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Wednesday, December 17, 2008

Steel: Small Enough to Fail

Posted By on Wed, Dec 17, 2008 at 2:41 PM

A friend just passed this installment of NPR's "Planet Money" to me. First broadcast last week, it features historian John Steele Gordon talking about how Pittsburgh's steel industry was apparently NOT too big to fail (The segment starts at roughly the 5-minute mark.) As Gordon points out, when the collapse of American steel was at hand, manufacturers didn't jet off to Washington to get a massive federal cash infusion, the way automakers have been doing. They mostly sought tariffs and other trade sanctions against foreign producers instead. 

You could argue that this is a distinction without a difference: If Detroit gets its bailout, it will be underwritten by taxpayers ... whereas the burden from tariffs was passed along to the customers having to pay for domestic steel. In either case, the industry's problems are being put on someone else's shoulders.

Then again, Gordon notes that much of steel's competition came from Japan, which rebuilt its industrial base from scratch after World War II, using more up-to-date equipment. And of course, Japan was able to do that thanks in part to help from the US government. So perhaps asking the government to protect its own industries wasn't so outlandish.

But maybe the big difference between cars and steel is the timing. Since the time since steel collapsed, we saw the rise of Reagan and three Bush terms, interrupted by a two-term Democratic presidency which believed strongly in free trade and financial deregulation. But after nearly 30 years of touting the virtues of the free-market -- mostly under Republican rule -- the government is considering levels of intervention that weren't even contemplated when steel went under.

Maybe excessive amounts of deregulation lead to excessive bailouts when it all goes awry? Maybe this money isn't intended to bail-out not the decades-old screw-ups of Detroit, but the decades-old screw-ups of Washington D.C.?

Incidentally, following the Gordon interview is a 5-minute rebroadcast of a "Planet Money" segment from the year before, in which correspondent Adam Davidson visits Pittsburgh to see what the decline of steel hath wrought. It's a surprisingly nuanced piece that notes steel's collapse wasn't quite as complete as popular myth would have it.  And it explores, somewhat superficially, the slur "cake-eater," which is one of those insults I keep meaning to use more often in columns. 

Finally, in a "these are industries that died" vein, I recommend Jason Togyer's post on the Post-Gazette's recent layoffs ... and its poorly timed price hike a couple days later. (Seriously -- did these guys get their marketing strategy from the people who advise the Pirates?) Jason's argument is that in the face of serious challenges, our local papers have often focused most on the stuff they are least equipped to provide -- like providing gossip or world news people already have caught on CNN.

That criticism dovetails with one Jason's former colleague, Dave Copeland, made in CP a few years back--

[T]he office drones we were targeting wouldn't pick up a newspaper if it just had stories they'd already read on the Internet when their boss wasn't looking. What the paper needed, I argued, was content that people couldn't get anywhere else.

-- and about the only place where I disagree with Jason is his denunciation of the P-G's comics page. Sure, features like "Rex Morgan" and "Family Circus" are every bit as awful as he says. I can't imagine anyone under the age of 60 ever reads such tripe. But then again ... guess which demographic increasingly makes up the print edition's bread-and-butter? Hard to blame a paper for trying to protect the readers it still has. 

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