Scott Lincicome decries Biden’s abuse of national security to block Nippon Steel’s acquisition of U.S. Steel. Two slices:
Today, President Joe Biden blocked Nippon Steel’s proposed acquisition of US Steel on the grounds that “there is credible evidence” the Japanese steelmaker “might take action that threatens to impair the national security of the United States.” What “credible evidence” might push the president of the United States to block a multi-billion dollar investment in an ailing American steel company by a publicly traded corporation headquartered in one of the United States’ closest allies? Well, Biden never says, perhaps because—as I wrote right before the holiday—there is none.
…..
As I wrote last month, however, “the politicization of the Nippon Steel deal and ‘national security’ has potential harms that go way beyond the two companies or even the industry at issue.” In particular, it risks damaging the US investment review process; US-Japan relations; the United States’ position as a welcoming place for foreign investment; nations’ general rule against using “national security” as a guise for political favoritism and economic protectionism; and the US economy itself.
Also decrying Biden’s cronyist act to block the Nippon-U.S. Steel deal is the economist Jason Furman:
President Biden claiming Japan’s investment in an American steel company is a threat to national security is a pathetic and craven cave to special interests that will make America less prosperous and safe. I’m sorry to see him betraying our allies while abusing the law.
[DBx: Nearly all protectionism in theory – and absolutely all protectionism in practice – is an act of economic masochism.]
President Biden’s order on Friday blocking Nippon Steel’s acquisition of U.S. Steel is an act of economic masochism that will harm U.S. manufacturing and security. It is also a corruption of the Committee on Foreign Investment in the United States (Cfius) for raw political favoritism that will harm the U.S. reputation as a destination for capital.
…..
None satisfied United Steelworkers boss David McCall, who favors a tie-up with Cleveland-Cliffs, which was outbid by Nippon Steel in 2023. Cleveland-Cliffs CEO Lourenco Goncalves lobbied the White House to block the Nippon deal because he wants to create a steel-making cartel shielded from foreign competition by tariffs and Buy America rules.
A Cleveland-Cliffs-U.S. Steel combo would control 100% of U.S. blast furnace production, 100% of domestic steel used in electric-vehicle motors, and 65% to 90% of other domestic steel used in vehicles. But Cleveland-Cliffs—currently valued at $4.7 billion with $3.8 billion in debt—will struggle to find the money even to buy U.S. Steel, much less to invest enough to revitalize its factories.
Here’s Sen. Rand Paul (R-KY) on Biden’s move:
Blocking the sale of a struggling company to a stronger company simply steals value from what’s left of US Steel and hurts its remaining workers by blocking the billion dollar infusion of cash Nippon Steel promises.
Another opponent of Biden’s officious intrusion into the Nippon-U.S. Steel agreement is Ethan Dodd. Two slices:
Back in April, when President Joe Biden was still running for reelection, he told a gathering of steelworkers in Pittsburgh that “I have your back.” On Friday morning, just three weeks before leaving office, he stuck a knife in their backs.
He did so by blocking Japan’s Nippon Steel’s proposed $14.9 billion purchase of the once-iconic, now-declining U.S. Steel. The ostensible rationale was “national security.” As Biden put it in a statement Friday morning, “It is my solemn responsibility as president to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry.” He added, “And it is a fulfillment of that responsibility to block foreign ownership of this vital American company.”
…..
Shortly before Christmas, the Committee on Foreign Investment in the United States, which is part of the executive branch and includes representatives from a number of cabinet departments, found itself unable to come to a unanimous decision about whether or not the Nippon Steel deal should be stopped. According to the Financial Times, the three most important committee members—the Treasury Department (which leads the committee), the State Department, and the Pentagon—found no security risks. In other words, in kowtowing to a union leader who has been a long-time political ally, Biden ignored the wishes of an important ally, Japan; members of his own cabinet; and the union workers themselves. He is also hurting the country, which would be far better served if Nippon Steel reinvigorated U.S. Steel, something it is uniquely positioned to do.
A final irony: On the same day Biden blocked the Nippon Steel deal on “national security” grounds, the U.S. approved the sale of $3.6 billion worth of air-to-air missiles to Japan.
By intervening in the private business affairs of the two companies, Biden is demonstrating once again his expansive view of executive power, hubristic sense of government’s ability to order economic affairs, and willingness to stretch the definition of “national security” to justify his big government agenda even when there is plainly no national security threat.
Those elements have been central to Biden’s political persona for decades. Even as his charisma and mental facilities have failed, they remain. From his earlier support for the drug war, the USA PATRIOT Act, and Obamacare to his administration’s attempts at broad student loan forgiveness and inflation-inducing Bidenomics, Biden has rarely been deterred by norms or laws that limit federal power or by economic good sense. If there’s something Biden wants to do, he’ll simply find a way to do it.
…..
Officially, Biden says he’s blocking the deal because there is “credible evidence” that the deal “threatens to impair the national security of the United States.”
The official order signed by Biden laughably fails to detail any of that supposedly credible evidence, however. That’s because it’s ridiculous to suggest that Nippon Steel, a publicly traded company based in a close American ally (Japan) that already operates several steelmaking facilities in the United States, is any sort of threat.
Government intervention in the economy, to nearly any degree, never works well because the government is incapable of knowing all the information that goes into, for instance, making cars or anticipating what consumers want. All that data only works harmoniously (and spontaneously) in a free market. As economist Friedrich Hayek explained, “The free market constitutes an information-gathering process, able to call up and put to use widely dispersed information that no central planning agency, let alone any individual, could know as a whole, possess or control.”
Thus, it is no mystery why the government did not invent the iPhone or Uber.
You’d think that real estate tycoon Donald Trump and venture capitalist JD Vance understood that, and perhaps they quietly do. But their proposed meddling in the market through industrial policy is a form of what Ludwig von Mises, Hayek’s mentor, called interventionism, or “a hampered market” economy. (Bear in mind that the Biden, Obama, and Bush administrations also implemented industrial policies.)
