What Protectionists Intend

by Don Boudreaux on September 24, 2006

in Politics, Trade

Yesterday’s Baltimore Sun published this letter from U.S. Senator Barbara Mikulski (D-MD):

The Sun’s column "American workers caught in steel trap" (Opinion •
Commentary, Sept. 19) condemned politicians’ silence on the demise of
American steel jobs.

But I have not, and will not, stop fighting for steel.

Since I came to Congress, I have fought for measures to protect America’s steel companies and its workers.

I called on the president to impose trade tariffs on steel to level the playing field.

I fought for the creation of the Emergency Steel Loan Guarantee Program
to provide emergency loan guarantees to help steel companies weather
the storm.

And because of the many jobs lost in the industry,
I also had to fight to protect pensions and health care benefits of
retirees left in the cold.

Most recently, I helped craft the Pension Protection Act, which does a great deal to protect retirees’ pensions.

I stood up for steelworkers and steel companies to ensure that
government rules don’t exacerbate the economic difficulties of a sector
struggling to compete.

But years of unfair foreign trade practices have scarred our domestic industry.

And the indifference by the current administration to the woes of our
steel industry is costing America an important segment of its economy.

This will come back to haunt us.

Barbara A. Mikulski
Washington

I sent the following letter in reply:

Editor, The Baltimore Sun

Dear Editor:

Let’s
reveal the ugly underbelly of Sen. Barbara Mikulski’s letter in which
she boasts of her support of special government privileges for the
steel industry (Letters, September 23).

She writes: "I have
fought for measures to protect America’s steel companies and its
workers."  This sentence instead should read "I have fought for
measures to shield America’s steel producers from the rigors of
competition by preventing American consumers from spending their money
as they deem best."

She writes: "I fought for the creation of
the Emergency Steel Loan Guarantee Program to provide emergency loan
guarantees to help steel companies weather the storm."  This sentence
instead should read "I have fought to force taxpayers to subsidize
steel companies that are too inefficient to get adequate private
financing."

Were she truly honest and courageous, Sen. Mikulski
would summarize her position by saying "In short, I have worked hard to
appease a powerful interest group – and to improve my chances of
staying in the Senate – even though doing so makes most Americans
poorer and less free."

Sincerely,
Donald J. Boudreaux

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  • medusa

    "Let's reveal the ugly underbelly of Sen. Barbara Mikulski's"


    ewwwwwwwwwwwwwwww...


    Seriously, she perfectly represents her constituency. Very charitably their motives are considered ignorant or misguided but at their heart is thievery. Oh, how shall we divvy up the booty??

  • Kent Gatewood

    I take it that there are no tariffs on steel now?

    If you would compensate unemployed steel workers, would you compensate the owners of the steel companies?

  • I once told my brother (who works in the steel industry) that it would be cheaper for the US to continue to let other countries "dump" their steel on the US market, let American steel companies collapse, and put all unemployed American steelworkers on welfare, than it would be to "protect" the American steel industry.


    He was absolutely livid at the suggestion, probably because I basically told him that sitting on his butt all day drinking beer and watching TV would be more beneficial to the country than the 12 hours a day he puts in at the steel mill.


    Despite taking offense, he still didn't have a rebuttal.

  • Tarran,


    So what you're saying is that the protectionist measures destroyed a number new and growing, steel-using companies in order to protect steel workers and a handful of large, yet stagnant steel using companies.

  • Mr. Econotarian

    Best...letter...ever!

  • Are these people that ignorant, or that crooked? Which is worse? ;-(

  • Peter

    It might be due to the fact that I just read Atlas Shrugged, but does her letter appealing for protectionism not sound like something taken directly out of that book? It was written 50 years ago, and what have the people in power learned?

  • As an ex-steelworker, I saw first hand how much havoc was wreaked by Sen Mikulski, Geroge Bush and their socialist friends.


    Not only did the price of steel go up in 2002, but there were massive shortages. We were able to concentrate on long term orders, and companies that did not have long term cotnracts (generally small businesses whose consumption was too small or irregular to justify such contracts) found themselves unable to get steel: they had to wait six months for their orders of steel to be delivered, and what small businessman can afford to keep customers waiting for half a year?


    The result of these shortages was quite predictable, the number of jobs lost in the steel-consuming industries far exceeded the number of jobs "saved" in the steel industry. We all paid higher prices for goods and services in order to "protect" an industry that has been screaming for federal protection from foreign competition since the 1820's.


    In the end, the politicians, and steel-maker lobbyists didn't save the industry, but only delayed necesarry contraction and consolidation in the U.S. steel industry, and left consumers poorer.

  • KRM

    Last week I bought a stainless steel toaster oven made by LG. I wanted to get the American stainless steel toaster, but I couldn't find any. Thanks to U.S. steel companies and their union workers, I have to use a Korean made toaster. On the bright side, it's (so far) the best and nicest looking toaster oven I've ever used.

  • Even more straightforward, you could explain how this sentence is the exact opposite of the truth:

    "I stood up for steelworkers and steel companies to ensure that government rules don't exacerbate the economic difficulties of a sector struggling to compete."


    She actually ensured that government did exacerbate the economic difficulties within the sector - both by straining the steel companies by forcing them to pay for pensions they could not afford and by subsidizing the companies in the sector to the detriment of entry, innovation and competition.


  • Adam

    I'm curious as to whether you sent this letter to the senator's office, and what response (if any) you might get.

  • It should still be within peoples' memory that the last time such protection was put in place it did serious harm to the steel-using industries.


    There is a company in the Milwaukee area, P&H Mining Equipment, which went into reorganization a few years ago and it looked like the employee retirement fund was at risk. Right now they are again in excellent shape, and actively seeking to hire welders, mostly because of overseas orders. Drive up the price of the steel they buy, and those overseas orders will be put at risk.

  • Cris

    [applause]. Well said, as always.

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