The Rise of Steel Part II

Well, people make plenty of money while the fitness is being reduced. The costs are spread widely, but the benefits felt narrowly.

The protected industry doesn't always vanish, sometimes it re-invents itself. The US semiconductor industry was protected in the 1980s: https://www.nber.org/system/files/chapters/c8717/c8717.pdf

Yes and no. It doesn't always go that far. Sometimes dirigisme has a success story such as the development of semiconductor manufacturing in Taiwan or Brazil's plan to back national champions in areas such as aviation and meatpacking. (Ride in an Embraer E-Jet, never mind a A220, and you will experience for yourself why the 737 is obsolete. On the other hand, massive subsidization of both Airbus and Boeing has contributed to an absence of competition for the narrowbody jets such that a 1967 jet competes with a 1987 jet -- although even an evolved 1987 car would struggle to meet current safety and environmental requirements.)

More often a government chooses to coddle a "national champion" that turns out to be irrelevant in the larger industry, such as many European car manufacturers. Cases like that unfortunately don't lead to death but instead can linger on for decades and have a negative impact on all sectors of the economy (because of dirigisme in steel, you're stuck driving an expensive low quality car, paying extra taxes for the privilege, and forgoing public services and investment that really would help you.)

See also https://en.wikipedia.org/wiki/Corn_Laws a story which is by no means over...

It can be complicated. Think, initially, protectionism will benefit almost everyone involved in the economy. But the effects will largely depend if the industries (ie: individual companies) being protected are able to recover fast to catch up with foreign competitions.

This is where trouble happens. For that, if these industries fail to compete, what they'll ask for is more "protectionism" and usually it's downhill from there. They'll become a tax on the broader economy; and the practice of protectionism will find grounds to spread to other sectors.

Labor is a very small part of steel making. What maters most is the availability of needed resources, specifically energy and iron/coal. Then comes distance to markets and environmental regulations. Doubling/tripling/halving the cost of people is a secondary consideration.

The steel industry was hollowed out long before trade was opened with ‘the new China’.

I wouldn’t say protectionism is inevitably a bad policy, but it frequently is, may be so by default, and it is not driven by movements for justice and equality but rather by ‘special interests’ that can feed back a small amount of their gains to finance politicians and thus put their ‘activism’ on a sustainable basis.

doesn't seem plausible that the difference between 12000 dollars per year per worker and 120000 dollars per year per worker would be a large fraction of the price of the steel produced

first steel mill i googled up is https://monvalley.uss.com/uss/portal/monvalley/monvalleywork... which produces 2.9 million net tons of steel (net of what?) with 3000 employees

that's about a thousand tonnes per employee

shitty steel costs about 50¢ a kg, so that's half a million dollars per employee per year, but fine steel can cost 10 dollars a kg, which would be ten million dollars per employee per year

the cost of shipping shit across the pacific varies wildly, but it is often about 3000 dollars per 40-tonne feu, which is about 8¢/kg, comparable to the cost of a steel mill employee making 80000 dollars a year, so it is plausibly false to say that 'a Chinese steelworker makes only about USD 12,000 per year, which more than makes up for any costs involved in shipping the steel across the Pacific to the US'

also as paul houle points out, the collapse of the steel industry in the us happened 50 years ago, at which point prc was not a significant competitor

if there's robust domestic competition driving innovation and better technology usually there are no calls for protectionism; it's your overseas competitors who have to worry about getting undercut by you, not vice versa

>I think the real reason Wall Street made the decision to move US steel production

This is quite the statement, Wall Street didn’t do anything. Foreign countries developed their own steel industries and the US couldn’t compete. This had little to do with Wall Street. The largest steel companies aren’t US subsidiaries that moved production offshore. Chinas steel industry is dominated by large state owned enterprises.

CHIPS act spending is going to be a boondoggle. There isn't significant local demand for ICs. Nearly all production is in SEA so anything made in the US has to be shipped back for assembly. That means the only devices worth making are higher margin VLSI parts. Anything cheaper will not be profitable without protectionist subsidies.

It's pretty damning when Micron has funding for a new factory handed to them and then they have mass layoffs a few months later.