Asymmetrical Information

From the desk of Mindles H. Dreck:

Child fails to find pony in manure pile

An utterly lame defense of steel tariffs appears in today's WSJ.com - Letters:

Why It Was Necessary To Relieve Steel Industry

As you cite me by name in your July 9 editorial today "Free Trade Over a Barrel," which attacks President Bush's steel program, I would like to respond with some key points you failed to mention:

1. The president acted only after receiving a unanimous verdict from an independent commission, comprised of three Democrats and three Republicans (none of whom were appointed by this president), after more than six months of study, hearings and reviewing written testimony and industry questionnaires. It found that imports were the most important cause of serious injury to the industry. All six commissioners recommended that relief be put into place.

2. The president's action was made necessary by foreign market distortions. Foreign government subsidies and protection, foreign industrial policy in both market and nonmarket economies, and foreign cartel activities gave rise to vast amounts of global excess capacity.

3. The president acted to allow recovery of the industry (34 domestic steel companies entered bankruptcy) and to reinforce international negotiations he initiated designed to remove foreign trade distorting practices and talks aimed at reduction of excess capacity created and maintained by foreign governments who prevented market forces from operating.

4. The Bush steel program is just beginning to show some positive results. Price recovery from the unsustainably depressed levels that caused the flood of bankruptcies may see prices reaching their 20-year average level this summer, although this long-term average is still absolutely flat, and nothing like the upward trajectories of prices received by major steel-consuming industries.

Alan Wm. Wolff
Washington

1. Six opinions hardly legitimizes this expensive and anti-market solution

2. "If all your friends' mothers let their children jump off a cliff, should I?"

3. I suppose this is based on the assumption that these companies should continue to operate protected from competition under perpetual subsidy?

4. Is he saying a higher price to consumers is a desireable public policy end?

I guess Mr. Wolff is stuck with this one.

Posted by Mindles H. Dreck at July 18, 2002 2:09 PM | TrackBack | Technorati inbound links