A few weeks ago, Treasury Secretary Paul O’Neill, discussing the Enron collapse, noted that “Companies come and go. It’s part of the genius of capitalism – people get to make good decisions or bad decisions and they get to pay the consequences or enjoy the fruits of their decisions.”
Comments like O’Neill’s are typical fuzzy free-trader talk. Sorry all you ruined Enron employees and stockholders, it’s nothing personal, it’s just ‘the genius of capitalism!’
For some time to come, the recipients of such insipid excuses will be steelworkers and retired steelworkers. Last Thursday, tens of thousands of steelworkers and their allies rallied in Washington, D.C. to promote legislation that would place a 40 percent tariff on almost all foreign steel products. The reason is that the American steel industry is being strangled by super- cheap imported steel – resulting in 31 domestic steel manufactures declaring bankruptcy since the Asian economic crisis in 1998.
No one doubts that the collapse of the American steel industry will mean the loss of thousands of the best jobs in the United States’ manufacturing sector – a loss that will reverberate throughout the entire economy (particularly in the rust belt states). So the debate over what to do with American steel basically revolves around which is the least bad of two alternatives: Imposing high tariffs to protect American steel or allowing the glorious free market to sort these problems out at what almost everyone agrees will be a horrible cost.
This means that the free traders will soon find themselves in a rather delicious Catch 22. European leaders have already pledged to challenge any attempt by the United States to impose any sort of significant tariff on imported steel through the World Trade Organization’s shadowy and undemocratic legal processes. The people of say, Cleveland, are unlikely to take kindly to the idea that a group of unelected WTO bureaucrats now have more say in U.S. trade policy than W. or Congress. And if the free trade ideologues emerge from this battle triumphant, Americans are unlikely to sit back idly and watch as the economy of say, West Virginia, is slowly swallowed by the anonymous machinations of global capitalism.
Do the free traders really think this country is just going to nod its collective head solemnly and reassure itself that “this really is for the best”? They must, and they had better pray (after all, so many of them think praying makes a difference) that working Americans are actually just members of some big, dumb, masochistic herd ready to prostrate themselves before Unfettered Global Trade.
The steel industry, of course, is just the beginning. As the regulations and tariffs come crashing down, visions of laissez faire-topia will become even clearer: More Enrons, more California-esque energy crises, more Argentinas, more inequality, more polution and weaker unions. When people complain about these problems, they’ll always get the same answer from the free traders: “You just don’t understand, all we need is less regulation, more privatization, stronger protections of property rights and freer trade!”
This is the “genius of capitalism”? No thank you.
The point here is not necessarily that everyone should support imposing tariffs on steel imports. The point, rather, is that we should listen to Paul O’Neill: The collapse of Enron and Argentina and the California energy crisis should not be viewed as aberrations, but symptoms of a greater systemic problem, a problem O’Neill euphemistically calls “the genius of capitalism.”
Now we all get to bear witness to the “genius of capitalism” work its ruinous magic on American steelworkers, pensioners and the local economies that rely on steel production.
Apologists for global capitalism will soon find themselves coming head to head with Americans’ more noble populist sentiments, notably the American people’s deep sense of fairness. While it is certainly debatable as to how to best deal with the crisis in the American steel industry, only the crassest individual would suggest that it’s fair that hard working American steelworkers should lose their livelihoods or that pensioners should see their nest-eggs dry up overnight.
It would appear, then, that a spectre is haunting the free traders: The spectre of fairness.
Nick Woomer can be reached at email@example.com.