The Center for the American Experiment: Mining Will Be An Economic Boom

Conservatives in Minnesota have this “think tank” that is used to provide somewhat “factual” data to support their assertions of conservative economics. But can you trust the accuracy?

Well, they published an article about mining’s economic impact in Minnesota and one of their economists, John Phelan wrote a letter to the editor in the Duluth Tribune to explain it.  The letter was a response to an op-ed piece from the Center for Progressive Reform, which asserted this:

“(A Twin Metals) mine promises to be an economic loser,” they contended, saying that, “A 2017 study by Key Log Economics showed that copper-nickel mining in the Boundary Waters watershed would cost Northeastern Minnesota $288 million in lost revenue from visitor spending and lost property values amounting to about $509 million. The 4,490 local jobs at risk would be 10 times the number of new mining jobs expected to be created, according to a study from the School of Business and Economics at University of Minnesota Duluth. The total tab? Between $402 million and $1.6 billion in lost annual income.”

That study had a strong argument and solid numbers. But Phelan from the CAE refuted it this way.

That is why we at the Center of the American Experiment have produced our forthcoming report, “Unearthing Prosperity.” In it, we estimate the potential boost to Minnesota’s gross domestic product from proposed copper and possible titanium mining. We estimate that developing these resources would increase the state’s GDP by $3.7 billion annually. That’s the economic equivalent of hosting 10 Super Bowls every year. This would support approximately 8,500 jobs with total wages of $635 million. And this would add approximately $198 million in tax revenue for state and local governments.

When the CAE produces a report, the data is often suspect. They use “estimates” and ideal circumstances and extrapolation and always the best case scenario for their position. In this study, they use data that states each mining job generates $447,603 in annual revenue, based on extended activity related to the mining job….which is the 2nd best performing sector in this regard. In leisure and hospitality, on the other hand, each job generates an average of just $47,986 in gross value, making it the state’s worst-performing sector.

Their analysis takes us here….

Yet, since 2000, Minnesota has lost 23.5 percent of its mining and logging jobs and increased the number of jobs in leisure and hospitality by 18.9 percent.

However, that kind of proves the point about where northern Minnesota’s economy is going. Leisure and hospitality is growing and creating jobs. Mining is in a bust cycle. Even if some of the new mines develop, the jobs created are in the hundreds….not the thousands that have been created by tourism related activity.

Then there is the risk factor. Mining can be very hazardous to the environment. Hazardous to the very jobs that are growing in leisure and hospitality. These mining companies always talk about how their safety records are so much better and the CAE says with confidence that mining and environment can coexist. Yet, the past record is replete with mining disasters that cost billions in clean up costs and turned areas into wasteland. In 2014, a mining disaster in Canada at Mount Polley when a dam with waste water failed. Polymet’s proposal also has a dam to hold waste water.

I am not saying that new mines will not happen in Minnesota. In some form, they probably will. But this idea that we are being overly cautious and thwarting huge economic development in northern Minnesota is just wrong. The economy in northern Minnesota has gotten better – and a lot of that improvement comes from environmental jobs. Trying to restore older job bases that have inherent dangers, limited numbers of jobs, and which have just 20 years of production life….seems a little backward thinking.

To me, I would like to see CAE use outside methods for studies. Doing it within the “think tank” just gives you the feeling that they reach a conclusion first and then manipulate data to support it. It sure looks that way in their mass transit studies.

Minnesota wants a thriving, diversified economy; but when mining competes with the environment, something loses. And that is something we should not risk.

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