Electric cars are the way forward…right?
Despite public perception, electric cars are not actually that amazing for the world. At
the surface, these “eco-friendly alternatives” decrease reliance on fossil fuels, which
are known for being environmentally damaging and unsustainable.
However, when exploring the production process of electric vehicles (EVs),
companies soon run into the problems which come with sourcing raw materials
needed for the production of electric car batteries, which contain minerals such as
cobalt, lithium and manganese. Even if you overlook the environmental problems
associated with mining these finite resources, many of the materials are sourced in
less economically developed countries which can put workers lives at risk of harm.
The Democratic Republic of the Congo (DRC) is one of the world’s biggest providers
of cobalt, producing roughly two thirds of the global supply. A policy which
encourages the consumption of electric cars will simply increase the labour needed
to mine these materials. Other countries like Argentina, Chile and Bolivia, where
lithium is sourced, face issues like soil and water contamination which creates harm
for locals in these areas. This can especially be impactful in primary product focused
countries, as much of the land is needed for agriculture.
In many of these mines, workers face minimal legal protection despite the dangerous
job at hand and there are many violations of human rights. This also includes the use
of child labour with up to 40,000 children working on these sites on any given day.
This further impacts them negatively as it takes them out of education which leads to
schooling being under consumed in spite of its many benefits, hence worsening the
human development index (HDI) of the country, which is a measure of standards of
living through non-monetary aspects.
Nevertheless, in monetary values, the fiscal policy of subsidising EVs in the UK can
undoubtably have its benefits. It directly boosts aggregate demand as there is an
increase in government spending, leading to a further increase in real GDP causing
economic growth for the UK to flourish. Alongside this, the rise in manufacturing of
cars can create more jobs domestically which reduces unemployment, consequently
moving us towards one of the government’s macroeconomic objectives.
Arguably however, this domestic job increase is not assured as this policy does not
restrict the purchasing to domestic firms. Germany is widely known for their
specialisation of car manufacturing which the UK may choose to import from instead
of increasing domestic production as opportunity cost may be greater.
From a policy like this one, it’s likely to expect more trade wars which can currently
be seen as the US has imposed a 100% tariff on EVs from China. This protectionist
measure may help protect domestic jobs for the US but consequently bad trading
relationships between countries.
Not only could this subsidy of electric cars support our UK economy but could also
help develop the economies of these LEDC’s. This subsidy would create great
economic growth for the country as exports will significantly increase. They could
face some levels of investment from foreign bodies as well, therefore injecting more
money into their economy. However, once the resource runs out, this could
encourage capital flight as any foreign direct investment (FDI) is withdrawn from the
country as potential profit and growth has been lost alongside the resource. This
method of sourcing resources needed for production is not sustainable for future
generations as the supply of these materials will come to an end. The rate of
extraction is far greater than the rate of renewal therefore other alternatives will need
to be researched and developed before a policy which will lead to mass production
takes place. Otherwise, this will advance us to an exhaustion of natural resources.
But the impacts of the harsh and brutal exploitation will not leave so easily. Many
medical problems can arise from working in these poor working conditions in the
mines and with an extreme lack of high quality healthcare in many of these
countries, this leads to workers suffering without an opportunity of professional
support. Life expectancy in the DRC only reached 60 years as of 2021, which in
comparison to the UK, has taken 20 years off someone’s life.
With the current asymmetric information, electric cars may be seen as a clean option
compared to gas powered cars as they directly decrease emissions in the air
therefore leading to better air quality. Since 1990, there has been a 40% decrease in
carbon dioxide emissions in the UK. However, in reality, in order to charge these
cars, electricity is needed, and for that electricity to be generated, fossil fuels are
needed once again. We cannot escape our dependency on them. Not to mention, a
large increase of electric cars on the road will require much more funding for
charging ports and areas, as currently they are not largely accessible across the
nation. This expensive project will risk the government going into more debt and
certainly a budget deficit for the year. Some would argue this money is better spent
elsewhere with a housing crisis currently happening in the UK and students being
burdened by high levels of debt after finishing higher education. In addition, this
massive project will take numerous years to complete but also many more years to
truly reap any benefits.
To conclude, no. I do not believe the government should subsidise the purchasing of
electric cars as it will deceptively not be making our world better off environmentally.
The opportunity cost of spending such large amounts of money is too great.
Certainly, in the short term, LEDC’s can grow but far more regulations are needed as
the current human cost is too detrimental. So, the question becomes, should we
prioritise the UK economic development above human welfare? Should those people
have to suffer so we can buy a new electric Tesla?
Kate is a student from Fitazalan High School in Cardiff, and was our first ever winner of the "Welsh Award" as part of our Young Economist of the Year competition.
Sources used:
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