— Everybody and his uncle are talking about the steel tariffs, so I have to jump on the bandwagon. Steel is good, tariffs are bad; a nation without a steel industry is also bad, as is dumping aimed at wrecking an industry. Milton Friedman used to say that as long as a foreign country is willing to sell us steel at less than cost, we should buy a whole shitload of it and whistle as we did it. There’s a certain logic in that, but the practice of market manipulation isn’t all that cool.
So the only way to resolve this standoff that makes any sense to me is to demand something from our domestic steel producers in return for the price protection, like a tax credit for infrastructure upgrades or basic research paid for with the tariff. If the credits aren’t claimed, we drop the tariff, but as long as our boys are doing the right thing we help them along. Americans don’t get the fact that public/private strategic partnerships are commonplace in the rest of the world, and we can’t compete in vital industries without them. Where this really makes a difference is in industries like electronics with a high R & D component.
There was a time when AT&T’s telephone monopoly paid dividends to the country through the basic research at Bell Labs, which produced hundreds of patents a year. We’ve lost that national resource, and a similar one at IBM when they lost their effective monopoly on computers. The truly galling thing about Microsoft, by the way, is that they don’t innovate as Bell Labs and IBM Research did in their heydays; the boys at Redmond simply ape the competition and drive them under with dirty tricks, but that’s another story.
Consumers aren’t going to feel the effects of the steel tariff anyay, since there’s only a couple hundred dollars worth of steel in a car, and miniscule amounts in most consumer goods since plastic and aluminum are so much more widespread. Most of the screaming is from libertarian principles which are fine in the abstract but don’t offer much guidance when somebody is punching you in the face, economically speaking.