Last month, oil. This month, iron ore.
Last month, V1 wrote about the strange twist of occurrences which led Nigerian officials to express their disappointment at having been placed on a security watch list by the TSA, and their allusion toward selling Nigerian oil to America’s ideological competitors in response.
Today, there comes another example of constrained global resources – this time in the realm of raw materials used in manufacturing steel. The WSJ has reported:
“Over the last few months, demand for minerals and metals has risen because of the continued strength in China’s economy and slow recoveries in the U.S. and Europe… Spot prices for iron ore and coking coal are expected to rise between 30% and 40% in 2010.”
The point is not that iron ore and coking coal are running out. Rather, world demand is currently out-pacing the processing capacity of the world’s largest mining enterprises; and prices are rising, as they should.
So, what in the world does the price of iron ore have to do with air transportation in the U.S.?
As an increasing number of national economies around the globe rise toward western levels of consumption in the 21st century, V1 contends that only the most economically efficient nations will be positioned to compete for increasingly constrained natural resources. A corollary to this assertion is that large standing militaries may eventually become so expensive relative to other national constraints, that their continual deployment for use in assuring national access to global resources may become an economic hindrance so large as to defeat their own purpose. So again, the solution for competing in the global economy is economic efficiency.
Therefore, as a critical enabler of GDP growth, it is important that air transportation be economically efficient. That is to say, the U.S. will need its air transportation industry to convert minimal consumption of resources into maximum economic output. This cannot be accomplished so long as free-market air carrier seat and freight capacity must rely on a federal monopoly in navigation infrastructure for generating efficient throughput. Consider this structure something akin to requiring that private electric utilities transmit their power capacity through federal transmission lines. For another example, consider requiring cell phone providers to use a federally supplied and operated communication network. Get the ugly picture? There are sound economic reasons these two examples of inefficient industry structure do not exist. V1 believes it is important for America’s future that the same take place with regard to aviation navigation infrastructure.
Copyright © 2010 by Scott R. Davies. All Rights Reserved.
