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Ed Conway is the economics editor at Sky News in the UK. For his new book, Material World: A Substantial Story of Our Past and Future, he traveled the globe to tell the story of six materials — sand, salt, copper, iron, oil and lithium — and how they have become so vital to modern economies. Along the way he illustrates the supply chains involved in producing and using these substances, and discusses the trade-offs involved that touch on geopolitics, the energy transition and much more. In this edited transcript of a recent conversation we talked about the book’s themes and why he no longer takes this often overlooked world for granted.

Q: Can you start by explaining the main idea behind The Material World? 

A: At its simplest, it’s the fact that an ever increasing proportion of us work within services industries, and have lost our connection with, and understanding of how the basic and important stuff that keeps our civilization going actually works. There’s a feedback loop here, because within the world of economists, we do — understandably — focus on the stuff that seems to create the most value. And so we look at statistics like GDP, and the bulk of it is services: commodities and raw materials constitute quite a small part. As a result, we don’t give it that much thought. 

But while GDP is a really good metric of value and outputs, it’s not a very good metric of dependency. That’s a blind spot within conventional economics. GDP is like an enormous inverted pyramid, where a lot of the important things — soft tech, social media, professional services, pretty much everything — depend on a very small base in terms of value: how we get stuff out of the ground, how we make basic materials that allow us to do the other stuff. That’s the foundation stone, everything from the concrete that sits underneath our cities, so that we can urbanize; the copper we need for wiring, through to fiber optics, which enable this conversation to happen and the Internet to be a thing. 

It struck me that there’s this whole other world that I hadn’t thought all that much about before. And the more I delved into it, the more fascinating it was. I don’t say that’s because of any great investigative journalism on my part. It’s because a lot of us just weren’t focusing on this world of how stuff is made. 

So the book’s overarching theme is that if you want to understand the world that we’re going to inhabit in the future, you need to start by understanding the world that we currently inhabit. I don’t think our fundamental understanding of this world — and I include myself in that up until researching this book — is as thorough as it could be. And the upshot is, we’re approaching the future and all of these different challenges — globalization, the energy transition — with a greater naivety than we should be. If we did spend a bit more time thinking about the nuts and bolts, then we would have a more sophisticated view of what we need to do in future.

A question I sometimes wondered about was, Am I really the person to be writing this book about materials, as a mere journalist? Actually, though, this is a journalistic exercise: it’s not just about conventional economics, or about industrial strategy, or chemistry, or battery science, engineering, material science, or geology — it’s about all of these things. To have a sense of this territory, you need to be an amateur or a tourist in lots of these fields. And so the process was unapologetically journalistic. 

Did the process of reporting this book change the way you think about economics, and economics reporting?

It’s totally changed, for the reason that we talked about: We’ve had a blind spot about the material world. Recently, this stuff has become more fashionable. People are thinking about the energy transition and supply chains. So this has improved in the last year or two. It’s also a consequence of the fact that you have governments in the U.S., and maybe now in the UK, which are unafraid of talking about industrial strategy and introducing subsidies. 

But there is still a conventional wisdom that is really sniffy. You see that in a lot of the great organs  of our age, like the Economist and, to some extent, the Financial Times, which take quite a laissez faire view on trade and on the structure of the economy. One of the things that happened when the Berlin Wall fell was that we assumed that anything related to market intervention was just bad. The Washington consensus reinforced the idea that one needed to step back and allow the markets to take care of themselves. 

That makes complete sense if you can assume that everyone around the world is doing the same thing. But in the real world, China is subsidizing its producers enormously, although it’s so difficult to get hold of the numbers to allow you to intervene via the WTO. The International Monetary Fund, an amazing institution which I have lots of respect for, reflects the conventional wisdom even now. They wrote a very sniffy article about industrial strategy saying, ‘Really, is this a good idea? I think we know it’s not.’ 

I slightly recoil from that attitude now. Understanding more about this world, and understanding this stuff that a lot of people never really paid much attention to before is incredibly important and fundamental to everything else; and understanding that there is a tension between economics and security. 

There’s an example about how the UK ran short of binoculars in the run up to the First World War. We sharply reduced the amount of optical glass we were making in the late 19th century, and started buying it all from Germany, which happened to be really good at making it. Then suddenly World War One breaks out, and we don’t have any binoculars. A lot of people died as a result, because they were being sent off to the trenches without binoculars, or with their grandmother’s opera glasses. And in the post mortem it was said that Britain had pushed itself to the leading edge of laissez faire, saying let’s just buy everything from overseas if it’s cheaper. That’s fine, until it comes to a moment like that when suddenly you’re short of things. 

I find that very haunting and quite powerful, given where we are in the world today. There is no simple equation that allows you to put that into an economic model. And therefore, I am more circumspect about whether economics holds all of the answers. I’ve been semi-radicalized by this! 

Having said that, different countries still have different levels of expertise in producing various parts of these incredibly complex supply chains, so it’s hard for any to be fully self-reliant.

Yes, there is comparative advantage, and there’s competitive advantage, and sometimes there’s something semi-innate about a country which makes it better doing one thing than another. But a lot of the time that is learned. Your ability to compete depends on subsidies, which are often invisible. 

Right now, China is by far and away the world leader at making solar panels. But a lot of the expertise and patents for that really came from Europe. Germany was an enormous leader in making polysilicon, the material you need to make solar panels. But China saw an opportunity there, and essentially said, ‘No, we want to make this and we’re going to make it much cheaper.’ And they can. Partly, that’s down to big subsidies, partly to labor costs. Partly, it’s down to energy costs being a lot lower, because they use a lot of coal. And partly, it’s because there’s lower environmental and labor standards. How much of that is comparative advantage? I’d say a lot of that is something else, which is competitive advantage. 

The world has so many of these pinch points. It underlines the complexity and wonder of globalization, but also the fragility of it… We don’t think about this stuff ex ante much: we just think about it when there’s a crisis. 

The Ricardian comparative advantage argument is one you often hear from economists — well, Ricardo didn’t understand the world that we inhabit right now where there is far more complexity and far more of these interventions. I’m with Michael Pettis on a lot of this, and Matt Klein: there’s a more nuanced argument against just allowing comparative advantage to take hold. 

Even bearing that in mind, it’s hard to imagine how you couldn’t have this incredibly globalized set of supply chains. That does seem to be part of the answer for how we have cheap stuff today: people are specializing, and in all sorts of random places. 

There’s one anecdote which I find really telling. I went to a factory in the Midlands, here in the UK for a company called Brandauer. They’re very good at pressing really thin bits of metal into perfectly accurate parts. When I went there, they were making an electrode, a tiny little thing, that goes into the rearview mirror of a car, part of the circuitry that allows it to do auto dimming — most cars have this function so you don’t get blinded if someone puts their headlights on behind you. And it turns out that this single factory in Birmingham was making more than half of the world’s supply of the necessary electrode for rear view mirrors — this one teensy component.

So we’ve got this kind of concentrated globalization: a certain factory is the factory for making a single thing that is used everywhere. If Adam Smith saw that, he would probably rejoice, because that sounds like an incredibly efficient way of creating products and running the global economy. Doubtless, there are hundreds of thousands of factories doing the same thing for a given component somewhere else. And we only find out about these things when there’s some sort of a crisis. 

The world has so many of these pinch points. It underlines the complexity and wonder of globalization, but also the fragility of it, the extent to which if something goes wrong, there are so many different little pinch points that we’re going to suddenly discover exist. We don’t think about this stuff ex ante much: we just think about it when there’s a crisis. 

One of the more interesting challenges I had was to tell the story of the supply chain for silicon chips. If you want to make a computer chip, you need an ultra pure silicon wafer. People fixate, understandably, on what happens within the fabrication plant like Taiwan’s TSMC, where the silicon chip is made. To me there’s there’s just as much wonder in the bit before that, because we’re taking something that’s a lump of rock, and we’re turning it from that brute thing we get out of the ground into something that is the purest, the most perfect thing that we as a species can mass produce.

But to make that happen, towards the end you have to take super pure silicon, and turn it into something that has that perfect atomic structure, something called the Czochralski process. That involves melting it down in crucibles, crucibles that can only be made out of a particular type of ultra high purity quartz. If you don’t make it out of anything as pure as that, then you’re going to get some impurities introduced. 

And there is only one place in the world where we can mine that ultra high purity quartz on a large scale, and that is a place called Spruce Pine, in North Carolina. It is the pinch point of pinch points. If this place didn’t exist, you wouldn’t have any silicon wafers being made until we could find an alternative, although so far no one’s found a decent alternative. And civilization as we know it would be under threat. 

Because it’s so deeply buried within the supply chain, and because it’s relatively low value in terms of its GDP, I just don’t think there’s much attention paid to it. But it’s just one of quite a few pinch points. 

Did you get a sense that policymakers that you’ve come across as part of this book are aware of this and understand? 

The answer is no. 

Funnily enough, I was talking to some policymakers in the UK, just after we had an episode where a fertilizer plant in the UK suddenly had to be shut down. People hadn’t realized that one of the byproducts from that plant is carbon dioxide, in canisters or vats. That carbon dioxide turned out to be very important both for carbonating fizzy drinks, but also in the stun guns used for slaughtering pigs. Suddenly we didn’t have enough CO2, and that means suddenly we’re going to run short of bacon. It was only when there was a threat of a national bacon shortage that the government said, ‘Okay, we need to think about this now.’ 

They told me about this belatedly, and on background. People said, ‘Listen, we weren’t aware, it was a complete surprise’ — because they had no idea of the structure of the chemical sector. After that, people that work in the sector told me suddenly there were all sorts of government officials sending them emails saying, ‘Hey, do you think you could just draw up a map of the chemicals sector, so we understand it in future?’ 

Maybe, in this more precarious world that we’re in right now, where everyone’s more conscious than they were even a few years ago that supply chains matter, we can start to have a more sophisticated view of the world. But until now, the view has always been within government, and elsewhere in economics, that it’s just too complicated — so why would you bother? 

My response to that is clearly you’re not going to be able to come up with a comprehensive, coherent, all-seeing map. But that doesn’t mean you shouldn’t think about these dependencies. 

In the book I write about Leonard Read who, back in the 1950s, described how a pencil is made. The lead comes from this place, the wood comes from this place etc, it all goes together. I wanted to do that with a few other things, notably with silicon chips. No one, as far as I had encountered, had written a book explaining the journey of a piece of silicon from the ground into our smartphones. And actually it turned out there are very few people — like with the pencil — at the top end of the supply chain, who understood what was going on at its other end. I hope there’s going to be more work like that in the future, trying to visualize our various different networks of dependence around the world. 

Another trade off is the fact that the things that we need for the energy transition, are often extracted through processes that themselves create environmental damage, and cause conflicts with local communities. Could you illustrate that with some examples that you have in the book.

I think it’s important to have some perspective about it. Mining copper, for example, is dirty and quite environmentally damaging. And it’s dirty, getting lithium out of the ground, especially from Australia where a lot of the world’s lithium comes from. A lot of people see that and say, it’s dirty so why are we doing it? 

But the point here is it’s a very different type of dirtiness. This is mining metals that go into an electric car. And provided that electric car is powered with relatively low carbon power, your net carbon emissions are far lower, after a certain number of miles. So it’s a trade off: It’s a complex thing. And what frustrates me sometimes is people take the dirty side of it and say we shouldn’t be doing it. That’s not the argument: the argument is to be conscious about what we’re doing. 

Mining lithium is a dirty enterprise. Chile has the world’s biggest reserves of lithium, mostly in the Atacama desert, which I visited. Mining there uses a lot of water in an area that is one of the driest areas in the non-polar regions of the world. It is something that the locals have real trouble with and they are frustrated with the process. A lot of them want the miners to go away. If you look at a Google map of the salt lake on the Atacama, you can see these enormous pools where they are evaporating away the lithium.  So if you’re talking about the Anthropocene, humankind’s geological era, there is definitely a footprint on the world. And mining for lithium in the Atacama is actually much cleaner, and much less water dependent than in Australia. 

Copper mining is also incredibly destructive of the earth. And it’s going to get more destructive because we have already mined most of the high grade copper, and so now you have to mine a lot more rock in order to get a certain amount of copper. One of the most jaw dropping moments I had was visiting a mine in Chile called Chuquicamata. It is the world’s biggest man-made hole, like a canyon about 1.5 kilometers deep. What was staggering, standing on the lip of it and watching them do a blast, was not just its scale, but the knowledge that we need so many more of these, if we’re going to satisfy our future demand for copper. 

Because in order to do this energy transition, we need a lot of minerals. At the moment we don’t need very many minerals to build a power station: you need some concrete and a bit of copper, and so on. You need the minerals later on — the coal or gas that you’re going to fire the process with. 

Whereas with the energy transition, you mine all the minerals up front — and then you put them into a wind turbine, for example. You need a lot more minerals than you do to build a conventional power station — more copper, more concrete, you need much more steel as well, because you’re making lots more structures. 

And the same thing for cars, you need more minerals to go in electric vehicles, whether it’s copper, or battery materials, than you do for a conventional car. That’s why electric cars are so heavy. However, in the long run, you don’t need to fill them with petrol, which then gets burnt at the exhaust. And even more compellingly, they are so much more efficient at taking energy and turning it into motion than combustion engines. 

It’s a complex story. But in order to go green, we do need to do dirty stuff. The worst thing we could do is to pretend that’s not the case. You see it in Europe at the moment: we want the energy transition to happen, and we want to feel like we’re not doing anything dirty in order to get to it. The upshot is that we’re not able to make the stuff like solar panels ourselves because it is way too expensive to make with only clean energy. So, as we said earlier, it gets made in China under conditions that are much less environmentally protected than anything we would accept in this country. China makes solar panels using incredible amounts of coal for energy. You then have all the toxic waste that gets run off into rivers and lakes a lot of the time. 

When you buy a solar panel from China, which inevitably you are these days, none of those trade offs, and none of those damages are embedded in the price. We don’t have a carbon border adjustment mechanism. And so there’s a risk that in trying to seek this absolutely perfect transition, which is what a lot of Europe thinks it’s trying to do, we end up having a far dirtier transition, because we’re allowing it to happen elsewhere. 

The U.S. has a slightly more coherent approach to it, which is to say, we’re for the energy transition. But we’re still going to be fracking a lot of oil and gas to do it. Some people don’t like it, but the upshot is that energy costs in the U.S. are far lower than they are here in Europe. And therefore you can make stuff in the U.S.. Even there it’s hard, because it’s so much cheaper in China. 

These are considerations which I didn’t have the foggiest about before I started researching the book. And I just don’t think they enter much into the consideration of mainstream economists. I still feel there’s a big gap between the consensus in this continent and where we could be.

The thing that I find exciting about where we are right now is that we know that in order to achieve the energy transition, we need a kind of industrial revolution, meaning we need to reconceptualize and rethink the methods of making everything. 

Part of the problem with the way that the debate is prosecuted, particularly in developed economies, is that people are so keen to show they’re concerned about the state of the world, understandably. But in their concern, they are sometimes looking for easy answers. So sometimes this becomes a heroes and villains debate, whereas it is actually a very complicated and nuanced situation. The real world is nuanced: plastics, for example, have some incredibly important applications, but by the same token, we are wasting and chucking them away too much. It is possible for most people to retain both of these facts in their head at the same time, although not when you read a lot of the coverage.

And, to bring the conversation full circle, it’s that dissociation from the material world that exacerbates this problem. 

It’s nice and comfortable and cozy to just think you’re doing the right thing. But it’s not realistic. 

But to end on a positive note: quite a lot of the stuff we’re doing now, we’ve never done before. We need an unprecedented ramp up in lithium production. But look through human history: we’re actually pretty good at this stuff. We’ve done it before. We started to mine a lot of copper just at the right time to enable us to have the electrical revolution. And we’ll do it again. 

From our very earliest days, as a species, we have been adept at taking stuff out of the ground, whether it’s sticks or stones and turning it into tools. This is just the latest extension of us doing that. It is part of what we are. That’s why I find the topic quite satisfying, because I think there is something innate to humankind, which is about getting a tool and putting that tool to work. We have begun slightly to forget what it takes to get those tools out of the ground. Not all of us, of course: the world wouldn’t be here if it wasn’t for amazing engineers and scientists. But I feel like their story hasn’t been appreciated as much as it could be. 

The thing that I find exciting about where we are right now is that we know that in order to achieve the energy transition, we need a kind of industrial revolution, meaning we need to reconceptualize and rethink the methods of making everything. How often do you get to live through a moment where you know you’re living through an Industrial Revolution — not many generations do, and we are experiencing that right now. 

Even with AI — we can’t forget that it is based on a collection of servers and chips that take a lot of power. So it needs lots of silicon coming out of the ground. How do you make that silicon? Well, right now the best way is by putting it into a furnace and blasting it with coal. So you still end up at the face of the quarry with the rock in order to get this amazing world we inhabit.

But I love that. And I think understanding that — I have found it quite primally helpful. I feel like I understand the world a bit better and feel happier as a result. It’s quite therapeutic. I’d recommend it to everyone. Thinking about how this stuff they are surrounded by gets there is quite helpful to you, it makes you feel slightly more at one with the world around you.

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