AHC: Carter saves the U.S. Steel Industry

[GeographyDude]

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. . .

But, bondholders and employees are in non-symmetrical positions, and even if they’re asked to make relatively equal sacrifices, may not be perceived that way.

In particular, employees have probably taken some recent hits and are going to be on guard. Plus, the union leadership may want to show off. That may be a part of it.

 

[Johnrankins]

But, bondholders and employees are in non-symmetrical positions, and even if they’re asked to make relatively equal sacrifices, may not be perceived that way.

In particular, employees have probably taken some recent hits and are going to be on guard. Plus, the union leadership may want to show off. That may be a part of it.

Too bad for the union leadership, they are out of luck like everyone else. I don't care if they want to show off or not. They can take it or leave it. My guess is that they would take it. Most employees would rather take a hit than lose their job. It isn't like they are taking that big a hit. The main difference is that people who have useless jobs lose them and they are no shape to strike for a decade. Hardly crippling.

Most executives will lose their jobs so they take the biggest hit and that 15% hit is greater than you think. It is almost certainly leveraged. If it is a very conservative estimate of a 5:1 leverage you are losing 75% or the money you invested as the lenders will still want their money back.

I am sure the bondholders would want to show off too. A 75% loss is not going to allow them to do that. It has to hurt everyone and the government has to lessen the risk to the money invested and of setting a precedent. It has to hurt enough that it is truly a last resort.

 

[cjc]

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 subsidise the steel business and sell steel to America below cost this is a win for customer of stell in America who get a competitive advantage at the expense of foreign tax payers.

That's interesting becuse everything iv read on this subject is that all the lost jobs in the steel sector where replaced but whith much lower paying, non-unionized tertiary jobs. And that's why it felt so bad, not that jobs where lost, it's that non of the new jobs where nowhere as well paying as the lost jobs.

 

[BELFAST]

That's interesting becuse everything iv read on this subject is that all the lost jobs in the steel sector where replaced but whith much lower paying, non-unionized tertiary jobs. And that's why it felt so bad, not that jobs where lost, it's that non of the new jobs where nowhere as well paying as the lost jobs.

The steel business was once very profitable,but not any more. The jobs that replaced them were in new business that are not as profitable as steel was in the past.

 

[Simon]

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:

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.

There's only so much steel that people need and you can sell them. Past a certain point increased productivity has to mean decreased employment. Especially for goods like basic steels where even developing economies that have advanced can compete, once you've made the initial investment in equipment and training even if they're not quite as efficient their reduced manpower costs likely even things out or put them below US companies.

If foreign governments are foolish enough subsidise the steel business and sell steel to America below cost this is a win for customer of steel in America who get a competitive advantage at the expense of foreign tax payers.

Provided that the foreign governments continue to subsidise it indefinitely. If they stop at some point in the future it can be a problem.

 

[Johnrankins]

I agree that Brother Clinton blew it. I've even done whole threads:

Pres. Clinton more successful on middle-class economics his first 100 days?
https://www.alternatehistory.com/fo...le-class-economics-his-first-100-days.408852/

a different 1993, Clinton doesn’t piss away early momentum on healthcare reform?
https://www.alternatehistory.com/forum/threads/a-different-1993-clinton-doesn’t-piss-away-early-momentum-on-healthcare-reform.464334/

His three biggest mistakes:

1) didn't follow through on a middle-class tax cut, instead let economists talk him into deficit-reduction (!) (!) (!)

2) too much political capital on healthcare, and

3) being all in favor of his talented and personable wife Hillary being in the thick of things on healthcare, rather than nongovernmental ways to improve the country like most previous First Ladies.​

Bonus points: If someone can explain why Eleanor Roosevelt was much more popular than Hillary Clinton, even though Eleanor was arguably more gender nonconforming.

This is why Clinton was elected (five commercials, 30 seconds).

:49 "We're going to ask the rich to pay their fair share, so the rest of American can finally get a break."

1:37 "They've [Clinton and Gore] called for an end for welfare as we know it." [So this part should not have been a surprise]

2:00 see esp. this last commercial which argues whether Bush or Clinton will be better for a middle-class tax cut.

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But even with all this, there was a lot of political anger in 1990, and maybe earlier. I mean, more than normal.

And even more so because he was a Democrat! Democrats get upset when Republicans get elected and vice versa.

 

[BELFAST]

There's only so much steel that people need and you can sell them. Past a certain point increased productivity has to mean decreased employment. Especially for goods like basic steels where even developing economies that have advanced can compete, once you've made the initial investment in equipment and training even if they're not quite as efficient their reduced manpower costs likely even things out or put them below US companies.



Provided that the foreign governments continue to subsidise it indefinitely. If they stop at some point in the future it can be a problem.

Subsidising loss making steel has been going on worldwide for a long time and is set to continue.
I am not sure why.
if steel industry subsidies end it might be profitable to make steel in the us again.
I cannot see that happening any time soon.