The Steel Crisis: The Economics and Politics of a Declining Industry

By William Scheuerman | Go to book overview

5
Instrumental Politics and the Trade Act

Conventional lobbying still exists. . . . But there is also 'high level lobbying.' All over the country the corporate leaders are drawn into the cycle of the high . . . political through personal friendship, trade and professional associations and their various subcommittees, prestige clubs, open political affiliation, and customer relationships.

C. Wright Mills

The final year of the second Voluntary Restraint Agreement witnessed a worldwide boom in the demand for steel that drove profits to a postwar high. In 1974 domestic steel producers collectively returned 16.9 percent on equity. This followed on the heels of a solid return of 9.5 percent on equity for 1973. In fact, by 1973 steel imports had decreased from a 1971 high of 17.9 percent of all domestic consumption to only 12.4 percent of total consumption. 1 The temporary prosperity of 1973 and 1974, however, obscured the fact that steel's productive abilities in relation to foreign producers had declined significantly since the establishment of the first VRA in 1969.

The data reveal the extent of steel's productive decline during the VRA period. For 1969 U.S. steelmakers expended 12.95 worker-hours for every metric ton of steel produced; it took Japanese producers 15.07 worker-hours to make the same amount of steel. By 1975 the relationship had changed. Japanese producers could now produce a metric ton of steel in 10.09 worker-hours, but U.S. steelmakers still needed 12.04 worker-hours to turn out the same amount. 2 This decline in productivity was exacerbated by the high wages of U.S. steel

-98-

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The Steel Crisis: The Economics and Politics of a Declining Industry
Table of contents

Table of contents

  • Title Page iii
  • Preface v
  • Acknowledgments ix
  • Contents xi
  • List of Tables and Figures xiii
  • 1 - Steel on the Slide 1
  • 2 - Law and Social Power 22
  • Notes 39
  • 3 - The Golden Years: From Dominance to Decline 45
  • Notes 61
  • 4 - Protectionism and Disinvestment 64
  • Notes 94
  • 5 - Instrumental Politics and the Trade Act 98
  • Notes 125
  • 6 - Recovery, Relapse, and Retrenchment: The Trigger Price Mechanism 129
  • 7 - Restructuring: The Politics of Disinvestment 151
  • Notes 182
  • 8 - Economic Decline and Democratic Demise: Prospects for the Future 185
  • Notes 206
  • Index 209
  • About the Author 221
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