[tw]

From The Economist of 7 Mar 2002 "Rust never sleeps":
AN AILING steel industry, a case of unfair trade before America's International Trade Commission and a president mulling sanctions. No, this is not 2002, but 1976, when Gerald Ford was in the White House and America's sickly steel companies were clamouring for import protection to help them back on their feet. Twenty-six years later, the same [integrated] steel makers are still flat on their backs. The quotas, tariffs, subsidies and the like (worth well over $30 billion, according to some estimates) that America's politicians have lavished on steel companies in the interim have clearly taught policymakers nothing. Amid widespread groans, on March 5th President George Bush slapped tariffs, ranging from 8% to 30%, on an assortment of imported steel products for three years—a period of time, ventured Mr Bush's trade representative, Robert Zoellick, “that will give the US steel industry the opportunity to get back on its feet.”
...
Having fallen to below $200 late last year, the price of a tonne of hot-rolled steel has suddenly shot above $300, partly in anticipation of Mr Bush's three-year tariffs. That will help the 15 American steel makers operating under the protection of the bankruptcy courts. It will do nothing, however, to help restore the industry's overall long-term health.
...
mini-mill operators, such as Nucor .... use less than one-third of the labour that the integrated mills need to make a tonne of sheet steel. That makes them competitive with the Brazilians and South Koreans (see chart), while the integrated firms have the highest costs in the world.
...
On top of their lower labour costs, the mini-mills' electric-arc furnaces are much cheaper to build than iron-ore blast furnaces. .... Apart from US Steel and AK Steel, the two biggest producers, every integrated steel maker that is not already in the bankruptcy courts is likely to end up there, with or without trade barriers. The market thinks Nucor, on the other hand, is worth more than all the integrated producers combined.

From "Opinion" in The Economist of 7 Mar 2002 :
This steel-tariff plan, it is important to remember, lies well outside the ordinary run of bad economic policy: it is so wrong it makes other kinds of wealth-destroying intervention feel inadequate. And was it really politically inescapable? What a depressingly feeble excuse from a president ... who had claimed, by the way, to be a champion of liberal trade. Mr Bush and his advisers should be ashamed.

"Just Say No" 28 Feb 2002:
At the cost of destroying jobs elsewhere, tariffs would save some jobs in steel—but only temporarily. Tariffs would do nothing to solve the industry's structural problems. American steel is really two industries: a group of low-cost, non-unionised mini-mills and an array of unionised, capital- and labour-intensive integrated steel producers. Mini-mills have been doing well: their share of the market has quintupled over the past 25 years. But the integrated dinosaurs, hobbled by high production costs, are horribly uncompetitive and have remained so despite (or more likely because of) a long history of protection. The only rational long-term solution is to allow most of them to go bankrupt.

The Economist does not note another problem the integrated steel industry has - denial and outright lies about why imported steel is so less expensive.

"Romancing Big Steel" 14 Feb 2002
After all, 12m people work in steel-consuming jobs, while only 160,000 people produce the stuff. ... One study, sponsored by a group of steel consumers, suggests that 20% tariffs would save fewer than 9,000 steel jobs, but would cause over 74,000 lost jobs elsewhere. In other words, eight jobs would be lost for every steel job saved.

World trade once increased 4-11% every year for decades. However George Jr is pushing so many anti-free trade policies that world trade has fallen -1% this past year. Steel is only his latest salvo against free trade agreements in Doha negotiation. Free trade was a Clinton idea. Since George Jr is against every that Clinton did - reality be damned. George Jr now wants to subsidize farming. In a government that is running a $600+billion debt, George Jr now wants to subsidize farmers with another $170billion. Who is this anti-free marketeer George Jr who was elected by lying to us?

As a result of George Jr's tariffs to protect anti-American steel companies (for self serving political reasons), even the White House now admits it is shocked at how great those tariffs are hurting the economy. Job losses to save steel jobs may exceed 8 to 1. Throughout entire industrial America, long standing contracts are being canceled outrightly with new price increases typically at over 20%. Domestic steel prices tripled as anti-American integrated steel companies choose to gouge America rather than innovate. What makes them any different from executives who cook the books? Even a mental midget President could see this would happen. Why then is the White House surprised? Extremist rhetoric makes a brain non-functional? Or do extremists regard political expediency more important than economic growth?

Look what a patriotic company must now do to remain functional and productive:

NY Times on 29 Jun 2002
The Honda Motor Company is prepared to airlift 2,000 tons of carbon sheet steel to its auto factories in the United States and Canada next month if it cannot secure adequate supplies from steel producers in the United States, the company said today.
The company's plans were prompted by steel-import tariffs of as much as 30 percent that President Bush imposed in March. As a result of the tariffs, steel makers are renegotiating contracts, and Honda may face a shortfall.

In 1999, an intelligent President refused to protect anti-American industries. He refused to protect MBA dominated, anti-innovation, steel companies. As a result, the American economy grew. Even with a tax rebate (another idea that only mental midgets would promote), this current president pushes the economy into deeper recession WHILE turning (in one year) budget surpluses into deficits that were only exceed by Reaganomics. This president would outrightly hurt the economy only to fulfill a wrong headed campaign promise? Did he promise anything - will he do anything destructive - just to get elected? Maybe we raised the price on Jim Beam too high and now suffer the consequences?

Who elected this president anyway? An ugly Sec of State in Fl who needs more makeup than Tammy Faye to hide her extremism? Right wing religions - people who also protect child molestors? MBAs who advocate cooking the books - Enron and Arthur Andersen being two of George Jrs top campaign bribers? Clearly this president was not elected based upon his intelligence. Maybe that is why he constantly undermines and goes against the advise of Colin Powell.

$170billion dollars to farmers? Another tariff is being considered for protection of IC manufacturing. Maybe another $7.7billion to airlines that already burned through $4billion without even considering addressing their problems. Maybe if we put the president to work in a Nucor steel mill for a year, then maybe he would learn how economies and free markets are suppose to work? Maybe he would work in a company that was actually productive? Maybe that is his problem? George Jr. has never succeeded in any business that was exposed to free market competition. At least in Nucor, he would be too busy gainfully employed to do any more damage to the American economy. Remember his original good idea for the economy - a tax cut? Where is the praise for that brilliant idea? Unfortunately we have the President we deserve.

How many accounting frauds does it take before a right wing extremist President finally speaks out against economic fraud? I guess that depends upon how much the latest defrauding company contributed to George Jr's campaign fund. Apparently WorldCom did not contribute enough - so George Jr finally had a company to accuse of fraud. Steel companies that don't innovate? To an MBA like George Jr, there is nothing wrong with stifling innovation.