Kellogg's Global Politics

Winning the Battery Wars with China & Elections in India|EU|Mexico

• Anita Kellogg

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The past few weeks have seen several important elections in India, the EU, and Mexico. We discuss the impact in their respective regions and to the larger international environment.

We also discuss the latest in the EV battery wars. Is there a path forward for the U.S. to decrease dependence on China, and does it come at the cost of meeting U.S. environmental climate goals?


Topics Discussed in this Episode

  • Ryan takes on Heritage’s Project 2025 Energy Policy
  • 05:20 - Democracy Tested in India, the EU, and Mexico
  • 50:30 - Winning the Battery War with China


Articles and Resources Mentioned in Episode

Ryan’s op-ed article in the Pittsburgh Post Gazette


Democracy Tested in India, the EU, and Mexico


Winning the Battery War with China

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Anita Kellogg: [00:00:00] Welcome to Kellogg's Global Politics, a podcast on current events in U. S. foreign policy and international affairs. My name is Dr. Anita Kellogg, an international relations scholar specializing in the relationship between economics and national security. I'm here with my cohost, Ryan Kellogg, an expert in energy investment and policy.

Ryan Kellogg: Thanks and glad to be back. So this is episode 46, and we're recording this on June [00:00:30] 16th, 2024. 

Anita Kellogg: Last few weeks have seen several important elections in India, the EU, and Mexico. We discussed the impact in the respective regions and to the larger international environment. We also discussed the latest in the EV battery wars.

Is there a path forward for the U. S. to decrease dependence on China? And does it come at the cost of meeting U. S. environmental climate goals? So, happy Father's Day to Ryan. 

Ryan Kellogg: Thank you very much. 

Anita Kellogg: We thought it would be a [00:01:00] good day to feature the article you wrote in the Pittsburgh Gazette on why Trump's energy plans are not actually good for energy industry.

Ryan Kellogg: Yeah, so we actually meant to mention this in the last episode, but I had an opportunity to write an op ed piece together with my colleague, David Burnett, that I worked together with uh, at Black Knight. And yeah, it was basically a looking ahead like a lot of people are now to [00:01:30] the November election and the potential consequences of, uh, future Trump administration.

And I know a lot of people are also highlighting this. Project 2025, which of course is the Heritage Plans Foundation and kind of a Bible, policy Bible for a potential Trump administration. And one big aspect of that is energy policy. And, you know, naturally you would think coming from the oil and gas industry, you know, one of the things that, [00:02:00] that Trump.

emphasizes is on day one of his dictatorship, just one day dictatorship. So I don't have to be worried. He's going to implement, you know, among other things is drill baby drill, right? Which I interpret as just any federal leases that are out there and out open for oil and drilling, regardless of whether it's economic.

Or attractive, you know, from an investment standpoint, and that's all fine and well. So you would think oil and gas industry would be completely on board with that. But what we emphasize in [00:02:30] this article is that the industry's moved beyond the 2000s, the early 2000s, which essentially this policy is frozen at, and it's embraced a lot of the policies.

Of both the energy transition and the narrative and actions around climate change. I mean, you had the COP meeting last November, which was heavily attended by the oil and gas industry. And it made these huge commitments around reductions and [00:03:00] methane and other greenhouse gas emissions. So, The fact that the heritage plan, this project 2025, seeks to roll back a lot of that, seeks to roll back the emissions, seeks to roll back all the subsidies from the Inflation Reduction Act, particularly around carbon capture and sequestration.

So both of these aspects, the industry has already invested billions of dollars in. They're very excited about, you know, the potential [00:03:30] opportunities, particularly on the carbon sequestration side, because it's a natural fit for the industry's skill set, you know, requires geological analysis, requires drilling injection, requires the huge transport of massive volumes of gas and storage underground.

These are all things that only the oil and gas industry really has. the experience in. So to strip away all these future business opportunities just doesn't make a lot of sense. And I think it's, it's something we'll [00:04:00] get into in this episode also around battery manufacturing. It's something that a lot of the provisions of the IRA are benefiting directly Republican led districts.

So there seems to be a disconnect between The provisions they're in, like Project 2025, which a lot of these policies are old bugaboos that Republicans have had since at least the 1990s versus where industry, in particularly the energy industry [00:04:30] is right now. So that's, that's really what this article emphasizes.

And we, we chose the Pittsburgh Gazette just because, you know, there's only so many energy. capitals kind of in the country. Houston's one of them, but Pittsburgh is a big source of, you know, the center of the Appalachian, uh, Marcella shale and natural gas industry. So it made sense that to get it kind of in front of that audience.

And obviously Pennsylvania voters are going to be critical, uh, in this coming election. So it's a little bit of a, uh, [00:05:00] unexpected, I think, opinion, you know, having oil and gas professionals say, Hey, Wait a second, you know, how did this benefits our industry? Let's take a second look at this. 

Anita Kellogg: Right, exactly. So yeah, so it's very interesting and I'll put a link in the show notes and so you can check it out yourself.

Well, so on to the main part of the show and want to begin with the election in India, where as expected, Modi secured a third successive [00:05:30] term as India's prime minister on June 10th. But to many's surprise, he emerged from the election in a much weaker position. So his party, the BJP, failed to secure an outright majority and now must form a coalition to stay in power.

So they aimed to take a supermajority, which was 370 seats in the 543 lower house, but ended up winning only 240. Now this was a surprise to many in the international [00:06:00] community because so many of the opposition had been prosecuted directly and there had been many sort of authoritarian measures with the judiciary.

And a lot of elements that did not favor the opposition at all. So many expected that he might get the super majority. So along these lines, he also lost a majority of seats in India's most populous state. And, you know, they lost despite. delivering a lot of red [00:06:30] meat to his Hindu nationalist base in the state, including a newly consecrated temple to the Hindu deity, Ram, and virulent anti Muslim rhetoric.

So one of the reasons for this is that it was driven over anger in the economy, like many of the other elections. So one thing that's interesting from this is that there are a lot of direct welfare payments to the poor. that have been expanded under Modi. But the complaint was [00:07:00] more because the economic growth has been very unequally distributed.

And so you've seen still remaining high unemployment, stagnant wages, flat consumption, and widening inequality. So the lower part of society has not been able to share in any of the economic gains. Therefore, any new policy would have to address These fundamental causes and cannot rely simply on cash transfers.

One of [00:07:30] the things that's been noted is that it seems to point to a resilience of Indian democracy when faced with increasing authoritarian tactics under Modi. One thing also that I, I thought was really interesting was the role of the caste system in the election. And I was listening to a report on CNN from Christine Emanpour and just talking about how important in this election was the lower caste splitting away from BJP and [00:08:00] voting for opposition parties.

And in some sense, you know, this is because they. You know, Modi has tried to eliminate affirmative action and under his unified Hindu party, there isn't room to discuss this fair distribution based on the caste system. So one of the concerns of the Kumar's united party that they are arguing for that there should be a census of the different castes just to have the [00:08:30] information about how many belonging to each.

Caste. And that would help focus on having more fair distribution based on caste. Now, the reason why the BJP opposes this is that fractures the idea of a single Hindu coalition, which they want to maintain. So what are your thoughts on the election? 

Ryan Kellogg: I mean, it came as a big surprise. Because certainly everything, you know, when we were in India last year in 2023, everything [00:09:00] leading up to it was, uh, expectation that Modi would be coronated and kind of ushering in this, this period of just the complete domination.

By BJP, they would point to, you know, an international stage. India is hosting like the G20. They have this much greater role within the global south that he's been pushing forward and then on the growth side, I mean India does have the number one growing economy with the struggles that that [00:09:30] China has been in over the last five years or so.

And there were, you know, even what we witnessed, not so much in Rajasthan, one of the poorest states where we spent most of our time, but there's definitely the evidence of, of infrastructure investments, of wide scale electricity throughout, you know, even the more rural areas. So there are successes they could point to, but obviously.

Particularly given the effects of coronavirus pandemic and, uh, the Ukraine [00:10:00] war and all of the subsequent inflation and kind of struggles that those gains weren't, weren't distributed equally. 

Anita Kellogg: They do get oil cheaper now. 

Ryan Kellogg: They do get, yeah. And I think that that probably helped in terms of like the energy.

Cost, but that's kind of only one aspect of of kind of where particularly the poor in the lower caste have have pain. But yeah, I think a lot of it is just the job creation, the fund and the failures of the education system, which is still struggling a lot in terms of [00:10:30] educating the people to be competitive as.

You know, the world's workshop, you know, particularly in the, the north where he lost a lot of voters. This is the northern part of the country is really kind of the core of his base of where the Hindu nationalist message really resonates. And that's where he lost, lost the most votes, despite the fact that, you know, like you mentioned, he was throwing that that red meat of tons of just really just.

[00:11:00] Very virulent, even by U. S. standards now of anti Muslim rhetoric, and it didn't work because, you know, it goes back to James Carville's economy is stupid, and in this case it was about jobs, high unemployment, and the increase in disparity. Right. I mean, 

Anita Kellogg: what's fascinating is you have, you can say India is the fastest growing economy, but for most people, they're not seeing any increase in their lifestyle.

It's not affecting them at all. [00:11:30] And so what's, what I find so interesting is when we were in Rajasthan, the area being so poor, like people did emphasize, Oh, it's brought electricity to our areas. It's brought more sanitation to our areas, but how. They want something more fundamental to that. When they hear about these growth rates, they want to be able to have, you know, better incomes, better able to provide for their children as well as better education systems.

And so the lack of social mobility, [00:12:00] the lack of just even internal improving your life. It's really kind of at odds with these numbers that, that we hear from the dynamicness of Indian economy, which appears to be only going to the benefit of a very small group of people. 

Ryan Kellogg: Right. And, and despite all the, I mean, the other thing that we witnessed was, you know, the increase in control of the media, of the judiciary system.

So the fact that the opposition groups were able to push back against [00:12:30] that and to have this electoral result where. You're going to have a much more constrained BJP going in. That's going to have to compromise. It's seems extraordinarily positive for democracy over. I mean, this is the world's largest democracy and it was, it seemed to be falling into a one party authoritarian rule.

And now. You know, it's completely changed. 

Anita Kellogg: Yeah, but I'm interested how this will affect, you know, if Modi will still have the power to [00:13:00] persecute the media and political opposition parties since, you know, the judicial system he's already interfered with, you know, does this really change things? It definitely.

Seems like it keeps it from becoming more authoritarian because he doesn't have the supermajority to change the constitution further. But I don't know, it's definitely a victory, but I don't know how much it rolls back already. The authoritarian policies that Modi has put into place. [00:13:30] 

Ryan Kellogg: Yeah, but it seems like it certainly stanches the flow in that direction.

It shows that, well, politically, you know, it's not, it's not getting you there going in that, that direction anyway. But yeah, I think it'll be interesting. I, the, in terms of the business view in the community, I think it was initially negative. Because this is seen as harder for him to implement, you know, some of the reforms and make it a little bit easier for foreign capital to invest in the country there.

Obviously, [00:14:00] with opposition, you know, there's gonna be a lot more consensus building. That's something that. Modi in particular has not shown any proclivity to during his political career. So I think a lot of the analysis has been focused on, well, this guy's basically been able to do what he wants for his 25 year political career.

How's he going to work with coalition partners that have different, different views? And, and can he be, can he successfully set up India, which does have this. [00:14:30] Very robust growth rate and certainly has the interest of the developed world to have a counter to China. So you can still have potentially all this investment coming in, but can you do that in a way that is more sustainable instead of focused on a personality cult that he was building before?

Anita Kellogg: Yeah. And ironically, while This election points to the need for more fundamental economic reform to benefit a greater amount of people. It may also be harder to make [00:15:00] those reforms because of the need to consensus build and just the additional amount of time it takes to team up with partners, get people on board.

So I think that's kind of an interesting thing to watch. is if anyone in India can really make the kind of economic reforms that India needs and would produce an even more dynamic economy. 

Ryan Kellogg: Yep. It definitely remains. I mean, I think the, uh, the foreign affairs article by Prada Mehta kind of points [00:15:30] out that, you know, when you can't just focus on.

Okay, these infrastructure projects or straight out now, welfare cash transfers, you have to look at the very fundamental institutions itself and it becomes a lot more challenging when it's about improving the education system or agricultural reform or just all these fundamental building blocks that will take to have a more, uh, equitable distribution of, [00:16:00] of the future economic gains within the country.

And yeah, it's, it's a huge challenge for sure. 

Anita Kellogg: I think this is really key for India because, you know, even as we hear about this dynamic growth, the distribution has been so unequal. There's, there's still so much incredible poverty in India. And I think that definitely Hampers some of its success that it needs to have going forward in terms of becoming, you know, a major power in itself.

Ryan Kellogg: [00:16:30] Yeah, and it's going to have to negotiate it in a way that that China didn't because essentially, I mean, Moody was trying to recreate. Instead of with the CCP said the BJP essentially as this one party state rule forced through without compromise, you know, the reforms necessary, but obviously trying to come out of the cultural revolution had to make, you know, big investments in education.

It was such an anti intellectual push during that period, but they had the advantage of that one party rule [00:17:00] and but India has to do these reforms with, you know, extraordinarily Complex and diverse democracy, so it really is kind of writ large another front on the civilizational consideration of democracy versus autocracy.

And we really got to be cheering for for India because if India can work given it all of its complexities and this need for consensus building, can it recreate the success that Bye. China has [00:17:30] had, despite the fact that you have all these different groups and different interests competing with each other in a real democracy.

Anita Kellogg: Yeah. I mean, I think the comparison to China is also interesting in the fact that so many, although as it's grown increasingly, the distributions have been unequal, but initially, you know, it lifted so many millions out of poverty, right? And you're not seeing that same transformation in India. 

Ryan Kellogg: Yeah, you're not you're not seeing that has the potential of the to be but it's definitely it's [00:18:00] starting at a point where China was and let's say the early 80s, right?

Like probably that level of economic development, probably something like that. Yeah, maybe I mean, I'm still I was still still shocked. I went over there thinking it was similar to like Malaysia, 

Anita Kellogg: you know, 

Ryan Kellogg: failing, you know, maybe like 10 8 10, 000. per capita GDP. And it's no, it's, it's like Nigeria. It's like two, three thousand.

I mean, just very, very poor country. 

Anita Kellogg: Yeah. So [00:18:30] hopefully this will lead to some positive changes and definitely makes it a better partner internationally so that we're partnering, partnering with a dynamic democracy rather than a state that's moving more towards authoritarianism. 

Ryan Kellogg: I think it is good overall.

I mean, I think either way, the foreign policy aspect in our relationship with India wouldn't have changed because our interests, you know, where that overlap are the same. But, um, but I think it strengthens them on the world [00:19:00] stage because it does show, yeah, they are a real democracy. Yeah. As a key member, as the biggest, most populous country of the global South, that's extraordinarily important.

Anita Kellogg: And as India becomes a more important player, right? So, uh, Was reading in our research that by 2027, they should be the third largest economy, which makes sense given how populous they are. Then as they become more important, it's very important that we see them to be a democracy and not [00:19:30] another potential major power that's authoritarian.

So the EU also had some surprising elections and I think you wanted to go over those. 

Ryan Kellogg: Yeah. And in a normally I don't, well, I mean, this is probably the first EU parliamentary elections that I really paid much attention to, and I think it's really, it's not so much the outcome of those elections as much as the consequences for the [00:20:00] national governments from these.

But just to give a little background, so the EU elections were held June 6th to 9th and occurs simultaneously across all 27 member states. The EU, you know, we've talked some about and I know you studied it in detail at the University of Amsterdam. Kind of in its early stages following expansion, but the EU Parliament has a wide range of powers and setting trade policy, regulatory authority, agriculture, and [00:20:30] immigration, and within this last election had over 180 million voters.

people voted, which represented about a 50 percent turnout, which actually was, was pretty good. Because one of the criticisms definitely, you know, at the time that we lived in the Netherlands was that the EU is fundamentally anti democratic institution, that it doesn't really represent its member states.

And part of the things that it pointed out was kind of the, the low turnout. So seeing a 50 percent turnout is actually fairly decent. [00:21:00] Now, the major outcomes from this and that got all the headlines were around Germany and French delegations to the EU Parliament. And what was key here was that the national parties of the, the heads of these governments, so on the German side, Schultz's Social Democratic Party and his coalition partners on the left Very heavy losses in terms of their seats to the EU Parliament, but on the bigger [00:21:30] side was French President Emmanuel Macron central alliance captured less than 15 percent of the vote compared to his competitor in the last election, uh, Le Pen's far right national party, the National Rally.

which captured margins twice as much over 30 percent of the vote. So this kind of sent shockwaves and there were concerns definitely before the election that the far right would make big gains within the EU. But in reality, it [00:22:00] was mostly the centrist parties held sway. So in terms of the dynamics and the direction of EU policy, which from a U S perspective, we can look at mostly as The Ukraine policy, which is really key, and then around regulatory authority, which more and more like US tech companies have gotten caught up in the EU regulatory net, particularly around privacy, essentially, none of that dynamic is going to change as a result of these [00:22:30] elections.

European People's Party is going to maintain its majority, and the pro EU party is essentially going to still have 450 seats out of out of 720. That being said, the EU faces a number of different challenges over the next five years, and that's really why there was some nervousness around it, you know, particularly with the Ukraine war, the need for Increase coordination among the member states and joint policies.

[00:23:00] So, among those challenges will be expansion. So, both Georgia, Moldova, and, of course, Ukraine, and focusing on that, they have increasing demands for joint budget, particularly when looking head. At, um, trying to increase defense spending, increase coordination on the defense side. And then, of course, the potential return of a Trump administration and what that would mean for transatlantic relationships.

But going back, you know, the real impact was on the national government [00:23:30] side and what. Emmanuel Macron, the French president did really shocked everybody. So faced with this very strong rebuke of his party, he has works within these parliamentary sort of systems called a snap election, basically saying.

Hey, French people, French public, do you really want to support the far right national rally? I mean, it's one thing to send as a protest vote to the EU Parliament where they have [00:24:00] limited power, like on the average French citizen. So he gambled, rolled the dice, and essentially there's going to be a big parliamentary 30th.

So what are your thoughts on that gamble? Do you think it's going to pay off? Or do you think it was foolish for him to? 

Anita Kellogg: Well, one of the things I think he's also betting on is can the right unify like, so the left has been very organized and unifying against the far right, [00:24:30] but they've had a harder time getting their main parties to work with each other.

And so I think he's hoping that that lack of unity will help give more of an opening to the leftist parties or left of center really. Or even the center, but how will it work? I hope it works, but obviously it's a huge gamble. Uh, certainly did not need to call elections this early. And I think a lot of people are [00:25:00] very concerned that this will not work out.

For um, 

Ryan Kellogg: yeah, so I mean the I mean the markets definitely didn't like it the french stock market dropped six percent on this and just concerned that You're gonna have a much more dysfunctional government going forward not to mention abandonment of a lot of the tough Reforms that Macron was pushing for a lot of the reason for his unpopularity, which a lot of it is, um, is due to, [00:25:30] again, the, the effects of inflation and the struggling global economy and kind of its impact on, on the average person's personal finances.

But the other thing he pushed through is around labor market reform. He increased the retirement age from 64 or 62 to 64. So, and him rolling the dice, he's essentially hoping also that even if his party, the Renaissance [00:26:00] party gets a severe drubbing in this election and ends up having actually sheer power, because France has kind of a weird system where it combines a presidential system and a parliamentary system.

So you have both a president. Who I think definitely has substantially more power is particularly around like foreign policy than the prime minister does. But nevertheless, you could have this instance where you have Macron as president and then [00:26:30] a national rally prime minister. In this case, it would be this individual Jordan Bardella, which led the EU parliamentary election and is seen as the protégé.

of Marie Le Pen. I was shocked. He's only 28. Wow. I mean, Macron was like famous for getting elected when he was 39 as president in 2017. But this guy is 28. Wow. Which is pretty wild. So he could be the party's prime minister and What Macron is hoping is that, okay, [00:27:00] you've been this protest party, frankly, for decades now, you know, before Marie was his, under, under her father.

Let's see how you do when you actually have some power and you're part of a governing coalition. And I think his bet is that whatever happens, you And probably result in chaos that when the presidential more consequential presidential election occurs in 2027 that essentially they can blame everything on national rally and that way kind of neuter them up front.

So give [00:27:30] them a little bit of power, be able to still constrain them, then blame all the problems on them. So that's, that's kind of his other gamble. If, if the, the strategy doesn't work to get people to sober up and say, we don't really want to have national. Rally in charge of this country, which really historically If this did happen, it would be the first return of the far right to power since the vici government Which is the one that collaborated with the nazis from 1940 to 1944 [00:28:00] So it'd be really unprecedented.

Anita Kellogg: Yeah I was also just looking at articles to see if anything if anyone had some idea of who might win this and I I think people are pretty divided You On whether this will lead to a far right majority, but having a simple majority is not the same thing as having dominance within the legislature. So that will play out a lot in the things that yeah, in terms of 

Ryan Kellogg: [00:28:30] the yeah, the.

Who you coalition partners are and then how much of that protest vote goes instead to the left to the far left as opposed to to national rally. 

Anita Kellogg: Yeah, and I don't know how this affects the election, but in the last day or so, there's been huge protest against the far right. So. I don't know, again, how that affects election results, but 

Ryan Kellogg: yeah, I mean, it's, it's kind of similar.

They showed like a map of the election results and obviously all the population [00:29:00] centers and they even had the same coloration. I think we poisoned everybody's political system. So you see, like, the little tiny blue, but that's, that's where Paris is. 

Anita Kellogg: Yeah. 

Ryan Kellogg: So it's much easier to organize these big protests.

Where the opposition exists, or the majority probably rather exist in Paris. I'm not surprised you can get big like urban protest, as opposed to the rural countryside, which is very much pro national rally. 

Anita Kellogg: Yeah, I think your Alexa frustration that you see with the left in the US to [00:29:30] write is these urban centers, these educated people and feeling frustrated that.

You know, at least in the U. S., you're kind of losing out to minority in many, in many cases, but kind of expressing some of that frustration through protests. 

Ryan Kellogg: Well, and the French definitely have no, no problem. Yeah. They protested a drop of a hat and burned down half the streets. 

Anita Kellogg: So I think it's concerning.

I think businesses do not like [00:30:00] this and they don't like uncertainty in general, and they're not excited about having a far right majority in France now that may hinder some of the economic reforms that Macron has tried to push through and has on his agenda. 

Ryan Kellogg: Yeah, it's definitely but it'll be interesting.

I mean, because we're just we're heading into it. We mentioned the UK election last time that's happening this summer, too. 

Anita Kellogg: So 

Ryan Kellogg: you're having these just major US [00:30:30] partners. Um, having very consequential elections. It does reinforce, although this Mexico example is going to go counter to my hot potato theory of politics post coronavirus, but basically any administration that Had the unfortunate experience of being in power during this period of of high inflation and do both the coronavirus and into the Ukraine war is just getting drubbed.

We [00:31:00] talked a little about before the podcast on the approval ratings of like, major world leaders at, like, the G7 and you're talking about a graphic. That's where Biden was. 

Anita Kellogg: Biden was like the most popular or the least least popular of all of them. I think there was maybe one that had a slightly lower disapproval rating than Biden, but it was a, it was a funny graph.

Ryan Kellogg: Yeah. Yeah. Cause it is the university. Yeah. Cause, cause [00:31:30] Schultz. Trudeau, obviously Macron we talked about. Extraordinarily unpopular Sunak. These are all people that are going to face, well, those that are having to face elections are just going to get absolutely drubbed. I think you can even throw Modi in there, even though Modi was much more popular.

Anita Kellogg: He's still got, 

Ryan Kellogg: he's still got drubbed because of inflation and the hot potato theory. I 

Anita Kellogg: don't think that, no, I don't think that's why he lost. I think it's more fundamental economic structures. That have not changed, 

Ryan Kellogg: [00:32:00] I think. I think inflation, definitely food inflation because of Ukraine and 

Anita Kellogg: one the coronavirus 

Ryan Kellogg: that affects poor Indians a lot.

Anita Kellogg: I didn't read any articles that suggested inflation was one of the causes. 

Ryan Kellogg: Yeah, cost of living. This just is kind of implied that. 

Anita Kellogg: When it says cost of living is stagnant does not say to me, Oh, this is coronavirus inflation. Yeah. 

Ryan Kellogg: But what that's just, it's a global phenomenon. When I think even Modi was punished [00:32:30] because of the hot potato theory now, mind you, yeah, the Mexico thing throws my theory out the window, but 

Anita Kellogg: I don't, I think, I think some of the other examples are more accurate, but I don't think that that was the main reason in India.

Ryan Kellogg: So anyway, it's It's all going to be a test of this, including most critically, the election in November here. I'm so depressed. I think Biden's in trouble because of my hot potato theory. 

Anita Kellogg: I was nearly in tears today. It's [00:33:00] that sad. Well, so certainly an election that goes against your hot potato theory is the Mexican election, where they rewarded the current party in power To very dominant results.

So, Claudia Scheinbaum, which we're hoping is the correct pronunciation. It's very weird to see a German name and, uh, in a Mexican election. But, she was the protege of the current president, Andres Manuel Lopez, [00:33:30] who was term limited. And she'll be Mexico's first woman president. So they got a supermajority in the lower house and just three short of a supermajority in the upper house, which could change because there is also often some grasshoppering, which is when legislatures flip parties.

And now the party runs 24 out of the 32 governorships in Mexico. So this victory represents a step back to the one party rule. [00:34:00] Similar before the 90s, when the Mexican politics was dominated by the institutional revolutionary party PRI. So the private sector does not like this, and it reacted negatively with a decline in the peso and a 6 percent decline in the stock market.

Basically, the reason why is that there is fears of wide scale constitutional changes that will consolidate power under a single party. Militarize the police, or further militarize the police, popular vote for [00:34:30] the Supreme Court justices and electoral authority in the end of independent regulatory bodies.

These actions, if they were to come to fruition, would likely drive away foreign capital investment. They definitely don't seem good for economic results in general. So basically they've built a populist platform that divides the country into those that represent the people versus elites. They have [00:35:00] large cash payments to the poor, but at the same time, criminal violence has reached record highs, and we're definitely present in this election as well, considering that 24 candidates for Congress and mayorships were killed, which is the highest rate of violence in a Mexican election, at least in the modern era.

I think it's interesting when we contrast this to India, the large cash payments, which seem to be very effective in Mexico, but less effective in India. [00:35:30] So they've greatly expanded the role of the military, which in essence, serve as the country's police, which kind of reminds me. A little bit of Columbia, where the police and the military distinct, but the military, especially during the period when they were fighting back against the FARC took more and more of these roles, similarly, they build major public works that control, as you might expect [00:36:00] immigration and infrastructure and military equipment is used to spy and opposition groups, which is obviously very bad.

So they've engaged in campaign violations using public platforms to demonize the opposition. So this has been thwarted at times by the Supreme Court and obviously would probably block other constitutional reforms. So now the agenda is to seek to make them subject to a popular vote. There is [00:36:30] the energy policy, which we're seeing already government subsidies of up to 80 billion to prop up Penmex, the state oil company, and they banned the imports of fracking based oil products and seem to have an overall ban on fracking.

So it was kind of interesting policy, I think, because of how much oil could contribute to Mexico, Mexican revenues, and that their oil policy is It's really [00:37:00] strange. 

Ryan Kellogg: Yeah. It's freaking horrible. It's up there with Venezuela in terms of like the level of intelligence in it. Yeah. I mean, Mexico is interesting, but it's before AMLO came to power in 2018, they had actually opened up a number of the leases to foreign companies and foreign investment.

And at the time it was working for, for California resources and we actually looked at it. Real closely at it and it seemed really attractive because this was an industry that Fundamentally was [00:37:30] still in technology of the 1960s And it had deployed So none of the horizontal drilling none of the fracking none of the you know, latest kind of completion technologies so mexico Has the potential to produce far more efficiently and far more and rich its country, you know you know Build up all of its kind of infrastructure and invest in education, all that.

But instead, you know, they've chosen this nationalization route, which aligns much more with what the PRI [00:38:00] policy was back in the 1990s. And that's just been disaster in there. Yeah. The fact that I saw the government has to subsidize the oil company, 80 billion to keep it in business at a time of pretty decent oil prices.

This is a disaster. This is as bad as Venezuela. 

Anita Kellogg: Yeah, I don't know if it's quite as bad as Venezuela, which saw a dramatic decrease. Yeah, I don't think they 

Ryan Kellogg: purged Pimax of its technical professionals or put in political appointees, but that is kind of what they're doing on the [00:38:30] regulatory side, apparently, is instead of independent bodies, they are now just all going to be political cronies.

And yeah, who knows what, I mean, they're losing money because of graft, I'm sure. I'm sure there's deep corruption within the industry. 

Anita Kellogg: So that I found very surprising. The other thing I wasn't fully aware of because I hadn't paid enough attention to it, but instead of going after the cartels, the party has adopted a policy of hugs, not bullets.

Oh, [00:39:00] I love your face, which is direct cash payments to the poor and military construction of infrastructure, which are two important things. 

Ryan Kellogg: Yeah. Yeah. Yeah. I don't think any of that. I mean, so the goal behind, I think the hugs and not bullets is to address the root cause of crime, which is fine. Poverty. I get that.

I get the, the welfare payments and things, but you can't do that. When you have a militarized, vicious, criminal organization that's basically [00:39:30] a full non state actor that controls huge swaths of your territory and has corrupted so much of the politicians, particularly in northern Mexico, you have to root out those organizations before you can go back and address the root causes of why, like, gang, Uh, being part of gangs is like attractive.

Anita Kellogg: I think you have to do both at the same time. 

Ryan Kellogg: Yeah, that's fine, doing both. But you have to address, you have to eradicate the violent [00:40:00] elements, the non state actors who have control. The state has to have monopoly on violence in order to be a legitimate authority. 

Anita Kellogg: But, you know, one of the reasons why they may not be as interested in that is if you're controlling politicians and those politicians happen, the ones you're promoting happen to be in the main party, that only gives the party more power.

and more incentive to allow the cartels to go ahead and do that. And in fact, there have been studies [00:40:30] that looked in by the U. S. law enforcement agencies that have been investigating possible funding of AMLO's campaigns by the cartels, which is also a problem that happened in Columbia. Almost every, for a while, most of the presidents in Columbia had significant cartel money that went Campaigns of the winning.

Ryan Kellogg: Yeah, they definitely, yeah, they had had the cartel money and then anybody that was opposed to the cartel got assassinated. 

Anita Kellogg: Yeah. 

Ryan Kellogg: So, yeah, I mean, you, you're having this, [00:41:00] this sort of vicious cycle and I think where it runs up against in terms of like US policy and US interest within Mexico is that. This Mexican government doesn't view the drug trade as a Mexican problem, that the drug trade is a U.

S. problem, which I think is fair that we've always talked about the foolishness of the drug war because the demand by U. S. consumers is so high. It's always going to be met by somebody. [00:41:30] But they actually see it as a jobs program. That was the other interesting thing. This is an AP report. It says I'm like, I'm just dredging this up from some far right place.

But yeah, the drug trade creates jobs in these poor northern regions of Mexico. And the fact that Mexicans aren't addicted to fentanyl and these methamphetamines that, you know, again, the raw products. Ingredients coming from China, manufactured in Mexico, and then distributed [00:42:00] by the cartels within the U.

S. But the demand's there, obviously, in the 

Anita Kellogg: bigger problem, though, is the rampant violence increase and homicides. I mean, I can even see them not caring about the drug trade in itself. But the violence that comes from these cartels, I think one of the things that's also harder about going against the cartels is that there's no like centralized cartel power, right?

When Columbia was fighting directly against FARC. 

Ryan Kellogg: I mean, I think there's certain cartels are [00:42:30] more powerful. I mean, it's similar. Yeah, before FARC, but it's, I think, I don't think it's so much more dispersed than, you had the Medellin cartel. You had just had different factions during that period in Colombian history that controlled.

Yeah, but they didn't, they 

Anita Kellogg: weren't successful against, you know, being able to go against the cartels when they were so diversified, but they may have had more success because they were specifically targeting FARC, which controlled so many of these different cartels. 

Ryan Kellogg: Yeah, [00:43:00] yeah, maybe part of it is essential.

I just assumed that another interesting thing about the cartels now is that they don't actually make much of their money off of the drug trade itself. It's rather the protection racket. Yeah. So they're so integrated and control so much of these. Yeah. So like the mafia that it's just extortion from local business owners, from politicians within these regions, you have to pay this protection money.

And that's, that's the majority of the, the funds in. Again, militarization of the [00:43:30] police, unlike Columbia, is not being used to try to battle these groups. 

Anita Kellogg: That's what's so weird to me because when I was reading that, I was like, oh, that's kind of natural that there's the milit. It seems like it's 

Ryan Kellogg: being used to spy in your opposition.

Anita Kellogg: It's just, to me, that's a weird use of it. I was, I was surprised by seeing that trend, but not seeing them go after the cartels, because you would see. Yeah, I think that that is one of the things you would do by the militarization of the police. 

Ryan Kellogg: Yeah, so that's why I'm seeing jumping ahead. [00:44:00] If Trump is reelected, there's gonna be two issues, immigration, which we won't talk about.

And then two, this whole Mexico, because this came up a lot. Remember in the Republican debate was like, we're going to send in troops to go after the cartels. This is going to be a big issue. I think if Trump's reelected, I think you're going to see action on this. 

Anita Kellogg: Now, one of the reasons why we haven't seen action before this, though, is because Mexico has been doing so much of a job in preventing immigrants from crossing [00:44:30] into the U.

S. Yeah, 

Ryan Kellogg: we haven't really challenged, and they kind of make the point in some of those articles that Biden, you know, you've had all these anti democratic issues. And, you know, we'll, we even, you know, we'll, we'll wag our finger at India, I mean, because one, you know, they're trying to assassinate their opposition groups within Canada and in the US, but with Mexico, we're like, no, it's fine.

If you, if you're following our immigration policy, then we're okay with this. But what you're going to see, and [00:45:00] these 2 are so closely tied together is if there's a much more aggressive deportation policy with Trump. Mexico is probably going to push back against that. And then the counter push is going to be, we have an issue with your cartels.

Anita Kellogg: But what happens if they don't counter Trump's immigration policy? What if they just go along with it? As long as well, I think they're going 

Ryan Kellogg: to receive like 10 million people that they're going to dump in the country. They think Mexico is going to go along with that. 

Anita Kellogg: They might. [00:45:30] 

Ryan Kellogg: Well, then, okay, there probably won't be an issue then, but they were just willing to accept 10 million refugees all at once for over a year.

Anita Kellogg: I mean, I don't know how they handle that, but I have a hard time seeing them challenge Trump's policy, knowing what Trump might do if they do challenge it. I only see them challenging it if someone like Trump does put in troops, American troops on the ground inside of Mexico. 

Ryan Kellogg: I mean, I think it'll be [00:46:00] targeted strikes, but it'll be, I don't know how the hell that would work.

It's not like they're real going after drug enforcement, but yeah, targeting the cartel leadership. 

Anita Kellogg: But there's so many cartels still, I mean, I don't think that works. I don't think there's a good plan for it. If you're doing like targeted strikes or. 

Ryan Kellogg: Yeah, and particularly given, I mean, the other thing that I was surprised by, there's very limited cooperation engagement.

between U. S. law enforcement and [00:46:30] Mexican law enforcement. The AMLO has actually made it a policy of not cooperating with U. S. law enforcement. So we're not going to have the intelligence and cooperation, or the intelligence, local intelligence necessary to have, like, These targeted operations, but that's what I mean.

I'm reading probably too much into Republican blathering from that debate, but they all made a point of, like, how tough they could be to go in and do special for special off strikes on cartel groups in Mexico. 

Anita Kellogg: Which is such a [00:47:00] violation of international law because you're violating sovereignty and to do that without permission from the Mexican government is pretty unprecedented.

Ryan Kellogg: Well, I mean, I guess not dissimilar to what we did getting Bin Laden in Pakistan, just going in. It'd be similar to that. 

Anita Kellogg: But I think Pakistan already had. They weren't 

Ryan Kellogg: happy about the There was a violation of their sovereignty, for sure. Oh, I 

Anita Kellogg: thought they were like, kind of cooperating with the U. S. They weren't, 

Ryan Kellogg: they weren't, no, they weren't [00:47:30] really, I don't think they were super aware of it.

They weren't happy about it. Well. Because they were kind of implicated, because they was living in the richest area in the city that has a lot of their military leadership. So it was pretty sus. 

Anita Kellogg: Yeah, but I thought there was more cooperation between the two countries on terrorism. And even though they might not have been informed and unhappy about that, I think there was big violation 

Ryan Kellogg: of going in with your special ops and, and assassinating somebody in your country.

Anita Kellogg: Well, this would be like, [00:48:00] if you repeatedly do it, did it, not just the one time thing. 

Ryan Kellogg: Yeah. We would repeatedly do it. You're not going to get there's, like you said, there's not one central leader that you can, I mean, El Chapo did control a good amount of that trade back in the day. And, um, but yeah, I think it is kind of broken apart more.

Anita Kellogg: Yeah. Well, obviously Mexico always features heavily into American politics as well, but this has larger consequences [00:48:30] internationally, in terms of economics, and then it will be really interesting to see if there is a, how this will be handled by future administrations. 

Ryan Kellogg: Yeah, and I think, you know, in contrast to the India story, it does represent a backsliding of democracy.

I mean, they, they are doing what BJP wanted to do. They're going to have the super majorities. They're going to be able to make fundamental constitutional changes. And this relatively young democracy, because they've only had multi party competition since the [00:49:00] 90s, is going to backslide probably into, into one party rule.

Anita Kellogg: Yeah. And so that's really disturbing to have on your border and kind of just disturbing in the trend of democracy writ large. 

Ryan Kellogg: Yeah. And I don't get the part that I don't connect real well is the one benefit that's been to the Mexican economy is obviously our, our challenge with China and trying to decouple with China.

A lot of that manufacturing has come back to Mexico. How does this whole thing factor into the [00:49:30] attractiveness of. Mexico is like a destiny. I mean, part of it is just the geography is always going to be great and it's always going to be a cheap labor source. So maybe it doesn't affect anything. Maybe the cost of business and I assume U.

S. manufacturers don't have to deal with cartel 

Anita Kellogg: controlled areas. I don't know, even if they do. I mean, they're buying off, right? So, 

Ryan Kellogg: yeah, technically under the anti corruption act, they can't buy off foreign entities. Please. Pay [00:50:00] protection. I don't know. I 

Anita Kellogg: don't know. I mean, being able to get your products labeled as Mexican, even if most of it comes from China is pretty powerful motivator.

Yeah. That's all talk. You know, there's still though a lot of tension between this idea of insuring and reshoring. That I'll talk about when we get to the batteries. So the other topic we wanted to get to is more of a in focus sort of topic about the battery [00:50:30] wars that are central to electric vehicles.

And just in the context of this, some background, you know, the U. S. has a goal of 50 percent of cars being sold by 2030 to be electric. And, you know, a lot of articles have pointed out that at the same time, policies to reduce dependence on China threaten this goal. And I found it interesting that like in the IRA tax credits, only 11 car models [00:51:00] meet the demands.

So it's pretty narrow, what cars actually can meet the demand of not having foreign parts by countries like China, critical minerals can't be more than 50 percent from China. 

Ryan Kellogg: Did they reform this in terms of like, why, cause I was surprised by that too, like how few models qualified. Does that now include like kind of the French orient components or the components come from the EU or Japan or Canada or Mexico [00:51:30] that that counts towards that or is this like us sourced?

Anita Kellogg: I think this is us sourced except for critical minerals, which can come from friendly countries. 

Ryan Kellogg: Okay. So it's still that restrictive incorporate that that French aspect. So that's why only 11 models qualified. 

Anita Kellogg: So the reason why batteries are so important is 40 percent of the cost is the electric battery in them.

And this has given China a huge advantage because they produce batteries that are lower cost and more technologically advanced, which [00:52:00] makes their cars more affordable and even possibly a better quality than the ones produced in the West. So there was a foreign affairs article that went into the idea that we could build up, the U.

S. could build its own supply chain as long as it was willing to invest hundreds of billions of dollars in it, which is. One thing that they kind of glossed over, but the obstacle for the U. S. in building lower cost batteries are the fact that China [00:52:30] controls critical minerals and supply chains. So basically, China produces over 70 percent of the world's lithium ion batteries, holding a similar share in refining processing in manufacturing stages.

Furthermore, they control crucial minerals such as cobalt and graphite further strengthening their position. So how would you build your own, how would the U. S. build its own supply chains? One thing that the Foreign Affairs article points out [00:53:00] is that the R. A. has been a boon, especially to the supply chain for electric vehicles.

U. S. battery production is expected to jump from 257 gigawatt hours in 2023 to over 1, 000 gigawatt hours by 2030, which is enough batteries for the 10 million vehicles per year, roughly produced in the U. S. annually. The problem with this is that, okay, so that's what's being produced now, but we want to produce more vehicles in the future, and that doesn't meet [00:53:30] our goals if we were able to meet the increases needed to meet 2030 goals.

Really key is focusing on critical minerals, basically. Three of them that get mentioned the most are graphite, nickel, and lithium. Uh, China mines 68 percent of these and it processes most of them. This is really crucial and I think something the Foreign Affairs really left out article is that it's not just about mining and finding deposits of them, [00:54:00] but even more important is having the process plants, right?

And so, that's something that's severely lacking in the U. S. and It was glossed over in, in the article. So they estimate it would cost hundreds of billion dollars to do this. Another article talked about 82 billion, but obviously the expense would be very high. It mentions that even in the mining process, we don't have enough mineral reserves in the United States and Canada to beat the [00:54:30] demand for five out of eight key battery minerals over the rest of the decade.

But we could get there if we added the UK and Australia. But at the same time, you know, that's, that's just for projections for the decade. What do we do after that? But it's also a matter of time. You know, they're kind of at the same time, they're assuming that we could put this together in the next decade.

They mentioned that it takes an average of 15. 7 years to open a new mine and they don't even talk [00:55:00] about what would be involved in processing plants, which also have heavy pollution associated with them. They mentioned that private investment is not enough, which I think is kind of obvious. And one of the reasons why China was able to develop this technology and keep producing these electric batteries is because of the substantial support from the Chinese government.

And so the U. S. would have to decide, needs to decide, you know, how important. Is this [00:55:30] and I think because we have so many tariffs and other measures to prevent car manufacturing companies from buying Chinese batteries and in general against TV cars that us needs to counterbalance that with by putting a substantial amount of money, but I think from the articles point out, we can't.

Even if we adopted all these measures, we can't get to the 2030 goals with the kind of tariffs and stuff that we have on batteries [00:56:00] and the cars right now. As I just said, you know, when you think about just opening another mine. It would take almost 16 years to do that. I don't think that can be sped up substantially.

Say you change regulations, you might speed that up to 10 years or something like that. But that's definitely not enough for the decade. And mostly what you've seen is reopening of mines, and maybe you can do that a little bit faster. But this implies you would need a lot of new mines to be able to get enough materials.[00:56:30] 

Ryan Kellogg: I mean, you, you can fast track permitting and put more resource because a lot of it is just the environmental assessment reviews and all the upfront regulatory community engage all the things that China doesn't have to care about because they give a crap less about the communities that expect them to.

Right. Exactly. Yeah. But yeah, I mean, you could conceivably shorten that probably to five years. 

Anita Kellogg: I mean, the problem is, you know, one thing I've learned about renewable energy sources is it [00:57:00] takes 10 years from a plan to build a wind farm to actually building it because of that, the whole review process of environmental regulations.

And so I don't see there to be a lot of hope that you're going to dramatically reduce the timeframe. 

Ryan Kellogg: Well, it's. It's, I mean, part of it is just the resources you put for the survey work and the environmental assessment. I mean, that's, that can be sped up through throwing more people at it. I think the part that makes it difficult is the time for community [00:57:30] engagement, comment period, consensus building, all of those things.

That's, that's much harder to. To speed up the analysis part. Yeah, you can speed up. You throw enough people at it. But the consensus building and getting communities on board much more difficult. 

Anita Kellogg: Yeah. So there's definitely this problem of saying we need more critical minerals within the next decade here.

If we drill, if we mine more, we could get that, but then saying, well, we can't open a mine in the next decade. 

Ryan Kellogg: Yeah. No, [00:58:00] I find the whole thing. I mean, I'd have multiple issues, you know, one, maybe this goes back to the whole solar panel discussion, kind of what gets determined as a strategic concern, you know, in terms of what we're targeting China and trying to, to prevent important batteries and kind of the battery inputs and definitely the minerals going into battery.

I mean, these are our raw input. Should we really be so concerned on the. [00:58:30] Criticality of these or should we loosen up around the idea of if because all of these goals, I think one of the articles made this clear is that all these goals of, you know, wanting to build up us manufacturing on wanting to meet.

In a net zero goals and wanting to increase national security, they're all in like in competition with each other. So something like has to give at a certain point. You can't [00:59:00] pursue all three. So why why focus this much on a low margin environmentally destructive process that we're trying to either locate here in the United States.

Which, you know, we've talked about all the challenges of trying to do in a responsible way, because we're not going to do it irresponsibly, because that goes against, you know, other environmental sustainability goals, or do you do you accept that? Yeah, fine. You can stay this manufacturer [00:59:30] of low margin raw inputs.

We're going to protect against the high end stuff like the electric vehicle manufacturing. 

Anita Kellogg: Yeah, see, as you're talking like that seems like a compromise because the problem is, you know, the U. S. carmakers are losing money off their electric vehicles and One of the articles gives this example, actually it was a video by Vox, gives this example of like the Ford, one of the Ford trucks, which its electric version cost, you know, at least [01:00:00] 5, 000 more than its traditional combustion engine version of it.

And they just can't make money if these cars are priced higher than their oil combustion cars. So, and that's a huge problem. And what the key factor in that, as I said, the battery is 40 percent of the cost. And so, All these measures we've targeted at preventing the import of batteries, preventing car battery factories set up in the United States that use [01:00:30] this Chinese technology.

So the factory would be in the U. S., but because of the ties to China, it's considered a national security threat. 

Ryan Kellogg: Yeah. 

Anita Kellogg: So we're not even doing that. And if we can't lower the costs, our cars themselves can't be competitive. 

Ryan Kellogg: Right. Yeah. Yeah. Not not in the, the, the global non protect. I mean, it looks like he's going to put up barriers to the Chinese vehicles as well, but yeah, not in, not in the rest of the world market.

Anita Kellogg: Yeah. And that's the [01:01:00] problem. If you can't have these, these massive economies of scale, then it makes again, it harder for the U S car makers to make profits and to be able to continue making these cars and make advances in these cars. And it seems. This is what I think so much of it is, instead of tariffs, instead of the IRA even being so restrictive, that we should be, we should still put our money into building up our supply chains and supporting this industry, but at the [01:01:30] same time, You know, reduce some of the tariffs and the ability to import these batteries so that we still have something for the interim as we build our up our own competitiveness.

Ryan Kellogg: Yeah, I just don't see how we get to that competitive. The other interesting thing that read was that there's a massive oversupply of capacity for battery. I mean, China has. What is it like four or five times the global demand for batteries in terms of the production capacity? That's a money losing. I [01:02:00] mean, how are you going to get any private sector investment?

Well, I mean, that's what IRA is to introduce that, but for such a low margin, I don't get the full national strategic competition, this national security aspect of it. And then I would push back and say, well, maybe the one thing that needs to be given, we have a competitive advantage and, and natural gas.

Why push so hard on these 2030 goals when you could achieve, particularly [01:02:30] with carbon sequestration, you could still achieve, you know, 90%. Of your goals and then look at it from a global perspective, the real battles, the real battles are about coal plants coming online in China and India and the biggest thing that we could do is to increase natural gas production.

And get them off of that, as opposed to trying to completely work against the natural economies, the competitive advantages, and [01:03:00] bring a low margin, heavily polluted, non national security related base like battery manufacturing or solar panel manufacturing to the U. S. That just, it just doesn't make a lot of sense to me.

I get chip manufacturing because those are good jobs and that's. very high end tech. I don't get the solar panel or the battery 

Anita Kellogg: manufacturing. I don't get solar panels. The problem, the national security issue is the critical minerals. We feel very, it's [01:03:30] like, that's part of the supply chain that China could, you know, stop sending us critical.

I 

Ryan Kellogg: guess around chips. Yeah, I get that part. I don't get it around like batteries or solar panels. 

Anita Kellogg: Or even the dependence on the batteries could hurt our car industries if our car industry started relying on Chinese batteries. 

Ryan Kellogg: Well, and I'm saying maybe you slow that roll on the transition to electric vehicles then.

You have more hybrids. I think a hybrid is a natural compromise, but you still have the [01:04:00] flexibility in case of wartime restrictions that you can pump in that plentiful supply of gasoline or natural gas. 

Anita Kellogg: Okay, two things. One, if you're getting to 2030 goals, you can't just do it by this natural gas. And I'm saying that 2030 

Ryan Kellogg: goals are probably unrealistic and that the bigger global impact is around global south increases in carbon production because of coal plants coming online.

Anita Kellogg: Well, I'm sorry, but you have to do something to counter that in developed countries. 

Ryan Kellogg: Yeah, but it's [01:04:30] not nearly enough to counter that. These little marginal productions that we're going to throw billions of dollars at something that's not economic. Or environmentally sustainable in other ways, if we're, you know, these mines are unpleasant operations and just don't, it just doesn't make sense for developed economies to do these sort of productive processes.

Anita Kellogg: But then you're always vulnerable to China and the threat, you know, threatening the cutoff of any critical mineral. [01:05:00] 

Ryan Kellogg: Well, I think it has. I mean, it has to be a better balance. It doesn't feel like this is the right balance. 

Anita Kellogg: I mean, from your perspective, all these tariffs and everything preventing these cars and batteries coming to the US doesn't matter because you think electric vehicles don't matter.

Ryan Kellogg: No, I think the, the adoptions, well, no, I'm saying is that you, you lessen tariffs on that and you use Chinese made batteries. 

Anita Kellogg: Well, then you could build your industry. Meet the goals because then it's more cost effective. 

Ryan Kellogg: Yeah, no, no, no, I think, I think [01:05:30] you do, but if you're It's again that contradict, but then maybe you're compromising our national security.

That's what you're saying, because it was, Oh no, we're dependent on Chinese batteries that they're going to cut those off in a wartime situation. I mean, I think it makes more case for, for hybrids vehicles. They should compromise for ensuring that Americans can still drive with their batteries, which take, I mean, batteries last like five years.

I think we talked about this before that that was a good, it was the same with solar panels. It wasn't like [01:06:00] an immediately cripple. 

Anita Kellogg: Yeah. 

Ryan Kellogg: Everything. Awesome. Military vehicles are not going to be running on. Most of them are not going to be running on batteries. 

Anita Kellogg: Definitely not Chinese made batteries. 

Ryan Kellogg: No.

That's still going to be running on diesel, and well I say mostly diesel, and jet fuel. 

Anita Kellogg: Well, I mean, so I have two minds about this. 

Ryan Kellogg: Oh well, and nuclear for the naval vessels, but. 

Anita Kellogg: I think you allow these lower cost batteries, and you make cars. American made cars more [01:06:30] affordable. And I think that's a huge, it would be huge in adoption and in car companies actually making money off electric vehicles at the same time, you can work on innovation, uh, battery technology.

Right. And put money behind that. 

Ryan Kellogg: You should. Yep. I 100 percent on that. I think we need to leapfrog this lithium ion thing. I was reading about some of the alternatives and read through it in detail. I know the sodium one, you know, had some big drawbacks, but yeah, that's where we have a [01:07:00] competitive advantage or should have a competitive advantage and that's where we should put our resources is on the next generation battery technology.

Ones that. more fit with our, our strengths in terms of the supply base. 

Anita Kellogg: Yeah, but I don't know that we can just abandon the critical minerals in general and say that we're just content to rely on China for processing all these minerals. 

Ryan Kellogg: And we're not around the chips, anything around things, powering AI, those critical minerals.

Yeah, that, that still needs to be a [01:07:30] focus to get that, but around solar panels around batteries. Yeah. Let's try to leapfrog that on both, frankly, both solar panel technology and. And batteries and continue depend on China to some extent, seeing where we can, uh, encourage other manufacturers within Southeast Asia or India to help kind of French or it, but 

Anita Kellogg: that also is somewhere where we could.

make some advances. So there's also battery makers [01:08:00] in Japan. South Korea still controls 39 percent of the market. The U is promoting more domestic production. The UK is promoting more domestic production. Other comparative advantages that we could go for. So the United Kingdom has a competitive R and D landscape.

Southeast Asia. is expected to be an important hub for electric two wheeled vehicles, in addition to its ability to have critical minerals processing and refining capabilities. [01:08:30] So more fringe drawing could also help solve some of these problems. 

Ryan Kellogg: I think that's, that's definitely the, the way to go. I mean, where, yeah, I guess where there's competitive Advantages work out with those friends.

Anita Kellogg: Yeah, I still think though. Unfortunately, these tariffs and stuff are popular policy because anything Anti china is popular policy and I think they'll make Electric vehicle adoption very difficult in the u. s 

Ryan Kellogg: Yeah, if we have to wait until there's a full [01:09:00] supply chain from the mine to the car On all the minerals that go into it then.

Yeah, it's going to be a long time. 

Anita Kellogg: It'll be decades You 

Ryan Kellogg: And, uh, and, uh, extraordinary waste of money. 

Anita Kellogg: So that's, that's the battery wars, as you mentioned, it's not just in the US, but there's a lot of concern, uh, in Europe that these cars undermine European car makers, because as I mentioned, they are much lower cost [01:09:30] than Western car makers are producing electric vehicles and they're of really good quality.

Like it would be different if they were just cheap cars. Yeah, just garbage. 

Ryan Kellogg: But yeah, it's extraordinary. Yeah, I mean, these, these are like their higher end pretty capable cars are like 10, 

Anita Kellogg: 000. Which of course threatens the market. 

Ryan Kellogg: I mean, it's destroyed. I mean, if you just let them in, it would destroy the US and European car markets.

Yeah, wipe them out. [01:10:00] Yeah. So maybe the very high, the high end consumer wouldn't wipe out. But yeah, for the average consumer. He's like feeling the pinch right now from from increased car prices. I mean, it's yeah. 

Anita Kellogg: So batteries are a place where you're still dependent on China, but at least you can make your own cars more affordable.

Yeah. And that's one way to think about it too. 

Ryan Kellogg: Yeah, it's just, it's a, it's a low margin component that gets plugged into a greater system. It doesn't make sense that we, [01:10:30] we would make it here. 

Anita Kellogg: A little unfair to consumer. I would love to have a 10, 000 good electric car. 

Ryan Kellogg: Yeah, I mean, I had to resist the thing.

I told you this before, but even around robot Vax, I can't remember. We mentioned this last time, but, you know, I unfortunately invested and I robot don't look at the stock price now, but back in the day, they were seen as, you know, a Boston based cutting edge to have the best, like home consumer [01:11:00] robotics, they're investing in like other types of robots, like clean your gutters, clean your pools, all this sort of stuff.

And they had real. competitive advantage and lead, but they lost it all because they stuck with this certain technology. The Chinese companies had moved on to RIDAR. Which is another way of kind of detecting obstacles and things. And because they can manufacture so much cheaper, you can get these much more capable, smarter vacuum robots now, that [01:11:30] now dominate the market.

And now iRobot, which was going to be bought by Amazon, that deal's fallen through. It's now like on the verge of bankruptcy. 

Anita Kellogg: I don't understand why you decided not to buy it because it was Chinese made. 

Ryan Kellogg: Because it's sad, because that to me represents a high end enough product, I mean, I guess because it's a smart robot that vacuums itself, that that's something the U.

S. should be able to compete on and did, but then blew it, and it's sad. [01:12:00] 

Anita Kellogg: No, 

Ryan Kellogg: I don't buy cheap, cheap, cruddy stuff 

Anita Kellogg: that 

Ryan Kellogg: it doesn't make sense for us to manufacture. But for robots, yeah, I assume that us can compete on robotics, that that's a future big market and the US should be able to compete on that.

Just like the high end chips, but not on crappy components like solar panels and batteries. 

Anita Kellogg: You're not doing anything to help the US compete. You not buying the Chinese [01:12:30] does not help the U. S. compete. 

Ryan Kellogg: Well, I mean, it helps not reward the Chinese manufacturer. Anyway, why aren't they, why aren't they, uh, targeting these Chinese vacuum robots for high tariffs too?

That's what I understand. 

Anita Kellogg: I don't even understand your logic. It reminded me though of this article that's caused much consternation from The Economist this week, which was just about China being a science powerhouse. It also reminded me of a [01:13:00] conversation with your dad on Mother's Day. This idea that many people still have is China being technologically backward and kind of just re engineering Western items and such and producing lower quality, whereas China has invested so much in science and technology that they have very advanced scientific technology of their own, and that's Just the technological advantages are undercutting many of these, these products.[01:13:30] 

Ryan Kellogg: Yeah. And I think that, I think that feeds into my, you know, you make a phone, my robot story, robot vacuum story. Um, I think part of that may be in the outcome of the innovation. 

Anita Kellogg: Our vacuum were a lot strategic. 

Ryan Kellogg: I don't know. Are batteries strategic? I don't feel like 

Anita Kellogg: Yeah, if battery, we already just said batteries are not.

Ryan Kellogg: Okay. Yeah, but they're targeting all Chinese. I mean, let's be honest. Trump comes back. It's, it's 100 percent tariff on all Chinese products coming in. Well, good 

Anita Kellogg: time to [01:14:00] buy one now then. 

Ryan Kellogg: Yeah, maybe. But no, I think it is. Yeah, because to your point, I didn't read the full article, I did see the study, I think, coming from Nature that looked at the citations, which really triggered this.

Because if you have a lot of different ones, and how do you measure like scientific output? And then, you know, More importantly, how do you measure the quality of that scientific output? I think Nature put out one around citations to very highly prestigious scientific journals. [01:14:30] And for the first time, Chinese based or located scientists and engineers have now surpassed the United States in terms of these citations.

And this is seen as kind of a watershed event of, of their outputs. And yeah, they've, they've invested a lot. I'd personally like to know how much is being driven because, you know, we've talked about before and I've definitely studied in detail. We've have trained a number many, many thousands, tens of thousands of their PhD, a [01:15:00] small number, 10 percent return to China.

I know they've been critical at like seeing law and some of their, their top end. Universities, how much of this is being driven by Western trained PhDs? 

Anita Kellogg: Yeah. Even though 

Ryan Kellogg: the vast majority, the gain, the benefit, the vast majority is to us. 'cause 90% of 'em stay, 10% of 'em do go back. Is it that 10% that's made a difference and now that they brought back that?

that culture, which [01:15:30] depends certainly on openness. I think that's a long term threat to them continuing this trend. But is this a product of, you know, bringing back that cutting edge Western research from Western trained PhDs? Is that making this difference now in China? 

Anita Kellogg: Well, I think the question also is that, you know, China is putting all this support.

It's put a lot of money into developing technology and scientific explorations. You talk about robotics. It's about can [01:16:00] we innovate and that requires more money probably from the public sector. 

Ryan Kellogg: Yeah, requires that it's, I mean, I think the other, well, no, they're, yeah. I mean, the other thing we've, I've always argued is the, the unique ecosystem that exists between our universities and then that first stage of, of private capital in terms of like, you know, what Silicon Valley is this, this hub.

Between like Stanford, [01:16:30] Berkeley and the companies there in terms of empowering these innovative startups is trying to like recreating that same, can you recreate that same system with the restrictions that the she regime has put on universities and on capital is that sustainable or not? 

Anita Kellogg: Right, but absolutely China has these innovation hubs that very much.

Ryan Kellogg: Yeah, I know, but, uh, [01:17:00] and, uh, but those are products of like Hu Jintao and, and, and before him changed him in, but how much is that, are we just seeing it? Cause it's a lag effect. You set up these systems, you set up this relative openness, you give capital kind of the freedom to invest in these things, but, uh, That's changed over the last five years with this kind of increased restriction and party control.

Are we just seeing like a lagging effect of the positive input when China was [01:17:30] more market liberalization and, and we're going to worry about something that's already, they've kind of destroyed the goose that lays the golden egg. 

Anita Kellogg: I mean, that may very well be possible, but I think the problem you alluded to is not so solvable in the U.

S. in the sense that there's not nearly Private venture capital to really take a lot of these technological developments into commercial products. That stage is very underdeveloped and one thing that, you know, it's [01:18:00] interesting, the government funds projects like in DARPA that creates all this cool technology, but then doesn't put the funds into making a commercial product from that.

Ryan Kellogg: Yeah. Yeah. That's. That's always been private capital is great at scaling once the commercialization and profitability has been proven, but you need the government translation funds government's good at like funding that basic research, but then it needs to also get it to scale to the point where.

Private capital can take over because it's profit. I know [01:18:30] government has to do all the work, but government should also begin profit sharing for all of this that it's dealing to. That was part of the problem. I think with like the covid vaccine is that all the research and the work was done by government scientists on the fundamental basic science, but then all of the profit 

Anita Kellogg: Yeah.

It's 

Ryan Kellogg: captured by private firms. 

Anita Kellogg: Yeah, I mean, it's a, that's a problem. I don't know how profit sharing would really work in trying to not intervene as much in the economy, but we need to do what the [01:19:00] economy itself can't do and what is not in the incentive for businesses to do is to create a commercial.

Ryan Kellogg: Yeah, and this, I mean, it's. Essentially, it's the role of venture capital is supposed to be this is supposed to be the role, 

Anita Kellogg: but that's not where venture capital money goes. 

Ryan Kellogg: Well, they do lose. I mean, they do invest a lot of ideas that go nowhere, but I think because it's key with like energy and these bigger things, it's not like investing in a dumb app that costs like you're hardly throwing any money and they'll invest in 100 of them and one will succeed [01:19:30] and they'll make billions and billions from that energy requires As an example requires like a big investment that you're right, VCs doesn't want to get because that's too risky.

Anita Kellogg: So I think it's, that's, you know, we identify, you know, I say this in my class on industrial mobilization and competition, what the incentives are for private industry and how the government does not take up that mantle. We're not able to fully take advantage of our own technological innovations. Exactly.

And [01:20:00] that's actually 

Ryan Kellogg: this. Going back to the article that I wrote, the Pittsburgh said that's another point that we make project 2025 wants to get rid of the already kind of underfunded translation funding that like the DOE provides, because they don't want to quote unquote pick winners and losers within the market because they are under the assumption that private capital alone can do it do it all.

Anita Kellogg: And this phenomenon. Mental misunderstanding of what the incentives are for private capital and how those [01:20:30] incentives have changed through changes to stock market and type of reporting what they want to see from companies. And there's a lot of incentives that have changed over the last couple of decades.

that have also drained some of this money from these transition phases. 

Ryan Kellogg: Yeah, it's probably, yeah, maybe some of the sources for funding for venture capital have now shifted to such that they, well, I don't think they were ever set up to take on high [01:21:00] risk sort of ideas that are these kind of fundamental non software related sort of things.

But yeah, yeah, I think it's, it's, they've become more risk adverse. 

Anita Kellogg: Yeah. So a lot of things for the government to actually invest in, and we have no solutions of where the money is going to come from. It sounds about right. 

Ryan Kellogg: Yeah. 

Anita Kellogg: About how I was teaching the energy industrial studies analysis and on their final project to bring in like business leaders and [01:21:30] government leaders to kind of hear their projects.

And the more libertarian business minded person who is the CEO of his company was like, I every single solution you suggested costs a lot of money, right? And we only have so much money. So that seems to be a huge problem. But so that is our show, I think. 

Ryan Kellogg: I think so. Yeah. 

Anita Kellogg: Yeah. Well, this brings us to the end of this episode of Kellogg's Global Politics.

You can visit our website at www. [01:22:00] kelloggsglobalpolitics. com and follow us on Twitter now slash x. Global Kellogg, or me, A. R. Kellogg. 

Ryan Kellogg: And you can reach us by email, so anita at kelloggsglobalpolitics. com and myself, ryan at kelloggsglobalpolitics. com. As always, please see the show notes for the articles we discussed in this episode.

And if you like the show, please take the time, tell your friends, and subscribe. Share it on your social sites. It's a simple, quick, and free way to support the show. Thanks, [01:22:30] everybody. 

Anita Kellogg: Thanks. 

Ryan Kellogg: Bye.

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