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The Lost Luster of Gold

It matters less what you read than where you live and where you come from, because that determines how you interpret knowledge.

by Judy Cresanta

hat, a quote from Army Major Susan P. Kellett-Forsyth, describes the growing attitudinal cleavage between America’s "warrior caste" and mainstream America. Using the conflict in Kosovo as an example, it is difficult to appreciate the level of concern and downright anxiety of our military and intelligence communities. Their world is survival and bottom-line patriotism. They understand the costs of war better than we do. After all, freedom has a different meaning to a member of the military than, say, a concert pianist. The only time each appreciates the experiences of the other is when conditions force their worlds to collide. War intrudes on the life of the pianist; the soldier seeks a respite from horror by losing himself in the rhapsody and calm of the pianist’s score.

Robert Kaplan, a American foreign correspondent making his first sustained trip through the American West, found that the Kellett-Forsyth’s statement holds true in another context also. "Greens" and Environmental Protection Agency zealots who hail predominantly from the urban centers of our country tend to interpret a world they know nothing about—the rural West—from their urban perches. Conversely, terms like "multiple use" mean different things to rural Western residents as opposed to urban environmental enthusiasts obsessed with exhaust.

Understanding the gap between the two orientations, Congress attempted to force the two worlds to converge by mandating that western governors be consulted prior to the drafting of new federal regulations governing mining. Of course these proposed regulations have a name—Hardrock Surface Management Regulations 3809 Revisions—with an overly bureaucratic ring.

Proving once again that totalitarian mindsets rarely bend, the federal government practiced the familiar moves of symbolism over substance. Over the objections of the Western Governors Association, and despite the fact that the National Academy of Sciences had not yet completed its study to determine the need for new regulations, the Bureau of Land Management (BLM) moved full speed ahead in its attempt to write over 500 pages of duplicative and crippling new surface reclamation rules.

Why did the western governors protest the BLM’s initiative? Perhaps because their regulatory programs already work well—Nevada’s is particularly strong. And buried in the 500-plus pages of BLM regulation revision are numerous conflicts with existing state regulatory structures. Instead of increasing cooperation between the federal government and the state, jurisdictional wars are sure to be fought, with the mining companies being caught in the middle of the fray.

This affront is in an international price climate that places gold and minerals in a tenuous situation at best. Gold prices are at their lowest point since 1979. Market analysts say central bank selling, the weakness in Asian markets and the strength of the dollar are all causative factors.

Apart from the international wrinkles, mining companies are some of the most regulated and taxed entities on the planet. At present there are literally hundreds of federal, state and local air, water and land permits required before a single mine can operate. Couple this with the ever-present extremist whining and mission creep of the EPA and its iron triangle, and it’s clear that mining companies are involved in a war that few of us can understand. But here is where the two worlds collide: Since the Environmental Protection Agency was founded some 20 years ago, you and I have spent nearly $2 trillion complying with its rules and regulations—that’s $6,000 a year for the average Nevada family. In jobs lost, the cost has been in the thousands in Nevada and the hundreds of thousands in the nation. Today, with our country in debt $5 trillion, the regulations keep coming.

Like the good soldier focused on his objective, the mining industry has increased gold production and decreased operating costs in the face of a 15 percent decline in gold prices. Their adjustments included partial closures of some facilities and delaying development expenditures in others. But where is the corresponding prudence and restraint on the government side of the equation? The answer is found in where we live and where they live. Driven by differing incentives, one shrinks into an efficiency mode, while the other grows with few boundaries.

The critical question is, where will the two worlds find reconciliation and some modicum of understanding? Will it be in a compromised or failed economy? Maybe within the international competitive environment? Or will it require a war? NJ

Judy Cresanta (jc@npri.org) is president of Nevada Policy Research Institute.


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