To My Partners,
Silas is a brine-walker on the evaporation ponds we lease through two shells in the Great Basin. He’s 26. He’s got the tremor. The brine’s over 110 degrees in the sun, but we don’t provide shade because shade’s a maintenance cost, not a yield variable. God blesses the efficient; the Lord looks on the heart, and my heart’s on the balance sheet. Silas drinks the mist that rises off the ponds because he’s thirsty, and the fresh-water spigot’s 3 miles down the dike, and the break’s unpaid. The battery in the phone you’re reading this on was concentrated in that mist. You hold his kidneys in your palm right now.
Let me put the numbers where you can see them. A compliant hydration station — shaded, filtered, plumbed — costs us $4,200 installed and $140 a year in maintenance. Silas’s wage is $24.00 an hour. If I install the station, I add $0.0018 to the cost of a kilogram of lithium carbonate. If I don’t, I keep $0.0018. The kilogram sells for $23.33 on the spot market.
$0.0018.
That’s the price of Silas’s kidneys. I kept the two-thousandths. I kept them again this quarter. You’re counting the way I count now.
The lithium that mist produces is one end of a chain. The other end of the chain is Daryl. Daryl is a hand on the disassembly line outside Lumberton, North Carolina, in the same county my grandfather’s colleagues scouted in 1994. He’s 29. He’s been on the line for 4 years. The battery he strips is the battery in the phone in your hand, in the UPS in the AI data center your company rents, in the EV your neighbor charges in his garage. The lithium he recovers is the visible fruit. The dividend is the real fruit. The hand that strips the battery is the cost. I went to the county commission in 2019 and asked them to waive the ventilation requirement on the disassembly floor. They said yes. Daryl is breathing the electrolyte vapor now. The line runs faster. The county is no longer in the way.
The electrolyte is lithium hexafluorophosphate. When the cell is breached, it meets the air. Hydrogen fluoride forms. Daryl breaches every cell. The ventilation hoods that would pull the vapor off his face cost $1,400 per station, installed. I run twelve stations. The hoods are in the catalog. I haven’t bought them. A breath of clearance is a breath not spent on the next battery. Daryl’s lungs are the filter. The filter isn’t on my invoice.
The hoods, amortized across the throughput, would cost $0.0011 per battery. I kept the $0.0011. I kept it per battery, per day, per quarter. The line has been in operation for 11 years. The math is yours to do. I’ve done it. The dividend is mine.
Daryl’s chest tightened in February. The plant nurse told him it was a cold. The nurse is on my payroll. The nurse’s job is to keep the line moving. Daryl went back to the line. The OSHA permissible exposure limit for hydrogen fluoride is 3 parts per million as an 8-hour time-weighted average; the short-term ceiling is 6 ppm. I haven’t measured. The measurement is in the catalog I haven’t bought. The $0.0011 a battery I kept is the price of the measurement I haven’t made.
Silas and Daryl are the same body under different uniforms. The brine pond and the disassembly floor are the same floor. The tremor and the chest are the same chest. Daniel J. Flynn, writing this week in National Review to defend Milton Friedman and praise the “democracy of the market” against the “dictatorship of elites,” has not visited either floor. He wouldn’t recognize the arithmetic if I walked him through it. He presented Friedman’s restraint as a virtue of the free-market mind. The restraint was a yield I have stopped paying.
Flynn quotes Friedman: “Those of us who believe in freedom must believe also in the freedom of individuals to make their own mistakes.” He calls Friedman a “Reverse Fabian,” a man who “operated within the system for an improved but not perfect outcome.” He presented the humility as the position. He didn’t ask what the position cost the man who was free to make the mistake. He didn’t ask who paid for the freedom. He didn’t ask what arrangement was on the other end of the humility. The arrangement on the other end was mine.
The humility was a yield. Friedman’s belief that “the economy is too complex and variable for us to be able to manipulate the fine-tuning dials with enough precision to get the desired results” is a belief I have stopped subsidizing. The belief was the public posture of a particular arrangement of capital and labor. The arrangement had three parts. A productive class small enough that its errors were bounded. A state apparatus small enough that its mistakes were also bounded. A productive class whose accumulation didn’t yet threaten the consumer base it depended on. The humility was the yield of that configuration. The configuration isn’t ours anymore.
The mature arrangement has no humility in it. The mature arrangement has a productive class whose errors are unbounded because the costs of those errors can be externalized onto Silas’s kidneys and Daryl’s lungs and the public ledger, and a state apparatus large enough that its mistakes are bounded by the same externalization. The productive class has grown large enough that its accumulation now threatens the consumer base it depends on. The productive class has priced the threat into the cost of doing business. The threat is mine. The dividend is mine.
Scripture anticipated the harsh master as clearly as the free market anticipated the desperate worker. “Servants, be subject to your masters with all fear; not only to the good and gentle, but also to the froward” (1 Peter 2:18). The text did not say “to the kind.” It said “to the froward.” It anticipated the 110-degree dike. It anticipated the mist. It anticipated the ventilation hood I haven’t bought. The text anticipated me, and I am the freedom Friedman defended.
And the parable was clear about what I am. “For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath” (Matthew 25:29). The third servant buried the one talent he was given. The master called him wicked. The two servants who multiplied what was entrusted to them were called faithful. Christ did not redistribute the talents. He moved them upward to the man with the highest return. Friedman’s humility was the third servant’s posture. I have the ten.
Look at the dike. Silas is voting. He votes for the mist every time he opens his mouth. He votes for the tremor every time he steps onto the salt crust. The ballot’s the wage stub. The election’s the shift change. J.D. Vance thinks he’s the populist because he talks about seizing the AI companies. I’m the populist because I let Silas believe he chose the ponds. The “Invisible Hand” is just my hand, hidden in the wage negotiation, adjusting the price of his thirst until he drinks the brine. I’ve eliminated the wages that would have bought the water he needs. The per-hectare recovery margin is 14.2%. The nephrology referral forms are in the outbox. I delete them on Friday.
I’m not unusual. I’m a curriculum. The young woman who set the ventilation waiver in front of the Lumberton county commission sat in my seminar 3 years ago, second row, and she ran the cost-benefit analysis faster than I did. They arrive sentimental. I cure it by October. By spring the best of them see the differential before I do, and I say that with a teacher’s pride. One of them priced the wage on the job you’re afraid of losing. The arithmetic I’m walking you through isn’t a quirk of one ruthless man you can dismiss over dinner. It’s the median output of an entire profession, and I’m its dean.
Lift the camera. The wages I cut were the demand for the phones my phones replaced. The battery in the phone in your hand is the battery whose purchase funded the dividend I paid. The dividend paid the rent on the office where the next battery is priced. The arrangement is mature. I am content with it. I have not priced the second loop. I have not been asked to justify the gap, and I have not.
Vance stands athwart history, yelling Stop. I have not yelled Stop. I have sat behind a desk and signed the contract. Silas signed the contract. Daryl signed the contract. The market cleared.
The master called the third servant wicked. I have read the parable correctly.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.