Meddling in markets during election years is not new. But rarely do we witness both major political parties set aside any pretense of restraint and indulge in a particularly cynical brand of economic illiteracy.
The object of each party's desire is union members in Ohio. The point of contention: a bid from Japanese steel maker Nippon Steel to buy U.S. Steel. The bone of contention: an American steel company, Cleveland Cliffs – unionized and Ohio-based – has also made a bid for U.S. Steel. But for less than Nippon is willing to offer for the same assets.
The Biden administration working overtime to burnish its union-friendly credentials, opposes the Nippon bid on a host of grounds, including the ludicrous contention that allowing U.S. Steel to come under Nippon's corporate umbrella would somehow threaten our national security.
As The Wall Street Journal writes, the whole thing would be a farce were it not so nakedly political. And yes, bipartisan:
…the political opposition to Nippon Steel isn't about the economic merits. It's about Cleveland-Cliffs, the steelworkers union and the electoral competition for blue-collar workers in November.
Like U.S. Steel, Cleveland-Cliffs is a unionized U.S. company. Its CEO, Lourenco Goncalves, is sore because U.S. Steel rejected his merger offer as inadequate last year. Smart move. Nippon Steel's bid is roughly double what Cleveland-Cliffs offered. Cleveland-Cliffs and its political patrons in the Ohio and Pennsylvania Senate delegations are now lobbying furiously to block the Japanese company's purchase. Donald Trump also opposes the deal, claiming to be a tribune of the working man.
If you really care about workers, Nippon Steel's bid is better. The firm has promised to honor the United Steelworkers collective-bargaining agreement and says it won't move current U.S. production or jobs overseas. A more competitive U.S. Steel is less likely to have to lay off workers in the future.
It's as if everyone is stuck in the 1980s, when Japan, Inc. was making mincemeat of sluggardly American companies that couldn't compete on price or quality. Times have changed dramatically since then, with Japan an even more important ally and economic partner than it used to be, especially as a counterweight to China.
However, the political class doesn't care about such large issues because votes are on the line.
Yet Team Biden is actively looking to turn an already tawdry political exercise into a full-blown international dispute. According to Politico, the Justice Department is mulling an investigation of the potential Nippon-U.S. Steel on antitrust grounds.
Bad as that is, the other wrinkle inside the story shows just how devolved economic thinking has become in official Washington in recent years:
The primary hurdle to the deal, however, remains a recently started review by the Committee on Foreign Investment in the U.S., an interagency panel helmed by the Treasury Department that evaluates mergers and other investments by non-U.S. interests. The panel is primarily focused on countries like China and Saudi Arabia, but U.S. Steel's importance to the American industrial base has led to concerns about it being foreign-owned.
The American industrial base is doing just fine – and would be doing much better were politicians not openly, and cynically, pandering for votes.Â
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
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