March 1, 2002

Steel

President Bush soon has to decide whether the U.S. will impose punitive tariffs on imported steel. The president of the United Steelworkers was explaining on NPR’s “Morning Edition” today that there is excess steel making capacity in the world, which is why so much steel is being imported. However, none of the excess capacity, he earnestly told us, is in the U.S.

I would be delighted to learn that there is excess oil production capacity in the world. Why should I not have the same reaction to analogous news about steel making capacity? Moreover, who’s to say that a steel plant in Gary, Indiana, does not represent excess world capacity, but a steel plant in Russia does? Clearly, Russia is more desperate to sell steel at a low price than is U.S. Steel. By my understanding of economics, that makes the Indiana plant seem like one plant too many.

The issues may be somewhat more complicated than that, but, I suggest, the USW is quite selective in its arguments. The USW president emphasized that relatively little labor is required to make domestic steel, and domestic plants produce only modest pollution. That may be true, but American steel producers are still burdened by high labor and benefit costs that can be traced to the postwar era, when big business and big labor conspired to produce steel at high prices with high-wage workers, and with little concern for plant modernization. At the time, of course, steel was essential to the economy, and the foreign competition was meager.

Times have changed. Even big steel has changed, prodded by upstarts like Nucor (which, to its shame, is supporting protectionism for steel). On the other hand, why should I pay higher prices to support steelworks and misguided investors?

Of course, President Bush will approve the tariffs. Labor votes are at stake, and the Republicans need them. The public be damned.

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