AHC: Carter saves the U.S. Steel Industry

[History Learner]

Potential unintended consequence: there's a possibility the bailout could make further ones politically unpalatable going forward into the ATL 1980s. That's major because the Latin American Debt Crisis is still going to happen and an inability to marshal the will to bailout Mexico and, by extension, American banking interests could possibly result in a 2008-style meltdown in the early 1980s.

 

[Johnrankins]

You'd have to put someone like Deming in charge; but since it's not WWII and we don't need to outproduce the Axis, nobody wants people like him spoiling their personal empires.

Denning was able to do what he did BECAUSE we had to outproduce the Axis and that was a pretty big incentive. During peacetime, he would have had to face the normal bureaucratic backstabbing, nest building, power games, and squablling. The war itself lessened all that.

 

[Johnrankins]

Potential unintended consequence: there's a possibility the bailout could make further ones politically unpalatable going forward into the ATL 1980s. That's major because of the Latin American Debt Crisis are still going to happen and an inability to marshal the will to bailout Mexico and, by extension, American banking interests could possibly result in a 2008-style meltdown in the early 1980s.

Possibly, particularly if it doesn't work. If the whole thing collapses like a house of cards 3 years later with the government having nothing to show for it but a pile of debt it is going to make it much tougher.

 

[History Learner]

However, modernisation would likely reduce the need of manpower, reducing the job creation effect.

To me, that’s the slow-motion crisis of automation.

If high-quality steel becomes cheaper and more abundant, won't that generate more jobs in the industries that consume it?

Having done yet more research on this specific area, I've honestly arrived to the conclusion it isn't Automation in of itself that is the issue:

This question of what happens next is thus central to the economy’s trajectory. Without the productivity gain, nothing happens. Workers able to produce more than before, for whatever reason, is the sine qua non of economic progress. But only if accompanied by rising output are the effects for workers undeniably positive.

Historically, that has been the dynamic. From 1947 to 1972, for instance, economy-wide productivity roughly doubled. But output surged as well and, at the end of the period, the same share of the population was working and men’s wages were up 86%. In the manufacturing sector, productivity rose by 3.4% annually, but real value added rose by 4.2% annually; employment during the period rose by more than three million.

Compare that period to the 21st century, when America has lost nearly five million manufacturing jobs. Was any of this because of extraordinary technological breakthroughs that caused productivity to surge, allowing firms to do much more with many fewer workers? No. In fact, the average rate of productivity growth in manufacturing this century has been 3.1%—lower than 1947–72 and no different than 1972–2000. But output growth has been only 1.3%, less than a third the rate of the earlier period. We’ve gone from the world where firms use a doubling of productivity to double output, to one where they use it to lay off half their workers. Had output growth this century equaled that of 1950–2000, manufacturing employment today would be near an all-time high.

So when policymakers blame automation for job losses, they are looking in the wrong place. Productivity gains have always been with us—in fact, they used to come faster. If anything, the American economy is suffering from insufficient automation—as reflected in declining productivity growth, stagnant wages, and remarkably little use of robots. American manufacturers use only 200 industrial robots per 10,000 workers, the standard measure of adoption. In both Germany and Japan, that level exceeds 300. In South Korea, it exceeds 700. With greater automation and higher productivity, American firms would likely be more competitive in the international economy.

In another example, it's been known for several years now that production is starting to shift to Southeast Asia. That's very interesting because Southeast Asia is leading in Robotic adoption for industry.

 

[GeographyDude]

Having done yet more research on this specific area, I've honestly arrived to the conclusion it isn't Automation in of itself that is the issue:

“ . . . From 1947 to 1972 . . . In the manufacturing sector, productivity rose by 3.4% annually, but real value added rose by 4.2% annually; . . . ”

And then from 1973 forward, annual productivity grew more modestly. And just a little bit more modestly at that.

But maybe that was enough to motivate executives to look for profits in other areas, such as aggressively cutting expenses such as payroll?

 

[GeographyDude]

https://www.c-span.org/video/?454499-2/the-future-worker
Please see 5:05 into the speech where Oren is disagreeing with something Adam Smith said.

Now, Oren’s a conservative, and he’s saying jobs, self-sufficiency, and healthy and functional communities are more important than yet more stuff.

He also says that at some points conservatism parts intellectual company from libertarianism.

 

[Johnrankins]

https://www.c-span.org/video/?454499-2/the-future-worker
Please see 5:05 into the speech where Oren is disagreeing with something Adam Smith said.

Now, Oren’s a conservative, and he’s saying jobs, self-sufficiency, and healthy and functional communities are more important than yet more stuff.

He also says that at some points conservatism parts intellectual company from libertarianism.

Depends on both the Conservative and the Libertarian. Both are pretty big movements.

 

[History Learner]

And then from 1973 forward, annual productivity grew more modestly. And just a little bit more modestly at that.

But maybe that was enough to motivate executives to look for profits in other areas, such as aggressively cutting expenses such as payroll?

The reoccurring theme seems to be a failure to invest in modernization techniques; for the Steel industry in particular the “Big Three” completely failed to adopt the Basic Oxygen method despite widespread agreement across trade publications about its superiority and even the adoption of it by their domestic competitors.

 

[GeographyDude]

Depends on both the Conservative and the Libertarian. Both are pretty big movements.

I think we have to distinguish between the pipsqueak Libertarian Party on the one hand which basically has gone nowhere,

and libertarian ideas on the other which have gained much greater currency over the last 40 years, both as some people have gotten richer — and as other people have gotten poorer and gone back to tried and true ideas which aren’t all that tried and true!

as an example,

I’m going to pull the vote totals for the repeal of Glass-Steagall in 1999, which both the House and Senate voted for by big majorities. And just to be clear, this was not the only factor in the 2008 financial crisis, but it was a contributing factor.

—————-

In Nov. 1999, the U.S. House voted 362-57 to repeal (major aspects) of the Depression-era Glass-Steagall.
http://clerk.house.gov/evs/1999/roll570.xml

The U.S. Senate voted 90-8 to repeal.
https://www.senate.gov/legislative/...ote_cfm.cfm?congress=106&session=1&vote=00354

 

[Johnrankins]

Conservative anger is NOT because of Steel Workers, if nothing else Labour still support Democrats for many decades, it only got slowly reduced over time until Trump finally win Rust Belt. The anger come from loss of Reagan, HW Bush tax betrayals, Bill Clinton and his friendship with Black, etc. Conservative is not same as former steel workers. In fact, conservative since Reagan time had been opposed to Big Labor, helping Youngstown would anger them more,it would be seen as Socialism.

Bill Clinton won the WCW as did BARACK OBAMA. They didn't care less that Bill Clinton liked Blacks, they voted for the Black guy themselves, twice. The problem for HRC was HRC and no one or nothing else. She likes to blame everyone but herself for her screwup. She had the election more or less wrapped up IMO and then has to go out and call half the country "deplorable". That cost her the election, not racism, not sexism but her own stupidity. How she thought it was a good idea to insult the people she wanted to vote for her is beyond me.

 

[kholieken]

Bill Clinton won the WCW as did BARACK OBAMA. They didn't care less that Bill Clinton liked Blacks, they voted for the Black guy themselves, twice. The problem for HRC was HRC and no one or nothing else. She likes to blame everyone but herself for her screwup. She had the election more or less wrapped up IMO and then has to go out and call half the country "deplorable". That cost her the election, not racism, not sexism but her own stupidity. How she thought it was a good idea to insult the people she wanted to vote for her is beyond me.

Eh, I think "deplorable" gaffe is overrated. It didn't affect much. Clinton widely disliked because two decades of Republican propaganda and latent Sexism. her campaign did make mistakes, but it based on view that Rust Belt would vote Democrats, which historically true, and no one saw otherwise.

As for WCW, there are many survey that show cultural explanation, aphorism about how minorities "jumping the queue to success", that factor to their vote in 2016. They did vote for Obama in 2008 because 1) Mccain mistake in handling economic crisis 2) belief that Democrats is "better" at dealing with economic crisis. Improving economic condition in 2016, allow them to vote for non-economic reasons.

 

[Mad Bad Rabbit]

[ This is getting way into current politics + may need to be moved to Chat ]

 

[History Learner]

[ This is getting way into current politics + may need to be moved to Chat ]

It veered off course pretty suddenly after being relatively on target; a shame.

 

[History Learner]

MANUFACTURING THE FUTURE: Why Reindustrialization Is the Road to Recovery by Mark Levinson, New Labor Forum, Vol. 21, No. 3 (Fall 2012), pp. 10-15

Those like Reich and Goolsbee-who think manufacturing is healthy and the employment decline is due to productivity increases- point to the fact that the change in real manufacturing value added, relative to GDP, is stable. But what's obscured is that, in 2010, thirteen of the nineteen manufacturing sectors were actually producing less than in 2000. But, more importantly, when corrected for the problems identified by Mishel-overestimation of output in the computers and electronics sector, and problems with how inputs are measured-manufacturing output actually fell over the last decade, while GDP increased by 17 percent. Employment in manufacturing is declining mainly because of reduced output.

Productivity growth, rather than being the cause of declining manufacturing employment, is the prerequisite for manufacturing employment growth. This should not be surprising. Only highly efficient factories can survive in todays global economy. William Nordhaus has shown that, within each manufacturing industry, increases in the rate of productivity growth were associated with increases in the rate of job growth from 1948 to 2003. A Brookings Institution study extended the Nordhaus study until 2009 and concluded that "there is no evidence that productivity increases were significantly correlated with job loss." It is not inevitable that manufacturing will decline. Many nations with higher manufacturing wages than the United States- including Germany, the Netherlands, and Norway- have seen either stable or increasing manufacturing output as a share of GDP. Other countries- Korea, Austria, Poland, Finland, the Czech Republic, and the Slovak Republic- have actually seen their manufacturing sectors grow as a share of their economy.

 

[Johnrankins]

Eh, I think "deplorable" gaffe is overrated. It didn't affect much. Clinton widely disliked because two decades of Republican propaganda and latent Sexism. her campaign did make mistakes, but it based on view that Rust Belt would vote Democrats, which historically true, and no one saw otherwise.

As for WCW, there are many survey that show cultural explanation, aphorism about how minorities "jumping the queue to success", that factor to their vote in 2016. They did vote for Obama in 2008 because 1) Mccain mistake in handling economic crisis 2) belief that Democrats is "better" at dealing with economic crisis. Improving economic condition in 2016, allow them to vote for non-economic reasons.

I disagree, I actually live in Wisconsin and know WCW. The "deplorable" gaffe was BIG. People don't like being insulted. You might be surprised to learn that WCW know what the word "deplorable" means. If they were as racist as all that they wouldn't have voted for Obama no matter what. Race is way down the list for them these days. It is not 1956 anymore so quit acting like it is.

 

[History Learner]

From everything I've researched, I am duly convinced that the modernization plan would've been beneficial for the Steel industry and greatly reduced employment losses to at least something around West Germany and Japan's levels of OTL. A stronger steel lobby might have effects on China's ascension to the WTO, which would be a further long term boon to it, and/or possibly other policy like a Border Adjustment Tax could also be enacted.

 

[GeographyDude]

MANUFACTURING THE FUTURE: Why Reindustrialization Is the Road to Recovery by Mark Levinson, New Labor Forum, Vol. 21, No. 3 (Fall 2012), pp. 10-15

. . . But what's obscured is that, in 2010, thirteen of the nineteen manufacturing sectors were actually producing less than in 2000. . .

This is where a full-fledged, messy economy just has a ton of moving parts. Because of course -- the Great Recession from Dec. 2007 to June 2009.
https://www.nber.org/cycles.html
After June 2009, the economy started slowly . . slowly coming back.

And of course, the near-meltdown of financial institutions around the time of Sept. 2008, in which things could have been a whole lot worse.

 

[Johnrankins]

If the government was to get involved I would do something like this
1) Demand an emergency stockholder meeting. Give a list of various executives that must be fired before the government gives any help on a "take it or leave it" basis.
2) Provide government funding that only can be used to upgrade equipment. The funding would involve the government receiving prior claim cumulative preferable stock callable after 10 years at 10% above par.

Although the government risks more money in this way if it goes under instead of getting bonds I think it might be preferable in the long run because the company doesn't have to pay interest for a few years which increases the chances of survival. Once it becomes profitable they would have to pay the government its back interest before paying a dividend to the common stockholders.

The bondholders and other debtors take a 15% hit to their bonds on a take it or leave it basis. If they don't take it the government will let the companies go under. They will take 85 on the dollar instead of the fifty cents or less it would get otherwise.

The Unions hand over all of its assets above that would be needed to cover one year's expenses. A new 10-year contract would be made with little changes to pay or fringe benefits but with far fewer rules. For example, the contract would not state that certain obsolete positions have to exist.

Everyone would lose something out of it. The managers would lose their jobs, workers would lose their strike funds,bondholders would lose money and stockholders will have to pay the government back. In this fashion, it is less likely for
it setting the precedent "If you screw up the government will bail you out."

 

[GeographyDude]

From everything I've researched, I am duly convinced that the modernization plan would've been beneficial for the Steel industry and greatly reduced employment losses to at least something around West Germany . . .

Honest to gosh, with Germany and what I’ve heard called their industrial policy, it sounds like just zigging and zagging at the right time. Meaning, just getting lucky.

I almost wish I could view it more positively.

 

[BELFAST]

Would keeping the US steel in business be a good idea if the Americans could import the steel cheaper than they can make it.
More expensive steel in the US would impact downstream customers like car makers etc making them less competitive compared to foreign companies using the cheaper steel.
The economist Philippe Legrain said in his book Open World: The Truth about Globalisation (2002) that for every job saved in companies like Bethlehem steel it caused 5 other jobs in be lost in the US customers of the steel.
if foreign governments are foolish enough to subsidise the steel business and sell steel to America below cost this is a win for customers of steel in America who get a competitive advantage at the expense of foreign taxpayers.