EU retaliation in steel war.

[Roland]

"That doesn't even make sense."

Such is the purpose and nature of Republicanomics.

"Now you can argue that Bush fulfilled his campaign promises too well..."

Overdelivering... unbeliavable.

"Doesn't that mean Europe is being dumped on because the US was tired of being dumped on? I think you're trying to split hairs."

The EU is not taking anti-dumping measures. There are essentially 2 import markets for steel in the world: the US and the EU. With the US government further manipulating the US markets (higher prices, lower imports), you get higher imports and lower prices in the other one. Dumping isn't an issue here - the EU and the US have all kinds of anti-dumping measures already.

[DanS]

"Overdelivering... unbeliavable."

I don't know all of the deals that went on, but the internal politics are quite interesting.

These steelworkers are a pretty conservative lot, even though they are union members. For instance, most probably keep a gun or two around the house and don't like abortion. However, they are not free traders, making them not quite fit into the Republican party on more than a temporary presidential coalition basis.

These cross-currents are important to keep in mind. The workers had absolutely no problem splitting their tickets between GWB (center-right) and one of the strongest leftist advocates in the Senate, Robert Byrd. A classic swing constituency. In Byrd's mind, he is in Washington to see to the interests of his constituents, narrowly defined. Everybody cuts him some slack because the area he represents is poor.

On this issue, you have a really bizarre coalition. The center-right allied with industry, the unions, union members, and the lefties.

What does this have to do with Europe? Well, it means that when Europe attacks this constituency, the result might be totally different than what Europe expects. They are attacking the left as much as their attacking GWB. Also, this is why your "Republicanomics" comment makes me scratch my head with bewilderment. It makes no sense.

[Colonâ„¢]

Wasn't it possible to help the steel workers directly, through re-employment schemes or early retirement? Couldn’t Bush instead have intervened in the industry directly, by merging the integrated steel-mills first-hand or releasing them of their pensions-burden one way or another?

[DanS]

Yes.

[Colonâ„¢]

So why wasn't it done?

[vonManstein]

Please retaliate EU. Those US bastages deserve what they get for crippling the Canadian west coast economy with their lumber tariffs. And, of course, our politicians are too inept to do anything about it

[DanS]

Colon: I don't know. Like I pointed out, this is an odd coalition, each part having ideas of its own. Maybe this was the least worst approach that could be agreed upon by everybody.

But that's just speculation.

vM: 40% of Canada's economy is directly tied to US exports. Don't let the lumber stuff overshadow the other benefits that Canada enjoys.

[Bereta_Eder]

Originally posted by vonManstein
Please retaliate EU. Those US bastages deserve what they get for crippling the Canadian west coast economy with their lumber tariffs. And, of course, our politicians are too inept to do anything about it

sure

[Ramo]

Our tariffs and other trading barriers are totally wrong, of course, but that hardly justifies the EU's. The EU is hurting everyone's economy in the long term, just to "win" an idiotic pissing contest.

[Colonâ„¢]

Dan, maybe the steel bosses felt it smacked too much of European style socialism?

[DanS]

No, the steel companies asked for the pension stuff, but the final course of action didn't include it. I seem to remember that the cost for the pensions is quite substantial.

[rah]

Yes, quite quite substantial.

The strange thing, is that with both the steel and lumber deal, the more right leaning newspapers are trashing Bush on it. Normally Bush walks on water in these papers. I was pleasantly suprised.

RAH

[Gatekeeper]

Originally posted by Sikander
Gatekeeper,

I think the line most of the 'hardline' economists on this thread are taking is that farming right now is a bad business to be in.

Well, they won't get any argument out of me in regards to that. It *is* a mostly bad time to be a farmer. It wasn't that way back in the mid-1990s, though. Well, not as bad at any rate.

This is due to two factors:

1) Increased productivity of the individual farmer

2) The tendency for farming to be a 'traditional' occupation which tends to stay in families.

Combined, this means that the flight of people from traditional farming families has not kept up with the increased productivity of farmers, which has crushed commodity prices for a long time.

Hmm ... I know that people are becoming concerned that there aren't very many younger farmers following the older (and, now, dying) farmers. It costs too much to start-up, between acquiring land and equipment and infrastructure ... start-up costs (if you don't inherit) can run well in the hundreds of thousands of dollars.

BTW, I agree with you 100 percent in terms of productivity. American farmers are good at that, too good. And, yes, sometimes they shoot themselves in the foot when they take land out of the Conservation Reserve Program (CRP) and put it back to crops or simply till up more land to plant said crops. It seems they do this to get more bushels to make up for the low commodity prices, but it's a vicious circle, one that won't raise crop prices as more and more bushels flood the market.

Cut the production and try to bring processing and distribution back to the farm states themselves via value-added ag ventures. That might do the trick.

Excacerbating this is the political pressure by farmers all over the world for government subsidies, which keep more farmers in business (at a cost to everyone) and ironically commodity prices low. Until there is an impressive increase in demand, or an equally impressive decrease in supply prices are going to remain low.

Perhaps the magic bullet is cutting the supply and investing in locally-owned value-added ag ventures. I could settle for some family farmers remaining rather than none.

People should get out of farming if there is a viable alternative for them. By doing so they will have a chance to make money in a sector of the economy that is experiencing a labor shortage, and in the long run they will make farming more profitable for those who remain. This is just the latest chapter in a saga that has gone on for millenia, ie the increases in farm productivity not only allow but force people to move into other occupations.

A number of farmers work the fields by day and go into town at night to work at a factory. Or vice-versa. I guess my main worry is that too much corporate control over the food supply's source, processing and distribution will put a bit much power in the hands of a few people. Efficient, perhaps, humanity, no. It's sort of ironic that the value-added ag and local ownership ventures I mentioned above are throwbacks to the days before the big corporations, but that these very things might be what saves a percentage of family farmers from tilling their last field.

Gatekeeper

(P.S. I meant to post this around 3 a.m. CST Friday, but Apolyton wouldn't respond for some reason.)

(P.P.S. Yes, I am somewhat affected by what happens in the nation's breadbasket, GP. I think the future will have to revolve around locally-owned value-added ag ventures in order to keep any famly farmers on the land. That's where we're heading today; hopefully it isn't a case of too little, too late.)

[Adam Smith]

re: Retail prices vs. prices received by farmers

I am posting from home, so I don't have any numbers in front of me, but here are a couple of ideas on why prices may be falling on the farm but rising at retail.

1. Food production and distribution have historically been pretty competitive. Margins have been reasonably low when measured as a percentage of sales.

2. Farm products are only a percentage of the final price of food, so a one percent reudction in the price of farm products will translate into a less than one percent reduction in the price of food sold.

3. IIRC, production and distribution costs have been rising the last few years in spite of just in time delivery practices. Part of this has to do with higher energy prices, part with higher processing costs eg., costs of ergonomic regulations for chicken processing plants, and part with tighter labor markets.

4. Another factor is that an increasing percentage of food sold is more highly processed. For example, less fresh vegetables, and more frozen meals ready to eat. As peoples incomes rise they are demanding more convenience. This requires more processing, driving a larger wedge between comodity prices and final food prices.

[Colonâ„¢]

Dan, the integrated steel plants are funding the pensions of more people than they have active employees. Can't remember exact numbers though, but I'll try to look them up.

AS, excellent post.