Gold or Coal – a course in economics

Many friends are fascinated by my fascination with the Discovery TV series focusing on gold prospectors and/or coal miners (Discovery shows: “Alaska gold” or “Coal”). I watch each episode looking for the economic secrets of success/failure. The little details that make your operation profitable.
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The natural resource is irrelevant. The secret is in the organisation of the production process – either optimising it to the smallest output unit (gram of gold or ton of coal) OR assuring immense economies of scale, with outrageous output assuring the conversion of raw material into profitable product. I watch the programmes, fascinated by the amount of dirt moved, rock mined, sand shifted and I am always shocked by how much useless stuff must be discarded before anything valuable is unearthed.
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The technology ranges from the simple but huge to specialised tools and machines created specifically for the industry. In the latter case, the machines show decades of development, incorporating centuries of experience – they are perfect for the job and must therefore cost a bundle. A fascinating issue is the presence of countless supporting units, rarely visible or used, but necessary for that “one important moment”, when not having this “thing” results in huge losses from stopped production. Both the specialised and general tools require massive up-front investment and take a long time to pay off, making the project budgets immense, requiring continuous production at sustainable levels to even maintain the organisations (not to mention turning a profit).
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Alongside the financing and technology, we have the people. Here Discovery taps into the American Dream – tough, hard-working people, not afraid of taking risks, putting up their own funds, spending their lives on the pursuit of production, revenue, success. These shows are also about luck – every season the teams competing change, insinuating a high turnover resulting from unavoidable failures. For every winner, there are (not shown) countless losers.
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Everyone, at some point, had to start. Start small, succeed, hire people, get new machines, get bigger, succeed even more. Entrepreneurship at its best. And each show is a business case, watched by the unwary, who therefore miss so much. I would like to see some more facts – a budget, some more analytical details, to enhance the understanding of what goes on (maybe on the Discovery website, if not in the show).
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I have to hide my disdain for raping the planet, as without massive open digs (and shifting of tons of earth, rock together with uprooting entire forests) there would not be any shows, however the amount of fuel they use is outrageous – everything runs on diesel, 24/7. Truckloads of diesel. The Arabs must be happy.
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Oh, and I finally know who drives all those American pickups with double wheels on the back…


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