Thursday, March 8, 2018

A Trade War?


 Electric steel furnace, 1941.

I've mentioned more than one time that I regard Catherine Rampell of the Washington Post as a snot.  The youthful Ivy League educated Rampell doesn't have the experience at anything real necessary for her opinions usually to be worth considering.

I note that as her most recent article on the upcoming, apparently, Trump tariffs was a really good one, and she deserves credit for it.

I'd think that, of course, as it points out something that I already have in regard to coal, that being the advance of technology and how that plays out in trends of production.  Indeed, on her article on American steel production and tariffs (which isn't much longer than a lot of my longer articles here. . .indeed it's shorter, she points out, correctly:
But here, too, Trump ignores the bigger force at work: robots. Like steel, coal extraction has seen big productivity gains. Coal has also been displaced by natural gas, which itself has seen gigantic technological gains in the form of fracking.
Yup.

Anyhow, on steel, Rampell points out:
We're producing about as much steel today as we did 30 years ago. But we're doing it with less than half the workers. That's primarily because of technological advances -- or, to oversimplify, robots.
The story is the same in many industries. As Chad Syverson, an economics professor at University of Chicago's Booth School of Business, puts it: "We get better and better at making things, and we've needed fewer and fewer people to make those things."
The steel industry in particular has been transformed in recent decades. It shifted away from vertically integrated plants that smelted their own steel from scratch toward more-efficient, highly automated "mini-mills," which primarily recycle existing steel and employ many fewer people.
Thirty years ago was around 1990, which was hardly the golden age of American steel, it should be noted.  But that's part of the problem as well.  Rampell correctly points out that technology has moved on and the way steel has produced in the past thirty years has changed.

Nothing is bringing the smelting methods of 1990 back.  That era is over.  A new one is here and tariffs aren't going to impact that at all.  And if 1990 isn't coming back, 1930 really, or perhaps more accurately 1970, really isn't.

And when people think of this topic, if they're in favor of this move, that's what they're really thinking of.  Indeed, the Trump spokesman who spoke in favor of the tariffs on the weekend show made that plain, pointing out that our current favorable treatment of foreign steel came about following World War Two, when we were trying to help restart the world economy.

Our policies then may or may not have been in error.  No matter what was the case, if we really intended to address the decline of American steel through tariffs, it would really have been the 1970s when we should have done it.  We didn't.  It's too late now, the industry moved on in the environment that existed.  And part of that environment is radically new production environment.

Unlike coal, steel (and aluminum) aren't in a long term global slide.  But production methods are changing. They were never static.  Tariffs, however, don't change much in how they operate from year to year.  Tariffs here are, frankly, way too late.

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