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Max Steel in the Hour of Chaos

Seattle 1999: Students, artists, NGOs and CSOs of different stripes, joined in common aspiration with trade unions and marched together in the Coalition of the Century. Their aim was to protest the World Trade Organization’s blatantly oligarchic decision-making structure. They also spoke out against relocalization of labor. What seemed to be lacking on the agenda, however, were ideas on how to promote and keep up industrial development among the strong-end of poorer countries, where ‘sustainable’ development had long passed the project stage. These ‘developing’ lands were once prosperous economic powers whose tide had turned during the years of globalization.

An important question remains from Seattle, though. How can the present state of trade union representation in the US (and Canada) ever merge with international progressive interests? There’s been a suspicious silence on the US Left about the recent trade union demonstrations on Capitol Hill and the subsequent decision made by President Bush to impose 8 to 30-percent tariffs on foreign steel imports. The silence clamors cacophonously outside of the NAFTA zone.

The concern from abroad is clearly coming from industry. International steelworks quite obviously relies on the US for most of its purchases. The automobile, energy, and defense industries are giant customers for the sector. With the US’s new defense budget alone meant to take up nearly 40% of the world’s total arms production, there’s simply nothing surprising about the fact that the eyes of steel manufacturers worldwide are focused on the US market.

This is where the buck seems to stop for the anti-WTO movement. It’s true that the WTO is run on all but democratic principles. Its clients, i.e. those over whose commercial conduct the body judges, are the politicians and large business interests they serve. On the surface, there’s very little distinguishing the G8 clique from the rest of the (poorer) industrialized world, especially as the commercial elite of the latter has shifted its economic planning according to open market principles.

No one would be foolish enough on the North-American Left to demonstrate in favor of more equitable profit sharing with Russian or Argentine business oligarchs. This is how a perceived wealth-for-corruption trade-off motivates the possible temptation on the Left to support protectionist measures at home. Susan George may be right to throw caustic skepticism toward the remarks of the Brazilian trade minister at Seattle. In view of the demonstrations, he is reported to have called for holding the next WTO meeting on an island or yacht. The commercial, industrial and political elite do tend to party on the same boat.

But if it’s that simple, then why are foreign left-wing movement doubtful about the intentions and prospects of the North-American Left, especially regarding protectionism?

Regardless of the Brazilian minister’s taste regarding which of the world’s pleasure spots is most favorable to doing business, the fact remains that without undertaking clear steps to share the North’s industrial and commercial power, the anti-globalization movement can hardly make sound claims for increased distribution of wealth worldwide. It’s all very nice to speak out in favor of environmental concerns in the Amazon. And it is surely sensitive to address the plight of the underage laborers employed by Nike and Adidas in China or Burma. To smash this exploitation, however, does nothing in the short term, and doubtfully on the long, to stimulate the economies of these countries. Not that China needs stimulation with its 7.8% growth index for 2001: the highest in the world. But Latin American countries, crushed by the interest on foreign debt, do.

Even were we willing to debate the virtues of protectionism, the problem with the latest of the Bush Administration’s unilateral gambits lies in politics and welfare. Bush is looking in two directions at once. The steel states, Ohio, West Virginia and Pennsylvania voted overwhelming Republican in 2000, and Bush has every intention for a replay in 2004. So imposing tariffs on steel imports obviously smells of the most cynical Real Politik. The worst lie is that this measure doesn’t contribute in the least to curbing the slow slide into disfunctionality of the old-style and heavy-polluting steel mills.

Forty years ago, the five major American steel firms were among a handful of companies shaping J.K. Galbraith’s “New Industrial State”. Such was their power that the economic stability ensuing from their planning garnered these companies an aura of quasi-benevolence, and not only to Galbraith’s eyes. They were exemplary players regarding the respect of workers in view of “legacy costs”, i.e. old-age pension benefits and health care, enshrined in gold after generations of unionized struggle. After Bethlehem Steel filed for bankruptcy last fall, carrying along with it the massive legacy obligations of another era, it seemed like the sixties had dissipated in its smoke stacks.

As much as President Bush would like to appear as guaranteeing “legacy costs” in this latest move, the steelworks workers should not be fooled by the measures taken. Bush is using a familiar tactic to bring relief to anxious pressure when things aren’t going well at home. In simple terms, this is called scapegoating. If it weren’t already a golden rule to never trust any politician who first puts the blame, and puts the blame heavily, on a foreign competitor, Bush’s accusation of foreign governments’s “subsidizing” their own steel industry clearly discredits any rationale his unilateral decision may have had.

The fact is, as the EU, Australia and Brazil will surely stress during their protest hearing at the WTO, the pressure on US steelworks has less to do with foreign competition that an internal industrial and commercial shift due to industry deregulation and the strong dollar. The codename for this in the business is “mini-mills”. Mini-mill technology allows faster production times and large-scale energy savings when compared with conventional steel mills. The result is improved profitability for the mill operator and a higher-quality product for the customer. They are also more environmentally friendly than the conventional or integrated mills that make steel from iron ore in coal-fired furnaces.

Once the pillars of the economy, the conventional mills form the sector that has recently brought failure upon failure in profits and production alike. Cost advantage for mini-mills reaches 25-percent over conventional ones. Marketshare for mini-mills has grown from 10-percent in the seventies to 50-percent today. Conversely, the share of imports has increased by only 10-percent overall during the same period. Such figures, coming as they do from a neo-conservative think tank like the Heritage Foundation that disagrees on principle with tariffs, should make the President’s decision even harder to understand_provided it stands on something more than the lowest grade of cynicism.

In a Washington Post article dated March 6, furious lobbying was reported from the steel-consuming industries against imposing tariffs. The result of the tariffs is not only going to hurt importer firms and countries. Tariffs are meant to allow price increases by domestic manufactures, surely meant to affect prices of any steel-based products, cars being the first among them. The President’s misguided decision reaches suspense levels as Max Steel spreads economic irresponsibility over the whole NAFTA zone. Because the bitter twist to this story is that more jobs will be lost over all than would be saved in the steel industry.

A final, vastly underreported, mystery remains. What’s the responsibility of the lobbying stemming from the minimill sector? There’s been no respite to their continuing chewing away of marketshare. Certainly they have no worries to face with health care and pension benefits for their staff: most of their qualified labor is hired on contract. So long as the conventional mill based industry endures, mini-mills are forced to compete on two fronts against the international crew and the old-stock. Wouldn’t it be interesting for the mini-mill industry to oversee a faster demise of the conventional sector? The cost-efficiency of mini-mills is certainly the product of automation and I.T. But they would never have reached such efficiency were it not for the virtues of market deregulation.

The mere fragility of the conventional mill recovery may disqualify any feasible solutions not extending many years into the future. Such market and industry patience, faced with the quick gains of automation, are no longer favored by Washington D.C. economic planners. Which is why if the steelworks workers deserve anything, it’s indemnity. But Bush’s wealthy, soon-to-be debtor government is only generous toward its friends and interests in energy and defense.

Giving workers indemnity for outstanding “legacy costs” is surely no way to run an economy on the long term. Nor is giving handouts to companies who no longer show prospects of recovery after having failed to keep up with changing economic times. Strikingly, the first solution requires no international multilateral organization, such as the WTO, to supervise. On the other hand, the IMF has strict guidelines against indemnities of any sort, particularly when a country is compelled to ask for loans due to being weighed down by repaying the interest on prior ones.

Nor does the WTO pay the attention it should to the influence of lobby groups as they compel leaders to push for clever and underhanded industry subsidies. Perhaps debate on lobby groups at the WTO takes place behind closed doors_though for such matters mere mortals are left to chew the cud outside in the pastures. Which is another reason why the WTO must be made more transparent.

Since Seattle, there’s been an uncommon alliance between trade unions and the G8 anti-globalization movement. Their demands on G8 governments have been met with violence in an attempt to smash calls for greater democratic participation in the G8 economies by as broad a political spectrum as possible. This is what inventive politics is all about. It’s also what frightens the hell out of the power brokers, a pertinent point given the monopolistic ownership and control of the media and press by which to skew or starve any opposing analyses.

Neither trade unions nor the anti-globalization movement can afford, if they seek international credibility, to call for tariffs. Tariffs imply one and only one thing: the way the elite of a wealthy country keeps its wealth to the detriment of others. This may sound like a great strategic move in football. But as far as North American society is concerned, it is backward economically, a catastrophe for the environment, while volatilizing the world situation in such a way that no country can finally be at ease when the strongest side only plays winning matches.

Trade wars are nothing new. In the imperial past, the globalization of its day, the Portuguese and English were at war against the Dutch more for trade reasons than strictly colonialist ones. But separating the two doesn’t really mean much apart from how your enemy fares in the end: dead, or in growing or dire poverty. Which is why there’s no difference fundamentally between a military intervention and a trade war. We’re not seeing bloody war these days on the trade front, at least as far as licit material is concerned, simply due to the US’s unmatched military superiority. No one in France, and hopefully in the US, would like to the see the Eiffel Tower bombed.

On the other hand, the situation is such today that the G8 countries, and first among them Canada and the US, must come to terms with some basic economic realities. Despite what lobby groups claim, the world’s poverty has grown exponentially through the years of so-called globalization. The majority of the poor, when they’re able to work, are being desperately exploited in only but the purest of Marxist terms. Casting economic punishment on countries whose economies are less stable than the North’s is a recipe for smashing the economic growth their planners have engaged in precisely along the lines preached by the US and their mouthpiece, the WTO. That the WTO is also a means for the industries of the developing countries to have access to wealthier markets and currency has its reason for being after all. We in the North who are interested in seeing the tide of the world’s poverty ebb, and analyze both wealth and poverty as functions of scarcity, have to convince our fellow citizens to conceive of living frugally until a far greater proportion of our southern neighbors are able to see regular, healthy meals on their tables. Managing to convince is when ideas finally begin flexing their own mettle.

Norman Madarasz is a philosopher based in Rio de Janeiro and Montreal. He is editor and translator of Alain Badiou’s Manifesto for Philosophy, published at SUNY Press in 1999. He can be reached at n_madarasz@hotmail.com

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