This might be getting a little boring, but I am going to keep repeating the role of natural resources in economics. This is a new slant on the subject'
The whole point of natural resources and economics is that the value from natural resources can not be duplicated any place else or not just in any place. My point in this blog is that even the role of natural resources is not fixed. It can change in at least two ways. The resource just becomes less valuable or it is replaced in some way. Look at the early New England area of the USA. Because of water power in the area, many mills were able to produce all kinds of goods cheaper than by physical labor. The USA had an ordinance plant located at Harper's Ferry. Why was that? It was because of the water power available there. Machine shops that now are powered by electricity were then powered by a "line shaft" that was driven by water power. New England was famous for its textile mills even though they did not grow any cotton. Now, that has all changed as water power was replaced by the steam engine and electric motors. While it lasted, however, New England was an industrial power house. I am just pointing out how natural resources play a major role, but in some cases they do not last for ever.
Look at atomic energy and even the atomic bomb. Why was the atomic industry located on the Tennessee River or in Hanford, Washington? It was due to the natural resource in those areas which was hydroelectric power. Large amounts of electricity was needed to refine the Uranium and that was only available due to the Grand Coolie dam and Tennessee valley project. Those are still good places for the refining of Uranium, but it can now be done in other places economically.
You might ask why there were no significant textile mills in places like Georgia or Alabama even though that was where most of the cotton was grown? If you look at these two states, you will see that neither has a lot of hydroelectric power. You need rivers and mountains for that and neither of these two states have both.
I visited New Zealand a few years ago and was surprised to find that, even though they did not have aluminum ore, they still produced aluminum. It was because they have a large surplus of hydroelectric power and smelting aluminum requires a lot of electric power. Rather than to try to ship the electricity to some place, it was more economical to bring the ore to New Zealand and send back the smelted aluminum. This is also the main reason that Canada can produce aluminum cheaper than the USA. Electric power is cheaper in Canada than it is in the USA.
All around the world countries are building bigger and bigger hydroelectric facilities. China is in the process of building one of the largest and tallest dams in the world. I think that when it is finished it will be the largest electrical power producer in the world. You can just guess what the economic impact will be of the that.
Similarly, Brazil is also building bigger and bigger dams on their many rivers. World wide, there is a limit to how many of these dams can economically be built. My guess is that the USA has already used up 90% of our potential economical hydroelectric production potential. Africa is very flat and thus does not have much potential, while the Russia and South America have considerable undeveloped hydroelectric power potential. It will be interesting to watch now that you have a better appreciation of the impact of natural resources on economics!
PS--I blogged about ghost towns before, but it worth a few comments here. Most of these ghost towns were towns that sprung up when Gold was discovered at their location. Now that the Gold has played out, the towns died and became ghost towns.
PS--Here is another point about natural resources. Given that there are two basic types of economies, value added and natural resource exploitation. Those that rely on value added labor are poor candidates for a socialist type government because there is little free money that can be confiscated from rich people. By contrast, a country that has substantial natural resources may be a good candidate for a socialist type government. Look at Norway with large oil reserves and a small population. Similarly, look at Canada who also has lots of natural resources compared to the size of their population. Now, look at Venezuela. They have lots of oil, but they can't economically exploit it, plus they have a large population. Look at Russia. They are also a good candidate for socialism while China is not. Interesting isn't it?
The whole point of natural resources and economics is that the value from natural resources can not be duplicated any place else or not just in any place. My point in this blog is that even the role of natural resources is not fixed. It can change in at least two ways. The resource just becomes less valuable or it is replaced in some way. Look at the early New England area of the USA. Because of water power in the area, many mills were able to produce all kinds of goods cheaper than by physical labor. The USA had an ordinance plant located at Harper's Ferry. Why was that? It was because of the water power available there. Machine shops that now are powered by electricity were then powered by a "line shaft" that was driven by water power. New England was famous for its textile mills even though they did not grow any cotton. Now, that has all changed as water power was replaced by the steam engine and electric motors. While it lasted, however, New England was an industrial power house. I am just pointing out how natural resources play a major role, but in some cases they do not last for ever.
Look at atomic energy and even the atomic bomb. Why was the atomic industry located on the Tennessee River or in Hanford, Washington? It was due to the natural resource in those areas which was hydroelectric power. Large amounts of electricity was needed to refine the Uranium and that was only available due to the Grand Coolie dam and Tennessee valley project. Those are still good places for the refining of Uranium, but it can now be done in other places economically.
You might ask why there were no significant textile mills in places like Georgia or Alabama even though that was where most of the cotton was grown? If you look at these two states, you will see that neither has a lot of hydroelectric power. You need rivers and mountains for that and neither of these two states have both.
I visited New Zealand a few years ago and was surprised to find that, even though they did not have aluminum ore, they still produced aluminum. It was because they have a large surplus of hydroelectric power and smelting aluminum requires a lot of electric power. Rather than to try to ship the electricity to some place, it was more economical to bring the ore to New Zealand and send back the smelted aluminum. This is also the main reason that Canada can produce aluminum cheaper than the USA. Electric power is cheaper in Canada than it is in the USA.
All around the world countries are building bigger and bigger hydroelectric facilities. China is in the process of building one of the largest and tallest dams in the world. I think that when it is finished it will be the largest electrical power producer in the world. You can just guess what the economic impact will be of the that.
Similarly, Brazil is also building bigger and bigger dams on their many rivers. World wide, there is a limit to how many of these dams can economically be built. My guess is that the USA has already used up 90% of our potential economical hydroelectric production potential. Africa is very flat and thus does not have much potential, while the Russia and South America have considerable undeveloped hydroelectric power potential. It will be interesting to watch now that you have a better appreciation of the impact of natural resources on economics!
PS--I blogged about ghost towns before, but it worth a few comments here. Most of these ghost towns were towns that sprung up when Gold was discovered at their location. Now that the Gold has played out, the towns died and became ghost towns.
PS--Here is another point about natural resources. Given that there are two basic types of economies, value added and natural resource exploitation. Those that rely on value added labor are poor candidates for a socialist type government because there is little free money that can be confiscated from rich people. By contrast, a country that has substantial natural resources may be a good candidate for a socialist type government. Look at Norway with large oil reserves and a small population. Similarly, look at Canada who also has lots of natural resources compared to the size of their population. Now, look at Venezuela. They have lots of oil, but they can't economically exploit it, plus they have a large population. Look at Russia. They are also a good candidate for socialism while China is not. Interesting isn't it?
