Sunday, July 23, 2006

Sympathize, but don't forget economic reality

It's a real tear-jerker of a "news" article: a West Virginia steel town gradually dies out. As steelworkers lost their jobs, they could no longer afford to patronize the local businesses, which depended on the steelworkers' income. The article describes how things used to be, when the steel mill jobs were steady and allowed a comfortable living. Then after touching on the effect of foreign steel exports to the U.S., the article obfuscates the real problem by laying the blame on those evil capitalists:

"The mill changed hands twice in the next 18 months, swapped by billionaires Wilbur Ross and Lakshmi Mittal like pieces on a Monopoly board."

"Decisions by executives studying spread sheets half a world away...[workers] thought they'd always have pride in a job well done and the power to control their own destinies."

The Weirton steel mill's troubles occurred while U.S. manufacturing output as a whole has soared. The rest of American manufacturing didn't seem to have as much trouble, because the successful companies excelled in where they had comparative advantages, or they shifted to products where they would excel. However, the Weirton mill and others failed only because it couldn't compete, and because the workers refused to move on. The companies were dinosaurs compared to foreigners who were more efficient and willing to sell for less. Yet rather than streamline operations, and perhaps produce only the types of steel in which they had a comparative advantage, the American steel mills instead clamored for government to "do something." They even held a rally in 1998, selfishly "demanding the federal government stop imports."

I say "selfishly" because protectionism ensures higher prices so that domestic manufacturers remain solvent, but everyone else suffers. Now, the steelworkers may consider their jobs a "birthright," but how is it their right to compel the rest of us to pay their higher prices because they abuse government's power to prevent us from buying cheaper substitutes? How is it their right to abuse government's power to protect their livelihoods, destroying the livelihoods of others in the process? President Bush's steel tariffs may have been modest, and they may have temporarily saved tens of thousands of steelworkers' jobs, but they still led to the loss of 200,000 jobs in the rest of the American economy. And that was before our European trading partners started enacting retaliatory tariffs!

One thing in the article that really bothered me is that when the couple met, he was 18 and she was 12. I could understand if meeting is all that happened, but "love at first sight" for him?! That was in the early 1970s, not the 19th century.

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