Posted on 07/06/2016 4:55:20 AM PDT by Kaslin
A recent ruling by the U.S. Department of Commerce dramatically increased tariffs on some Chinese steel products, such as cold-rolled steel, which is used to make appliances, cars and electric motors. Tariffs were raised by 500 percent on some other Chinese steel products. President Barack Obama and the major 2016 presidential aspirants, particularly Donald Trump, believe this measure will protect jobs in the U.S. steel industry. There is no doubt that steel industry jobs will be saved. But there is an ignorance and/or incapacity of being able to think beyond stage one when evaluating public policy. Measures to protect steelworker jobs pay attention to only the seen effects of public policy; they ignore the unseen. In other words, they look at only the visible beneficiaries of public policy and ignore the invisible victims.
U.S. steel companies want to restrict steel imports so that they can sell more steel to American companies and charge them higher prices. That means more employment and greater profits for those in the steel industry. We can think of those observations as the seen, or stage-one, effects of import restrictions.
Daniel R. Pearson has written a Forbes opinion article, which is titled "The U.S. And China Are Both Wrong On Steel" and gets us beyond stage one. In the May 23 piece, Pearson argues, "The real cost of import restrictions is the harm they do to manufacturers of value-added products that use steel as an input." Primary metal manufacturing -- which includes steel, copper, aluminum, magnesium, etc. -- added about $60 billion of value to the economy in 2014. The steel-using manufacturers generated $990 billion of value for the economy; that's more than 16 times more. Primary metal manufacturing employment was 400,000, while steel-using manufacturers employed 6.5 million people, also 16 times greater.p>Politicians have criticized Carrier for its decision to move 2,100 air conditioning jobs from Indiana to Mexico. Carrier is affected by import restrictions on steel, copper tubing and aluminum extrusions and can escape those U.S. government-imposed costs simply by moving production across the border.
Pearson suggests that the United States should send China this message: "Thank you for transferring so much wealth from China to the United States by selling low-priced steel. It's helping to keep our large manufacturing sector globally competitive."
Another example of failing to think beyond stage one is with the tariff and quota protections given to the U.S. sugar industry. Chicago used to be America's candy capital. Today it's a mere shadow of its former self. Brach's used to employ about 2,300 people; now most of its jobs are in Mexico. Ferrara Candy Co. has also moved much of its production to Mexico. Wages are indeed lower in Mexico, but wages are not the only factor in candy manufacturers' flight from America. After all, Life Savers, which for 90 years manufactured in America, moved to Canada, where wages are comparable to ours. By moving to Canada, it became more competitive because it saved itself a whopping $10 million a year in sugar costs.
The question that should be put to those calling for restrictions on imports is: In an effort to save jobs in one industry, do you care about or even know of its cost and disastrous effects in other industries? When Congress enacts a miracle for one group of Americans, such as steel producers, it creates a non-miracle for another group, such as steel-using producers. Should Congress then create a miracle for the steel-using industry to offset the effects of its miracle created for steel producers, such as giving them handouts or their own tariffs? I'm betting that it wouldn't work. Lawmakers would run into the same problem described in Marcus Cook Connelly's play "The Green Pastures," in which God explained to the angel Gabriel, "Every time Ah passes a miracle, Ah has to pass fo' or five mo' to ketch up wid it." Congress should keep in mind God's further lament -- that "even bein' God ain't no bed of roses" -- and get out of the miracle business.
But the jobs didn’t come back.
Walter Williams talks trade.
Wrong. There are punitive tariffs and there are protective tariffs. Anyone who DOES NOT agree with Trump on this matter will be required to always have customer service calls tended to by a citizen of the Sub-Continent.
An unanswered question: Once China has completely eliminated the United States steel industry and gained a monopoly, will they still sell their steel cheap?
Would the Chinese ever attempt blackmail once they have achieved monopoly control over steel production? Are they too righteous to do so?
What if we have a war, and have no steel industry to fall back on?
I respect and admire Dr Williams, but he is so wrong on this issue. First of all, he misstates Donald Trumps strategy, his strategy is to get to true free trade by first getting to fair trade. His threat to raise or create tariffs is for negotiation purposes primarily. But, like in steel even if we have to do this temporarily most or even all of the economic cost will be absorbed by new jobs created. Secondly, as an Academic Williams looks at the world as a perfect model...with some exceptions, when figuring out economic policy strategy. When only one side offers free trade, there is no free trade. We have surrendered tens of millions of good jobs to other nations who have absolutely no incentive to offer free trade and take advantage of us. They donate (buy) our politicians for special favors and encourage reduced competition within the US! From our own companies!
I hope Trump hired Walter Williams to give him economic advice
“What if we have a war, and have no steel industry to fall back on?”
The US won WWII because it was self sufficient in manufacturing and most raw materials were available inside the borders of the country.
Today we are no longer self sufficient in many industries. Imagine a war with China with supplies of semiconductors, computer chips, steel, machine tools, electrical generating equipment and clothing cut off. Likewise, imagine an EMP attack by North Korea where our electronic devises and the electrical grid is fried. Does anyone believe the Chinese or any other nation will rush to rebuild our infrastructure without significant concession such as eliminating our military capability?
Losing manufacturing self sufficiency equates to loss of independence.
That’s partially do to regulations. Ominous out of OSHA and the EPA
The other thing to note is that this crooked administration waited until industries had closed and left before making a move to help. To restart a business is the same as initial start up.
I would rather see govt help go to that than the solar industry
You can be a globalist or patriot but not both.
You are exactly correct. We must rebuild our own industrial complex regardless of the means used to do so. The FREE RIDE is over when Trump wins. That is why the greedy one world order idiots are so against Trump.
In WW II, the USA supplied all the Allies including Russia with trucks, jeeps, food, armaments, etc. etc. etc. We could not do the same thing now. It makes me angry beyond belief when I think of JEEP belonging to another country. DISGUSTING!
>>Pearson suggests that the United States should send China this message: “Thank you for transferring so much wealth from China to the United States by selling low-priced steel. It’s helping to keep our large manufacturing sector globally competitive.”
What part of our large manufacturing sector is globally competitive?
Economic prigs like Williams can never acknowledge that there are many benefits to tariffs. That is why a sane logical discussion is never possible with Free Traitors™. I hope they all rot in hell.
the econ troglodytes are braying in full force this morning
>>That’s partially do to regulations. Ominous out of OSHA and the EPA
I’ve worked in industry for 30 years. OSHA and the EPA seem bad for some person who works in an office, but if you put on a hard hat and boots and had to work every day around machinery, steam turbines, sewage, chemicals, ladders, catwalks, forklifts, etc you might view OSHA in a different light.
If you lived near a stream polluted by creosote in the 1960s and it’s still toxic today, you’d see the EPA in a different light.
OSHA and the EPA exist because companies used to shift costs of operation to the public (in the form of pollution and disabled or dead workers). Now, we Conservatives complain that companies have to pay their own costs and wish that they could shift them back to the communities they poison because the bottom line for shareholders is more important than those “little people” who live in trailers down by the mill.
When someone complains about the costs of regulation, that’s code for “I don’t want to pay for a safe workplace or to create clean discharges from my factory.”
I remember what the St Johns River smelled like in 1972. I like it much better now.
You prefer a progressive income taxes over tariff revenue making you are a witless Marxist tool.
You must not have read the article. The point made is that protectionist policies for one industry can have massive downstream negative effects on other industries. Do you really want to preserve buggy whip manufacturing by killing the entire automotive industry? Even worse, do you really want government bureaucrats deciding which jobs are preserved, while ignoring which jobs will be destroyed?
The word and meaning of Conservative has morphed into blindly supporting stateless globalist economic goals. It happened in front of our eyes.
I am not saying that in and of themselves those agencies are bad. Look at what they have become under activist commies. Many of recent regulations are geared to shutting places down and giving government control over land.
Even courts have told them they have gone too far
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