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Devils in the tubular steel details

| Saturday, July 19, 2014, 9:00 p.m.

It has become an article of faith 'round these parts that foreign nations, seeking to gain market share or outright control of the market, subsidize their steel industries and then “dump” the product in the United States. It's a great “nationalistic” narrative ironically born out of criticism of other nations' nationalism. But aside from the hypocrisy of the rah-rah-sis-boom-bah-ism, it's also a pretty discredited position — intellectually, economically and morally.

Just as employing nationalism to discredit nationalism is circular logic, so too is the supposed “remedy” to combat “dumping” — namely, subsidizing domestic steel (or any product, actually), through punitive tariffs, to counter subsidies to competing foreign products.

In other words, to slay the devil that “dumping” supposedly is, the government intervenes in the marketplace to set a higher, non-market price. And, in the aggregate, that's more harmful than dumping.

The latest episode involves steel pipe used in the exploding shale gas and newly reinvigorated oil industries. The U.S. Department of Commerce ruled this month that South Korea and eight other countries have been illegally dumping pipe product in the United States. That is, they essentially sold it at artificially low prices, the government says.

To counter those imports, Commerce seeks to impose duties of from 10 to 16 percent for larger manufacturers, such as the South Koreans, but as high as 118 percent for some of the smaller players in the tubular steel game.

The tariffs were pushed by, among others, two usual suspects, U.S. Steel and the United Steelworkers union, both based in Pittsburgh.

But as The Wall Street Journal points out, while they blame dumping, “the better explanation is that America's energy revolution is raising demand for steel piping, casing and other oil-country tubular goods. Low prices aren't a surprise given the worldwide glut caused by slowing growth in China and excess mill investment in China and the United States.”

To that last point, witness U.S. Steel's forthcoming abandonment of its McKeesport Tubular Operations. The narrative latched on to by pols like sucker fish — spoon fed, of course, by the steelmaker and labor — is that dumping is to blame.

But given that the industry, USW and pols looking for re-election fodder will get their duties, barring a veto by the U.S. International Trade Commission (ITC), why isn't U.S. Steel reversing course in McKeesport?

Overcapacity, of course, that's easier to blame on those foreign dumping devils. U.S. Steel President Mario Longhi conveniently did not mention McKeesport in his testimony before the ITC last week.

The Journal reminds that Washington-imposed tariffs raise “prices on the many to benefit the protected few. The injured in this case will include untold workers, shareholders and customers of U.S. companies that use steel — especially the domestic manufacturers that everyone professes to love. U.S. firms will have greater incentive to expand overseas” (can you say “corporate tax inversion,” class?) “where the tariffs don't apply, and household energy costs will be higher because of the added expense to drillers.”

But as Don Boudreaux, the noted George Mason University economics scholar and regular Trib columnist, says, neither can the moral equation be ignored.

“Protectionism is government intimidation unleashed against consumers to oblige them to buy products that they prefer not to buy,” he wrote in a letter to The Journal, one he shared with me. It is “force that enriches the politically powerful at the expense of the politically impotent” and “business people profiting from receiving special favors from politicians rather than from giving good service to the public.”

“Protectionism is the myth that money belongs not to consumers who earned it peacefully but to suppliers who steal it coercively” and “is the corrupting lie that absurdly and insultingly insists that mass flourishing results from monopoly and dearth rather than from competition and abundance.”

Local pandering pols such as Reps. Mike Doyle, D-Forest Hills, and Tim Murphy, R-Upper St. Clair, like to squawk the squawk about “fair competition” and America being “built on steel.” But the facts more than suggest such duties are a gross exploitation of markets and of people. Thinking people will understand that to be the worse devil.

Colin McNickle is Trib Total Media's director of editorial pages (412-320-7836 or

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