I understand that you believe that if another country's policies have the effect of subsidizing a class of American consumers, they are therefore beneficial.

Well, that's an argument, but it does nothing for sovereignty. The U.S. steel industry is complicated and ought to be restructured on the Nucor model. However, the instant reason the integrated manufacturers are unable to sell at a profit is that ALL their competitors are subsidized (100% in some cases, like China) by government.

Under what concept do other countries get to decide whether the U.S. shall have a steel industry or not?

But that is what you're advocating. You might as well sign on to the International Court while you're at it.

Harry:

What would you do? Just curious. And what's the "Nucor" model?

The Nucor model pays $18 an hour. The old USS, Bethlehem, National, Republic, etc. models paid $26 an hour (in 1977, the last really good year for the major companies), with 6 to 8 weeks vacation.

Harry:

I agree. I'd keep a sufficient steel industry to build our military hardware.

What does the Village Voice know about manufacturing and the heartland?

Harry --

China is a net importer of steel, and their consumption is the primary cause for steel prices having risen in the past two years. So I not sure they are the "problem" here. But lets assume they are the "problem". In this case the problem with abandoning free-trade because of "sovereignity" issues is that free trade is based on the theory that we are all better off leveraging off our different comparative advantages. And, at the limit, even subsidies are a form of comparative advantages. A country can only subsidize exports substainably if it had the financial resources (in China's case, domestic savings, essentially) to do so in general; and towards a given product, in particular, if this product is at the top of the efficiency curve for Chinese products. Anybody who has seen "steel leadership" (cheapness) migrate from US to Europe to Japan to SK to India...knows that the only countries who lose the end game are those who may have bet on dominating the market for ever once they make it to the top.

We're not going to lose a steel industry - steel costs too much to ship long distances. We might lose above-market union wages, and that's what steel tariffs are about.

There's not much political will to do things that would really help manufacturing -- like privatizing social security and paying down the national debt; free trade; and controlling litigation.

It's a sad fact of life, but Rockford IL is one of those creaky rust belt towns that has been in decline for a long time, with no idea how to get itself out. On my few trips to the place, I came to the conclusion it might be hell on earth (I've never been to Detroit, however, which probably wins out). *shudder*

Since the President isn't on the ballot at the moment in Illinois, I guess it really doesn't matter what the whiny Rockfordites think.

Automation kills factory jobs, too; more than China. But you never hear serious complaints about that. In fact, I heard an economist claim the other day that manufacturing jobs in China are actually declining...

Worse than Rockford is Aliquippa, PA. And it has looked this way since probably 1983.

The problem with this kind of anecdotal, feel-bad, snapshop in time articles is what I call the "Allentown" syndrome. Is a lot cooler for the empathy crowd to write and sing about lost steel jobs, etc., etc. It is another thing to come back ten years later, find that same town restructured into a white collar center, many times booming, and write about the forces that allowed for this transformation to occur.

It seems that American manufacturing wages peaked
around the time that the quality of those manufactured goods bottomed out.

I had the "Allentown syndrome" before I visited Pittsburgh. I expected a rust-belt hellhole, but to my surprise today it is pretty much indistinguishable from, say, Minneapolis. A good example of what MG is talking about.

Nucor is the second-largest US steel producer, usually quite profitable. It was the original company to use electric furnaces to make industrial steel from all scrap, as opposed to the integrated companies (USS, Bethelem) than dug the ore, mining the limestone, smelted the pigs, rolled the stock, etc.

In other words, what are called "minimills" today. Nucor is over 30 years old, so this isn't news.

The problem with the integrated mills is that the US produced 100 million tons of steel a year for 100 years, or about 10 billion tons. There is no need to mine new ore now, except to produce a small amount of specialty steels that are difficult or impossible to make from scrap.

The last integrated US mill, Bethelhem's Burns Harbor plant, cost $5B. My steel adviser considers that the latest integrated mills (all foreign) have cost at least $25B a piece and this kind of financing is possible only through governments.

In other words, it ain't economics, it's politics.

Free trade concepts are irrelevant.

The idea that steel is expensive to ship puzzles me. Shiploads of the stuff cross the Pacific Ocean all the time.

And the Atlantic.

You could make the argument that European Communism's long slide out of power started with its belief that all countries need a steel industry.

And the penny drops and Harry's affection for steel makes sense.

[Hint: what's the Russian word for "steel".]

I have similar affection for sugar.