Steel Tariffs

[G_frog]

http://www.iht.com/articles/117178.html for those who don't know.

This is now shaping up to be a good old fashioned trade war, with the additional device of the EU deliberately targetting politically sensitive good-producing regions.

So, what I want to throw open to the floor is the proposition that the global trade rules as they stand are in nobody's interest. The ability of nations to have a say over their own industrial development has always been key to their ability to govern themselves and - hopefully - improve the lot of their citizens. The extremely rapid movement of both manufacturing and investment, stemming from the combination of the WTO and relaxed controls of global capital flows, makes stability an ever more distant dream.

The american case merely highlights one of the problems this kind of thing can create.

[ChubbyChecker]

The WTO is there to exactly stop countries imposing tariffs in ways that they think will improve the lot of their citizens. Protectionism helps noone, as the 1930s showed quite well.

[Dante Hicks]

Protectionism of various types has helped most of the developed industrial countries in the past. To say, for instance, that Britain doesn't owe some of it's (comparative) wealth due to state intervention is madness.

[wu_trax]

what is good about these tariffs? yes, it might save some jobs in the us in the steel-production, but how many jobs does it cost in other industries at the same time? every american company that uses this steel has higher costs now and because of that less chances of selling their products on the world market.
if everyone would stick to the rules, including the EU with this goddamn CAP, the whole world could profit from free trade.
this is not about governing yourself, but about buying from the companies that are most efficent, no matter where they are located.

i do know that south korea gives A LOT of subsideries to its steel producing companies, but bushs way isnt the right one to deal with this.

[I am Idler]

could it be that bush needs money to bomb countries?
yes it could

[wu_trax]

i dont think they get much money out of this, they only increased the prices so that noone would buy foreign goods.

im still wondering whats the problem with producing goods in the usa. they have tariffs, export subsideries and a falling currency and still dont manage to balance the trade balance.

[G_frog]

Originally Posted by wu_trax

what is good about these tariffs? yes, it might save some jobs in the us in the steel-production, but how many jobs does it cost in other industries at the same time? every american company that uses this steel has higher costs now and because of that less chances of selling their products on the world market.

Everyone agrees that the US steel industry is and was outdated and hence uncompetitive. Assuming that the tariffs were to come off after the allotted span of three years, during which the industry could modernise itself, the tariffs would serve to increase competition, where their absence would reduce it. When the tariffs cam off, that competition and the presence of a modern domestic steel industry should reduce the costs to american firms buying steel.

Of course, under the american political system the consideration is not merely how many jobs are lost but where they are lost. Job losses in a securely Democrat state are unlikely to bother Bush that much.

The problem with producing goods in the US is that - in terms of productivity - their methods of organising labour and providing infrastructure, when compared to the (continental) european approach, are actually crap. The reasons why they have trouble competing with Asia are more obvious and well known.

[wu_trax]

if there are no tariffs the companies are forced to modernise NOW, or they are out of the market. end of story.
but now, with tariffs to protect them, these companies dont have to do anything.
think about the consequences. what if everyone would act this way? what if suddenly the eu decides that its a good idea to have an own computer industry and that therefore we have to protect ourselfs from american competition until our own companies are big enough? in that case we can aswell forget about the whole idea of free trade and have everyone ßproduce everything on their own, with higher costs and a lower standard of living.

besides, how many jobs will be lost if bush now risks a full scale tradewar between the us on one side and the EU and large parts of asia on the other? i dont think he can ensure his reelection this way.

[G_frog]

since when were you such an ardent free-marketeer?

I'm not convinced you can overhaul a large and creaking industry overnight.

Don't misunderstand me, I am not claiming that protectionism is always acceptable, I am only arguing that it is sometimes justified. The collapse of the US steel industry would have very large economic consequences, and would not neccesarily serve the goals of competition and efficiency. there is a difference between preventing economic and social damage and seeking further advantage. The absolute approach enshrined in the WTO is daft.

[wu_trax]

Originally Posted by G_frog

since when were you such an ardent free-marketeer?

i am, from time to time. i have a serious problem with all forms of protecitionism, subsideries and tariffs. just let the market decide who is best and thats it.
(that doesnt mean i have a problem with all the forms of free health care, unemployment aid, etc. that are provided in europe. thats another story, again we should let the market decide which system works best on the long term)

I'm not convinced you can overhaul a large and creaking industry overnight.

Don't misunderstand me, I am not claiming that protectionism is always acceptable, I am only arguing that it is sometimes justified. The collapse of the US steel industry would have very large economic consequences, and would not neccesarily serve the goals of competition and efficiency. there is a difference between preventing economic and social damage and seeking further advantage. The absolute approach enshrined in the WTO is daft.

its not like steel is such an important industry here, its a matter of principle. if you really try you can find a justification for all forms of protectionism. if the us now gets away with it others will do the same and that will be the end of the whole free trade idea. if us-steel-companies (or european biotechnology-companies) dont get along with the requirements of the market then so be it. people will find other jobs, by helping inefficent companies you only make the periode of transformation longer.

[Scoot951]

Originally Posted by wu_trax

if there are no tariffs the companies are forced to modernise NOW, or they are out of the market. end of story.
but now, with tariffs to protect them, these companies dont have to do anything.

I haven't really paid attention to this, but it seems you're under the impression that industries like to get competitive like college students like to write 40-page essays. They know that if they haven't updated by time the tarriffs are over they're dead, ofc they're going to do as much as they can. Alternatively, they can not get the tarriffs, go bankrupt (because no one can modernize now), and whoever's left can raise prices to their hearts content cause the competition is gone (again, not sure if that would be the case here, but that is why tarriffs exist).

[JonnyBGood]

I think it's a great idea as it'll only speed up the fall of civilisation enabling me to build my pragmatic anarcho-libertarian-individualist-capitalist-utopia in the ruins.




Don't listen to me though kids, I'm mad apparently!

[wu_trax]

and if prices rise what will happen? companies increase their production and make more steel available, which means prices will drop again.
bush already thought about extending the tariffs another few years. once the periode is over they will lobby again for more tariffs and the whole thing will continue.

[Super]

Originally Posted by JonnyBGood

I anarcho-libertarian

[JonnyBGood]

Originally Posted by Super

You can so do it too.

[Dante Hicks]

Originally Posted by JonnyBGood

anarcho-libertarian

"Libertarians are just anarchists who want police protection from their slaves" - by somebody

[Tactitus]

Originally Posted by G_frog

So, what I want to throw open to the floor is the proposition that the global trade rules as they stand are in nobody's interest. The ability of nations to have a say over their own industrial development has always been key to their ability to govern themselves and - hopefully - improve the lot of their citizens.

Nations invariably end up abusing tariffs, however "noble" their intent was at the beginning. What starts as "temporary" measures to allow industries time to reorganize become permanent supports for a stagnating status quo.

The extremely rapid movement of both manufacturing and investment, stemming from the combination of the WTO and relaxed controls of global capital flows, makes stability an ever more distant dream.

What nations should be striving for is flexibility, not stability. Industry, like life, is a continual process of adaptaion, innovation, change and evolution.

The US steel tariffs were short-sighted and wrong. Hopefully they will soon be scrapped and US steel companies can get on with the process of reorganizing their industry--or dying (their choice).

Fortunately, the advantages of world trade are so pervasive and wide-spread that it will be all but impossible to put that genie back into the bottle. Nations that aren't willing to operate in that environment will simply be left behind by those that are.

The american case merely highlights one of the problems this kind of thing can create.

Change is always disruptive, yet necessary.

[JonnyBGood]

Originally Posted by Dante Hicks

"Libertarians are just anarchists who want police protection from their slaves" - by somebody

Some realist posted above me. Quick dante let's attack him and get back to posting pointless drivel!

[wu_trax]

Originally Posted by Tactitus

Nations invariably end up abusing tariffs, however "noble" their intent was at the beginning. What starts as "temporary" measures to allow industries time to reorganize become permanent supports for a stagnating status quo.

What nations should be striving for is flexibility, not stability. Industry, like life, is a continual process of adaptaion, innovation, change and evolution.

The US steel tariffs were short-sighted and wrong. Hopefully they will soon be scrapped and US steel companies can get on with the process of reorganizing their industry--or dying (their choice).

Fortunately, the advantages of world trade are so pervasive and wide-spread that it will be all but impossible to put that genie back into the bottle. Nations that aren't willing to operate in that environment will simply be left behind by those that are.

Change is always disruptive, yet necessary.

for once we agree \o/
(im somewhat worried now )

[ChubbyChecker]

Originally Posted by Scoot951

I haven't really paid attention to this, but it seems you're under the impression that industries like to get competitive like college students like to write 40-page essays. They know that if they haven't updated by time the tarriffs are over they're dead, ofc they're going to do as much as they can.

What invariably happens is that during the protectionist period the industry concentrates its efforts on lengthening the tariffs, not modernising.

Originally Posted by Scoot951

Alternatively, they can not get the tarriffs, go bankrupt (because no one can modernize now), and whoever's left can raise prices to their hearts content cause the competition is gone (again, not sure if that would be the case here, but that is why tarriffs exist).

The tariffs have only just been introduced. What were the American steel companies doing before their introduction? Producing nothing and waiting for steel tariffs to come in? The steel companies didn't die a sudden death and they won't if the tariffs are scrapped. They would just have the incentive to modernise, or in the long term go bust.

Tariffs are a good idea in a young and growing industry that is facing competition from more experienced foreign companies. Funnily enough though this does not happen very often in developed countries and it certainly isn't the case with American steel.

[G_frog]

Originally Posted by Tactitus

Nations invariably end up abusing tariffs, however "noble" their intent was at the beginning. What starts as "temporary" measures to allow industries time to reorganize become permanent supports for a stagnating status quo.

This isn't inevitable; if it were, the Airbus consortium would never have bothered to become competitiive with american aerospace, for example. why should it? I'm willing to bet you are right about what will happen with these particular tariffs, as I have no faith in the incumbent administration (or establishment generally).

What nations should be striving for is flexibility, not stability. Industry, like life, is a continual process of adaptaion, innovation, change and evolution.

You can't have perfect flexibility. It takes time to build factories, develop infrastructures, technologies businesses and products, and train workforces. Also, flexibility may be ideal from the point of view of the investor, but hardly from the point of view of the individual or government which cannot plan ahead.

The US steel tariffs were short-sighted and wrong. Hopefully they will soon be scrapped and US steel companies can get on with the process of reorganizing their industry--or dying (their choice).

The steel tariffs were clearly wrong as far as they violate an international agreement, but beyond that is not so cut and dried. The problem with the existing system is that it either rules out or distorts any possibility of compromise. The attempt to enforce the WTO rules now looks like it may trigger another trade war with disproportionate consequences even if the WTO remains intact and in its present form.

Fortunately, the advantages of world trade are so pervasive and wide-spread that it will be all but impossible to put that genie back into the bottle. Nations that aren't willing to operate in that environment will simply be left behind by those that are.

This is a rather general statement; protectionism (particularly of fledgling industries) has historical precedents for its utility too. And anyway, can you back up your claim?

Change is always disruptive, yet necessary.

That's either a platitude, a tautology or an evident falsehood depending on how I interpret it. It certainly isn't an argument (especially as i'm advocating change too).

[Super]

Originally Posted by Tactitus

The US steel tariffs were short-sighted and wrong.

Tactitus disagreeing with US policy SHOCKER

[queball]

Originally Posted by G_frog

since when were you such an ardent free-marketeer?

I'm not convinced you can overhaul a large and creaking industry overnight.

Don't misunderstand me, I am not claiming that protectionism is always acceptable, I am only arguing that it is sometimes justified. The collapse of the US steel industry would have very large economic consequences, and would not neccesarily serve the goals of competition and efficiency. there is a difference between preventing economic and social damage and seeking further advantage. The absolute approach enshrined in the WTO is daft.

What large economic consequences? There are no mitigating factors here.

[JonnyBGood]

Originally Posted by queball

What large economic consequences? There are no mitigating factors here.

American steel industry goes bust. Massive unemployment results. Drain on social welfare system. Demand for unessential consumer goods fall. Prices fall, companies have their profit margins slashed, further cutbacks and lay-offs are imposed. Knock-on effect continues around the globe until Cambridge is burnt to the ground by hungry peasants and workers in search of juicy, well-fed middle class flesh as they cannot afford to buy food. Army is participating in the attacks rather than preventing them. queball gets eaten.

[Tactitus]

Originally Posted by G_frog

You can't have perfect flexibility. It takes time to build factories, develop infrastructures, technologies businesses and products, and train workforces. Also, flexibility may be ideal from the point of view of the investor, but hardly from the point of view of the individual or government which cannot plan ahead.

The limitations on anyone planning ahead is precisely what makes flexibility desireable. Of course perfect flexibility is unattainable, but adding government to the problem just introduces another level of bureaucracy on top of the normal business bureaucracy. By the time the government realizes there's a problem it's usually far too late (see the US steel industry in point of fact).

Flexibility is good for me as an individual as well. If the only job I could do was "steel worker" I would not be a happy camper right now.

The steel tariffs were clearly wrong as far as they violate an international agreement,

The steel tariffs have only now been ruled "illegal." When they were imposed, and during the legal challenges and subsequent appeals, they were perfectly "legal." Hardly clear at all.

I think the US steel tariffs were wrong irrespective of any international agreements.

but beyond that is not so cut and dried. The problem with the existing system is that it either rules out or distorts any possibility of compromise. The attempt to enforce the WTO rules now looks like it may trigger another trade war with disproportionate consequences even if the WTO remains intact and in its present form.

There seems to be widespread agreement in the US that the steel tariffs have not been very effective. Consequently, there is little economic justification in keeping them. The only justification for keeping them and, as it now appears for imposing them, is political. Another reason to get governments out of the tariff business.

[wu_trax]

Originally Posted by JonnyBGood

American steel industry goes bust. Massive unemployment results. Drain on social welfare system. Demand for unessential consumer goods fall. Prices fall, companies have their profit margins slashed, further cutbacks and lay-offs are imposed. Knock-on effect continues around the globe until Cambridge is burnt to the ground by hungry peasants and workers in search of juicy, well-fed middle class flesh as they cannot afford to buy food. Army is participating in the attacks rather than preventing them. queball gets eaten.

after what i have read there are 47 jobs in steel processing for every single job in steel production, so, do you think its a good idea to risk to lose 47 times as many jobs?

[JonnyBGood]

Originally Posted by wu_trax

after what i have read there are 47 jobs in steel processing for every single job in steel production, so, do you think its a good idea to risk to lose 47 times as many jobs?

I'm not following. Surely the steel industry (or part of it) shutting down will reduce jobs in steel processing?




PS Will everyone stop interpreting my jokes so seriously

[wu_trax]

Originally Posted by JonnyBGood

I'm not following. Surely the steel industry (or part of it) shutting down will reduce jobs in steel processing?

no, the tariffs do, because perfectly health american companies now have a competative disadvantage, because they have to pay higher prices for their stell than before. they make less profit and have to cut jobs. up to the consumer every step in the production chain has to pay higher prices now. thats even worse than subsidies.

PS Will everyone stop interpreting my jokes so seriously

im bored and wanted to say something

[ComradeRob]

Originally Posted by G_frog

So, what I want to throw open to the floor is the proposition that the global trade rules as they stand are in nobody's interest. The ability of nations to have a say over their own industrial development has always been key to their ability to govern themselves and - hopefully - improve the lot of their citizens. .

This is true to a certain extent. Should some tariffs be acceptable? Probably. Does this mean that the global trade regulation system should be abolished? Definitely not.

The WTO and related institutions exist for very good reasons, and whilst those reasons are not as obvious as they would have been 70 years ago, they are still valid. Broadly free trade is in everyone's interests, and there is still a need for institutions to protect this. A return to protectionism would lead to a decrease in global trade, to the detriment of everyone's interests.

The free marketeer's answer to this problem would be that tariffs are always bad, and that they should be removed. This argument is brutal, but does treat everyone in the same way. However, this does not make it the best option.

The problem with the current system is that it is so dogmatic. The free trade rules are simply unenforceable, and if the rules are such that governments feel that they 'have' to violate them for the good of their own economies then there is probably something wrong with the rules. So, with this in mind, I suppose that the best compromise would be to allow some, regulated, tariffs for special cases. This would be fair - everyone would be entitled to some degree of opt-out (the fanciful side of my mind would link this to democracy and human rights, with bigger benefits for countries with good records in these), so the freedom to act in a limited protectionist fashion would not be limited to only the largest states and trade blocs. The objective should not be to stop protectionism altogether, but rather to stop a snowball effect, which would lead to a collapse in world trade. Provide the system is stable, it should (in theory) allow for fair free trade, whilst allowing countries some ability to protect key industries from harm.

The pitfall is that the WTO is fairly toothless, and is not really empowered with the kind of abilities it would need to intervene in the event of anyone breaking the rules. Therefore it may be best to stick to the 'all tariffs are bad' approach in the hope that people will listen most of the time :\

[JonnyBGood]

Originally Posted by wu_trax

no, the tariffs do, because perfectly health american companies now have a competative disadvantage, because they have to pay higher prices for their stell than before. they make less profit and have to cut jobs. up to the consumer every step in the production chain has to pay higher prices now. thats even worse than subsidies.

Surely the converse of that effect is that the money pumped into the economy from protecting the steel industry balances the negative effects on the steel processing companies (if they employ 47 times the number of workers the overall affect will be much more diluted as well with individuals not hit as hard). So it just isolates it from the global economy temporarily so they can rebuild/spend money on action figures

[wu_trax]

besides the few protected jobs there is no positive effect that ballances anything out and even that comes for the price of even more lost jobs in companies that work with the stell and have now higher costs and are worse off on the world market than before.
in the end the american citzens have less money to spend on action figures, because they now have to pay more for stell products.

[JonnyBGood]

Originally Posted by wu_trax

besides the few protected jobs there is no positive effect that ballances anything out and even that comes for the price of even more lost jobs in companies that work with the stell and have now higher costs and are worse off on the world market than before.
in the end the american citzens have less money to spend on action figures, because they now have to pay more for stell products.

The protected jobs spend money which boosts the consumer-based economy though. I'm unsure about those lost jobs. I was under the impression that the tariffs were in place not because the steel industry was working at a slight disadvantage but rather due to the fact they were going out of business. The effect of this relative disadvantage being shifted onto an industry which employs 4700% more people (and I'm assuming these industries also produce more in monetary terms) would be more likely to be small cutbacks in wage increases and a general downturn in business rather than a complete collapse (there being obvious decisive points or areas in this overall equation). In the end the american citizens probably have the same amount of money to spend, and even if they had a bit less it'd probably mean 47 times as many people can't afford Nike Air Max for their kids this year rather than some people go homeless.


PS if the steel industry shuts down the ex-steel workers would be supported by social welfare which would be an additional drain on the economy wouldn't it?

[Super]

Originally Posted by G_frog

old fashioned trade war,

How are trade wars old fashioned?

[wu_trax]

we dont get forard with this. the few jobs that are protected cost more jobs in other industries because these industries now cant compete on the world market. they have to pay up to 30% more for their raw materials now !!! whats even worse, these industries which were not that bad off now cant help to close that giant trade deficit the us has.
it doesnt boost a consumer based economy, because everyone now either pays higher prices than before (thats called inflation) or buys foreign goods (which costs jobs in a perfectly healthy industry.

PS i didnt know your such a 'socialist'

[JonnyBGood]

Originally Posted by wu_trax

we dont get forard with this. the few jobs that are protected cost more jobs in other industries because these industries now cant compete on the world market. they have to pay up to 30% more for their raw materials now !!! whats even worse, these industries which were not that bad off now cant help to close that giant trade deficit the us has.
it doesnt boost a consumer based economy, because everyone now either pays higher prices than before (thats called inflation) or buys foreign goods (which costs jobs in a perfectly healthy industry.

Introduce more tariffs as necessary until foreign economic conditions alter. The US is certainly close to level where this would be a financially viable option (big oil reserves in Alaska which just haven't been exploited due to cost yet). The temporary economic isolation would protect the country in the short-term (inflation/wage cuts) as opposed to the immediate and harmful affect of the steel industry collapsing (huge unemployment and the associated costs on the state).

PS i didnt know your such a 'socialist'

I don't, if you notice I'm even using social welfare to help support my position, something which I do not support. I'm just arguing the counterpoint because nobody else looked like doing so which avoids the danger of dogma (<3 mill).

[wu_trax]

Originally Posted by JonnyBGood

Introduce more tariffs as necessary until foreign economic conditions alter. The US is certainly close to level where this would be a financially viable option (big oil reserves in Alaska which just haven't been exploited due to cost yet). The temporary economic isolation would protect the country in the short-term (inflation/wage cuts) as opposed to the immediate and harmful affect of the steel industry collapsing (huge unemployment and the associated costs on the state).

I don't, if you notice I'm even using social welfare to help support my position, something which I do not support. I'm just arguing the counterpoint because nobody else looked like doing so which avoids the danger of dogma (<3 mill).

you cant do that. that would mean that absolutly EVERYTHING would become more expensive, the standard of living would drop dramatically. you cant produce everything on your own, simply because 7 billion > 300 million.

[JonnyBGood]

Originally Posted by wu_trax

you cant do that. that would mean that absolutly EVERYTHING would become more expensive, the standard of living would drop dramatically. you cant produce everything on your own, simply because 7 billion > 300 million.

Maybe people should be poorer so we return to the state of nature and to the true meaning of man in his essence.





First time I ever at myself