“Conflict-Free Minerals” And Economic Illiteracy

This story was interesting.  People are protesting against Apple.  They want Apple to stop using “conflict-free minerals” in their products.

What is the definition of “conflict minerals”?  The definition is “Minerals mined by a government we don’t like.”

Suppose that the protesters got their wish, and Apple stopped using “conflict-free minerals”.  What would happen?  People would pay slightly more for their iPhones and Apple products, and the “conflict minerals” would sell for almost the same price.

Why is that?  It’s basic economics.

Suppose that the demand and supply for X is 1000 units per year.  Apple uses 100 X per year .  The supply of “conflict-free X” is 900 units per year and the supply of “conflict X” is 100 units per year.

The protesters get their wish and Apple stops using “conflict X”.  Now, other businesses start buying conflict X instead of Apple.  The price of X remains almost unchanged.  The price of “conflict-free X” is slightly more than “conflict X”, but not by much.

The boycott only works if *EVERYONE* refuses to buy “conflict X”.  Then, the price of “conflict-free X” becomes higher then “conflict X”.  Now, there’s an incentive for someone to cheat the boycott.  The people who mine “conflict X” would probably launder their product through a country with “conflict-free X”.

This boycott demand shows ignorance of basic economics.  There’s no point in botcotting a fungible commodity from a specific source.  The boycott only works if everyone joins, and then there’s a huge incentive for people to cheat.

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