’
“The Middle East has oil, China has rare earths”*…
Often called “the seeds of technology,” rare earths are a group 17 metallic elements (the 15 lanthanides plus scandium and yttrium) with unique magnetic, optical, and catalytic properties vital for electronics, defense, chemical processing, petroleum refining, and green energy.
China’s dominance over rare earth elements creates an unprecedented vulnerability in global supply chains that extends far beyond the relatively modest $6 billion market size. The risk of disruption in supply of rare earths has become a critical concern as the nation controls 69% of worldwide mining operations, 92% of refining capacity, and a staggering 98% of permanent magnet production, according to Goldman Sachs analysis from October 2025.
This concentration represents one of the most significant single points of failure in modern industrial infrastructure. Furthermore, the rare earth reserves distribution globally shows heavy concentration in geologically limited regions, making supply diversification extremely challenging.
The economic implications of this dominance become clear when considering potential disruption scenarios. Goldman Sachs warns that even a 10% disruption in industries reliant on rare earth elements could trigger $150 billion in lost economic output, alongside inflationary pressures cascading through multiple sectors. Despite rare earth markets being 33 times smaller than copper markets, their strategic importance creates disproportionate systemic risk…
– “China’s Rare Earth Dominance Creates Global Supply Disruption Risks” [source of the image above, and worth reading in full]
Farrell Gregory explains why they figure so prominently in so much discussion of the global economy and of U.S.- China relations and what we might expect…
Over the course of the last year, we’ve seen China suspend rare earth exports twice, generating a short-lived round of public interest and short-lived “expertise” in America. Each crisis followed a similar progression: an aggrieved China introduces export licensing, effectively suspending US access to certain rare earth elements and downstream products. The American public is subjected to alternating shouts of panic and confident assertions that ‘rare’ is a misnomer and the necessary elements are actually abundant in the Earth’s crust. After a period of confrontation, and likely following concessions on both sides, access is reestablished before too much harm is done.
Examining the differences in each crisis is less important than establishing what is quickly becoming a pattern: China is increasingly willing and able to use its dominance in rare earths as leverage against the U.S. It’s worth noting what a change this is from even five years ago: during the entirety of the 2019-2020 U.S.-China trade war, Beijing never introduced export controls for rare earths, despite making threats to do so. Now China assesses its position differently — they’ve accumulated leverage and they’re willing to use it with increasing frequency.
This frequency might be in part because China’s dominant position in rare earths is a time bomb for both sides. The PRC likely wants to use its REE dominance to extract further concessions before the U.S. manages to defuse this dominance with some combination of reshoring and tech advances.
I think it’s a matter of when — not whether — China decides to activate its standing export control infrastructure. They’ve built up leverage, and over time, that leverage will dissipate. In the near-term future, throttling rare earth and magnet exports is still an effective threat to employ in trade disputes with the U.S. In the medium term, successful reshoring and reliance-decreasing efforts will diminish what concessions China can extract from the U.S.
So, expect the rare earth crisis cycle to play out again. When it does, here are a few clarifications on rare earths that may prove helpful for avoiding the most common misperceptions…
Read on: “China’s Rare Earths Chokehold: A Primer,” from @chinatalk.skystack.xyz.
See also: “Rare Earths,” from @profgalloway.com.
And also this: “China Is Overplaying Its Rare-Earth Hand in Japan” from @bloomberg.com (gift article).
* attributed to Deng Xiaoping
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As we ponder paucity, we might recall that it was on this date in 1839 that the British East India Company [see here and here] established the Assam Tea Company and began the commercial production of tea (grown from slips furtively exported from China) in the region. Beginning in the 1850s, the tea industry rapidly expanded, consuming vast tracts of land for tea plantations. By the turn of the century, Assam became the leading tea-producing region in the world. That growth and innovations in tea preparation caused the price of tea to drop and demand to grow. Soon, London became the center of the international tea trade.
“I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations”*…
… so we’d do well to stay focused on those in power– in government, to be sure; but increasingly also on the emerging oligarchs grabbing the reins.
Further, in a fashion, to yesterday’s post… there’s so much going on these days– threats to democracy and freedom and well-being coming from so many directions– that it’s all too easy to miss something important. Allison Stanger calls our attention to one such dynamic: just as, starting in the 17th century, the East India Company’s commercial success gradually justified new powers [see, e.g., here, here, and the almanac entry here), today’s AI firms seek to leverage technical prowess to assume public functions by default…
On December 31, 1600, Queen Elizabeth I signed a royal charter granting the East India Company exclusive rights to conduct trade in the Indian Ocean region. The document was precise in its limitations: The company could establish trading posts, negotiate with local rulers, and defend its commercial interests. Nothing more.
Seventy-seven years later, the same company had acquired the right to mint currency on behalf of the British crown. By 1765, it controlled the tax collection (ruthlessly enforced by its own private army) for the Indian provinces of Bengal, Bihar, and Orissa—territories containing roughly 20 million people. What began as commercial efficiency had become imperial governance. The transformation was so gradual that few contemporaries even noticed sovereignty shifting in the region from local rule to corporation.
A similar pattern can be seen today with national governments and Big Tech—only this time, centuries of drift have been compressed into months. Where the East India Company deployed trading posts and private armies, today’s technology firms and specifically AI development companies use data pipelines, data centers, and algorithmic systems. The medium has changed; the mechanics of private power assuming public functions remain the same.
Consider the trajectory of Elon Musk’s so-called “Department of Government Efficiency” (DOGE). Established in February 2025 with the stated goal of eliminating bureaucratic waste but an unstated aspiration to vacuum up new data to improve Musk’s companies, DOGE began with access to federal payment systems—ostensibly to identify inefficiencies. Within weeks, reports emerged that DOGE personnel had gained the ability to alter government databases, including Social Security records and contractor payments. The justification remained consistent: To deliver efficiency, one must first seize control.
The parallel extends beyond metaphor. Just as the East India Company’s commercial success gradually justified new powers, today’s AI firms seek to leverage technical prowess to assume public functions by default, implicitly assuming that the reallocation of power will serve human flourishing. Each efficiency gain becomes justification for the next transfer of authority, yet the costs of that automation go uncalculated.
What once took generations now takes quarters; the key difference is the ease with which private digital systems can be aligned with the politics of friends and enemies. Communications systems, financial networks, and governance mechanisms are no longer reshaped through military conquest but by software updates. Increasingly, those same systems are being weaponized against the very allies who helped build them.
From content moderation to infrastructure control to monetary governance, AI companies are taking on public operations. As AI becomes a more prominent feature of everyday life, already existing problems in our public life will proliferate exponentially. The transformation before us is likely to proceed through three variants—algorithmic capture of information systems, weaponization of critical infrastructure, and cryptocurrency’s escape from public accountability. Absent immediate intervention, democratic societies risk permanent subordination to unelected digital sovereigns…
[Stanger unpacks the three variants, with examples from Meta, Starlink, and the Trump organization’s World Liberty Financial…]
… The choice is still ours, but the time to act is now. Democracies can reclaim control over critical infrastructure—or continue outsourcing it to corporate entities that increasingly resemble the East India Company: efficient, unaccountable, and sovereign in all but name.
As American allies have discovered, platform dependency is a trap that snaps shut when you least expect it. The question facing democratic societies is whether they will escape this trap while they still can, or whether they will remain subject to the whims of unelected digital sovereigns.
Everything scientists most value—objectivity, truth-seeking, skepticism and transparency—is at stake. These digital sovereigns are no longer merely connecting the world—they are remaking it. Whether this transformation serves public values or corporate profits will decide not only the future of technology—but the fate of self-governance.
“The right to search for truth, implies a duty,” warned Albert Einstein. “One must not conceal any part of what one has recognized to be true.” The true cost of “efficiency” may be democracy itself, which is currently at risk of becoming just another social atavism of the analog age…
“The AI Raj: How tech giants are recolonizing power,” from @allisonstanger.bsky.social in @thebulletin.org.
Oh, and how might all of this work out even if there are no reins?: “Longtime Investor Warns the AI Industry Is Set to Collapse for a Basic Financial Reason“: “Each big tech company needs a global monopoly in AI to sustain their success and market value. They are not all going to get one.”… meantime, the damage to society is done…
* James Madison
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As we take it back, we might recall that Battle of Gaugamela was fought on this date in 331 BCE. The forces of the Army of Macedon under Alexander the Great and the Persian Army under King Darius III met for the second time. Alexander and the Macedonians were victorious. The battle is considered the final blow to the Achaemenid (Persian) Empire, resulting in its complete conquest by Alexander.
“Inequality is as dear to the American heart as liberty itself”*…
And indeed, what was true a century ago seem still to hold. Everyone seems to hate/fear inflation, but it has radically different impacts on different groups within our society…
Inflation is widening America’s wealth gap.
• Prices have risen across the nation, and so have wages across all income levels.
• The lowest-earning households gained an average of $500 in earnings last year. But their expenses grew by almost $2,000.
• Meanwhile, the upper half of earners pulled further ahead as their incomes outgrew expenses significantly.
“Whom does inflation hurt the most?” from Scott Galloway (@profgalloway)
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As we ferret out unfairness, we might cautious birthday greetings to James Mill; he was born (James Milne) on this date in 1773. A historian, economist, political theorist, and philosopher (a close ally of Utilitarian thinker Jeremy Bentham), he is counted among the founders of the Ricardian school of economics (and so, among other things, a father of monetarism, the theory that excess currency leads to inflation).
His son, John Stuart Mill, studied with both Bentham and his father, then became one of most influential thinkers in the history of classical liberalism (perhaps especially his definition of liberty as justifying the freedom of the individual in opposition to unlimited state and social control). JSM also followed his father in justifying colonialism on Utilitarian lines, and served as a colonial administrator at the East India Company.
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