Devils in the tubular steel details
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 firstname.lastname@example.org).
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- NFL coaches weigh in on Polamalu’s legacy
- Outdoor notices: March 29, 2015
- Hit sends Penguins’ Letang to hospital
- Mt. Lebanon native, Iraq war hero’s action goes unrewarded
- Pirates pitchers finding success with expanded strike zone
- Starkey: Next frontier for Steelers offense
- This collector wields Power of the Pens
- Shortfalls sabotage promise of a union retiree’s pension
- Simple question: What has Hillary accomplished?
- South Side house part of former Steeler’s end game
- Norwin High School health teacher charged with selling heroin