This DiMicco Guy Is Precisely the Sort of Business Person Upon Whom Adam Smith Rightly Poured Such Scorn

by Don Boudreaux on March 23, 2017

in Crony Capitalism, Trade

In the comments section of Kristofer Harrison’s nice expose of the cronyism that drives Uncle Sam’s protection of U.S. steel producers, Daniel Dimicco – former CEO of Nucor Steel – wrote:

Your commentary couldn’t be more misleading and dead wrong. Rather than the picture you paint, the Steel Industry is the “canary in the coal mine”. It is the case study for the Massive trade Mercantilism and cheating that China is perpetrating on the USA’s entire Manufacturing sector. Your propaganda doesn’t pass the smell test!

I could not resist responding to DiMicco’s mercantilist myth-spreading:

Mr. DiMicco:

What doesn’t pass the smell test are your apologies for trade restrictions.

Knowledgeable people are aware of the parade of excuses that you and other trade-restrictionists offer for why American consumers should allow Uncle Sam to force them to pay higher prices so that steel-industry operatives reap more revenues. None stand up to economic or ethical scrutiny.

You say that foreign steel producers are subsidized. So what? If true, this fact means only that Americans get better deals on steel. If foreigners wish to give to Americans the gift of lower-priced steel, who are you – and who is the U.S. government – to prevent American consumers from accepting this gift?

Your success in preventing us from accepting such a gift makes us Americans as a whole poorer than we would otherwise be, despite the fact that such “success” conveniently results in higher revenues for domestic steel producers.

You will, in response to this argument, ominously warn that if Uncle Sam doesn’t “retaliate” against artificially low-priced imported steel from China, then Chinese producers will eventually bankrupt all American steel producers and, thus, one day hold monopoly power in the American market. Sounds scary – but it’s a fanciful tale. Today, steel is produced in at least 37 countries (and by many more times that number of individual firms). Even if all U.S. steel producers do go bankrupt – and even if no new steel producers will be able to be launched in the U.S. in the future – and even if we ignore the many substitutes for steel such as aluminum and carbon fiber – with so many suppliers of steel in the world it’s incredible to suppose that Chinese steel producers will ever have monopoly power in the American market. (Protectionists such as yourself have a lot of cheek: among your familiar tactics for securing monopoly power for yourselves is to instill in people an implausible fear of monopoly power from abroad.)

The bottom line, sir, is that producers’ existence and operation are justified only if and insofar as they serve consumers. You, however, operate under the false and self-indulgent assumption that consumers exist to serve producers. If consumers aren’t spending their money in ways that promote the interests of U.S. steel producers, you run to the government and demand that it force consumers to change their spending patterns. Of course, you dress up your resort to coercion against consumers with all sorts of fine talk about “fairness,” and “level playing fields,” and “playing by the rules.” But this talk is disingenuous (although you might now be so unreflective that you’ve come to believe it). The trade “rules” that you and other protectionists are so fond of saluting are nothing more than arbitrary restrictions written by government officials to appease special interest groups (such as steel producers). These “rules” violate a more sacred rule – a more sacred right – the right of people to spend their money in whatever peaceful ways they choose.

Protectionism is simply an elaborate and devious means used by some – in this case, U.S. steel producers – to rob the American public.


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