Asymmetrical Information

And people wonder why we don't want to be part of the International Court (or whatever).
I disagree with Bush on this but having non-Americans making policy for the U.S. is crazy

augustr --

This is not a case of "non-Americans making policy for the US" but one of non-Americans, designated by a treaty to which the US is a signatory, interpreting the meaning of a treaty to which the US is a signatory. The US has, they found (correctly) violated its treaty obligations. It will therefore face some sort of sanctions.

Unless you want to oppose all treaties on general principle, this is not the policy decision to get worked up about. A nation that signs treaties must abide by them, even if that means giving up some policy-making latitude. The policy was not made by non-Americans, it was made by a previous generation of Americans; that it occasionally works to the advantage of, as you say, foreigners, does not invalidate our obligations.
--G

Non-American's are not making US policy. When the WTO rules against us all it means is that other countries are permitted to impose tariffs on our goods. That isn't a violation of US sovereignity because without the WTO other countries could impose tariffs on our goods anyway.

IMO, Bush should offer hard cash to the steel workers. Estimates I read indicate that steel protectionism is costing something along the lines of $100K per job saved per year to US consumers. It would be cheaper if the Federal gov't simply offered a $25K stipend per steel job lost for two or three years. That would provide ample resources for the displaced workers to find another line of work. The Fed's could work out a similar arrangement with steel companies failing with bloated pension obligations. It's simply cheaper to buy them off than adopt protectionism.

Unfortunately the Federal Budget makes import quotas look appear as zero costs so it's 'cheaper' to impose import restrictions and cost American's $100K per job saved than to cut a check of $25K or $50K per job.

It’s about time that the Bush administration reverses itself regarding the protection of the steel industry. Indeed, the President now has a convenient excuse for doing so. We should also wish to live up to our treaty obligations. The WTO is right to take us to task. Our hypocrisy is inexcusable.

A columnist reported that the Bush Admin was going to repeal the tariffs if WTO ruled against them. Let's hope they follow through.

"who can now go back to them and say "I did my best, but the WTO ruled against me""

Somehow I really can't imagine that would play really well over in the rust belt.

Read an article in the Financial Times today that many steel market analysts expect a shortage of steel in 2004 due primarily to rising Chinese demand and that steel prices are up quite a bit over the last two years not just in the U.S. due to the tariffs but around the rest of the world as well. Perhaps that combined with the WTO ruling will make repealing the tariffs an easy call.

On the overall prospects for free trade, I do not see reason to be overly discouraged. There is always a push towards trade protection during recessions. Given that, I think the near term prospects for things like the Doha round of GATT negotiations were bleak right from the start.

I actually take encouragement from the fact that there really have been few protectionist actions taken. The US steel tariffs would probably be high on the list. Compare that with the variety of protectionist actions taken in the US ("voluntary" auto quotas, steel quotas, motorcycle tariffs etc.) and elsewhere in the 1980s (Canadian domestic content legislation) and recent actions pale in comparison. For example I have not heard of any country seriously considering pulling out of the WTO or NAFTA, Dennis Kucinich's candidacy notwithstanding. As the world economy returns to a more solid footing I expect we will once again move towards more and freer international trade.

hi megan,

before i comment on the post, i felt a little unclear about this comment:

"The hopeful possibility is that the steel tariffs have bought credibility with the rust belt for Mr Bush, -- and that that credibility will allow him to advance the cause of free trade."

and how exactly do you see that? is that due to the fact that he can argue that any attempt to impose protection will be squashed by the wto, and therefore not worth trying, or that the rust belt accepts that he tried (even if he eventually failed) and are satisfied with that attempt to support their interests,or is there some other mechanism that you have in mind for how this outcome hopefully "advances the cause of free trade?"

Teaching the law of comparative advantage should be mandatory at some phase of an individual's education. It is much too easy to create short term political advantage with a body politic that is unaware of its implications.

On the other hand, I am a supporter of agricultural subsidies. This is due to concern about the global food chain and its durability under some kind of major crisis like an outbreak of foot and mouth disease that cannot be stopped without drastic consequences.

I could be wrong, but the Great Depression did prove that Americans could survive food shortages just like the Russians and Eastern Europeans. As we all know, that was with a much smaller North American population. Are we still tough enough to go without?

Gary,

I'm not seeing how foot and mouth disease could create a global food shortage. It might create a global beef shortange, but think of all the corn it would free up!

An enduring lesson of the Great Depression, by the way, is that price supports and quotas for farmers create shortages and waste, and also raise prices for consumers who don't have a lot of spare change.

Even today, not every crop is subsidized, and the US is still a shockingly productive country in all areas. So no worries on the food front.

Now if only the EU (France) would get rid of their farm subsidies. How can we pretend to be fair with the 3rd world when France decides, and the EU, (lapdog that it is) it would rather protect that stupid farmer with the thing against McD's than help struggling countries in the 3rd world. Yep, Amerika , the root of all unfairness, Yeah, sure!

we are doomed with bush.

from http://news.ft.com/servlet/ContentServer?p...p=1012571727092

(via Bonobo Land)

quote:

Soaring demand for steel - including a huge increase
in Chinese consumption - means that a global shortage
is likely next year, industry experts are warning.
World Steel Dynamics, a US-based consultancy, says
there is an 85 per cent chance of a shortage in the
first quarter of next year.

Of course Bush will push for repeal of the steel tariffs. It will be completely in keeping with the efforts of cheap-labor conservatives to reduce production of all goods to the lowest common denominator. Maximum production at minimum labor cost. "Free trade" is just a code word for the freedom to seek the cheapest possible labor market. Economic freedom, in other words, for the producers only.

"Maximum production at minimum labor cost"

Oh, crockmeister, quelle horreur!!!

Those evil conservatives! Trying to make things less expensive! Bush is satan!

Where do I send off for my magic Bush code word dictionary?

This may seem a dumb question (and I will freely admit that I know next to nothing about the present state of the US steel industry): but wouldn't a looming worldwide shortage of steel due, as cited, from increased Chinese demand, be, on the whole, somewhat of a benefit to domestic producers? If the point of the tariffs was to overcome a price imbalance between foreign and local producers, why would a general shortage not nudge world steel prices upwards, thus making the domestic product just (maybe) that much more competitive. If American steel producers can eke out more business (or at the very least, keep production at current levels) would it not help to keep steel-industry jobs - the preservation of which might serve President Bush well in the "rust belt" - which presumably was a factor behind the tariff imposition in the first place.
Am I missing something here?
(Or is it just too much to expect that the Bush 43 Administration would give a damn about industrial workers' jobs?)

Jay C.
Bush cares about industrial workers' jobs (politicians tend to be very attentive to voters' problems). It's just that tariffs (and other Government foolishness)do not save them. Did you notice the cost per job "saved" in the steel industry mentioned in one of the comments above? That is money not available for purchases that would keep OTHER industrial workers in their jobs; probably more jobs were lost due to that reason than were saved in the Rust Belt by the illegal steel tariffs (that is what usually happens with tariffs). The users of steel in our economy were badly hit by the rise in steel prices as a result of the tariffs. Their workers lost jobs. Is it too much to expect you to care about their job losses?

One of the key things about learning to reason economically is to figure out what the unintended consequences of actions are and what the nonvisible results are. The saved jobs can be seen, the jobs lost in saving the steel jobs are not visible, but are nevertheless really lost.

"The hopeful possibility is that the steel tariffs have bought credibility with the rust belt for Mr Bush"

This is a joke, right?

Crockmeister is somewhat correct when he notes that free trade is really a fairly selective term and hardly an unmixed benefit from the point of view of any particular person. In particular, free flow of goods and capital across borders is still something of a problem as long as we lack free flow of labor and consumers across borders as well. Where he errs is in concluding that this means that free trade is bad. What it means is that freer immigration would be good.
--G

Megan,

I can't find the article, but the late E.G. Ross made a similar observation regarding free trade and the steel tariffs.

This is a joke, right?

At its worst, this is about on par with Clinton's signing of the Kyoto Treaty. Congress had apprised Clinton beforehand that it would under no circumstances ratify, but Clinton went ahead and signed it anyway to gain cool points from the Greens. Kyoto was de facto dead and decomposing long before Bush declared it to be so.

If that's what Bush was about with the tariffs, I don't like it one bit.

Minor correction:

...but Clinton went ahead and signed it anyway to gain cool points from the Greens.

should read:

...but Clinton went ahead and signed it anyway, presumably to gain cool points from the Greens.

While I understand Mr. Gould's contention that free trade's "benefits" would be more widely available if immigration was free, that hardly seems likely or wise given current geopolitical realities. And from my perspective, it would further concentrate power in the hands of the producers (not a bad thing in the eyes of most here, I realize) because the supply of cheap labor would be nearly limitless, at least for the foreseeable future.

As the owner of a soon to be defunct 50 year old American manufacturing company with a 3 generation long multi-million dollar investment in advanced equipment and technologies that there is no longer a market for (because we don't make jack in the USA anymore) I'd like to say that if the Chinese started exporting bullshit you guys would be screaming for tarrifs. Hey, get rid of OSHA, get rid of the EPA, get rid of healthcare, get rid of social security, get rid of income taxes, get rid of realestate taxes, get rid of the employer's contribution to unemployment insurance, get rid of salestax, get rid of child labor laws, time and a half, the minimum wage, the right to sue, workman's comp, liability insurance and rebate me the cost of the land my plant sits on. Then send me a boatload of farmboys willing to work 12 hours a day, 6 days a week for $.25 an hour infringing on whatever patents and copyrights I choose and I'll be more than happy to join the new world order.

In the meantime, send me one of those $50k checks until you figure out that middle class America was sold a bill of goods with NAFTA and the WTO that has not been delivered and that "Free Trade" is about as forthcoming as "The New Era of Peace and Prosperity" Yeah, we're breaking the treaty, but you broke yours with me first. Where are my export opportunities?

Sorry for the rant, but my standard of living has been sacrificed on the altar of "Free Trade" and I've been screwed.

Feel free to hurl insults, it's a job that hasn't been exported yet.

Anton

I will not throw insults. From the consumers point of view it does not matter who produced it and under what cicumstances as long as "I got mine". And as for the consumers view of what happend to you.....well, I got mine.

Rob, about farm subsidies, my concern is related to events that would prohibit farm products from being sold beyond the community next door. Corn is also vulnerable (for example, the Starlink mixup that proved GM crops cannot be kept apart from traditional hybrids). Iowa has had to bet its future on GM crops simply because the control aspects of hybridization will not adequately guarantee the purity of all non-GM crops grown on adjacent farmland.

Also, for the record, farm surpluses and shortages existed for non-market reasons prior to the Great Depression. One of the best examples is tobacco, a product that generated the Black Patch Wars at the beginning of the 20th century. There were farmers who were willing to sell to the Duke Trust and the reward was the Night Riders making a evening house call.

Agriculture is different from steel. Can you guarantee that a hungry and desperate American will also be a law-abiding American? I would prefer not to find out.

The 'essential product' defense of subsidies and protectionism is probably the weakest of them all.

Kudos, Richard on having the integrity to hit the nail straight on the head.

Now if you can explain how America can survive a sustained conflict without benefit of domestic steel production or metal working industry, I'll sleep better at night after liquidating my assets and heading for greener pastures.

Frankly, I think there is a trade war on the horizon and I welcome it. Free trade is one thing, fair trade is another. Buy low, sell high, that's the American way. From where I'm sitting, we made ourselves a bad deal and gave away more than we took. I think folks tend to discount the fact that there is alot of real pain out there for a very large segment of our population that this so called recovery has passed by. I'm glad you got yours, I'll take mine, now, thank you. I'm voting for the guy that tells the Euros to take their tacky furniture and stuff it.

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