Watch what they do, not what they say.
Government officials frequently tell us that global warming is an existential threat. And yet when it comes to public policy, the issue is treated almost as an afterthought. For example, the US currently blocks the importation of Chinese electric cars. If BYD’s excellent and very inexpensive EVs were allowed to be sold here, they would rapidly gain market share. It seems that a few union jobs are more important than global warming.
We are frequently told that China is the greatest threat to US national security, and that we need to work with our “allies” to counter that threat. So what are we to make of the following story?
President Joe Biden has blocked the $14.1 billion sale of United States Steel Corp. to Nippon Steel Corp., killing a high-profile deal that sparked a political firestorm and tensions between the US and Japan. . . .
“We need major US companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden said in a written statement, adding that the deal “would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.”
We claim that Japan is one of our closest allies. We demand that they sacrifice economic growth by refraining from the export of high tech products to China. They accommodate our wishes. And then when a few union jobs are threatened, we turn around and treat them like an enemy nation.
This is not about where the steel gets produced. Nippon Steel would not be offering $14 billion for US Steel if they planned to shut the firm down. Rather the fear is that Nippon would make US Steel more efficient, and that this might cost a few jobs. In the long run, however, inefficiency leads to unemployment. Thus it’s not even clear that US steelworkers will benefit from the president’s decision:
Biden’s announcement was a massive victory for United Steelworkers President David McCall and his union’s leadership, who have been vocally opposed to the deal, even as some rank-and-file labor members spoke out in favor of it.
READER COMMENTS
Thomas L Hutcheson
Jan 4 2025 at 7:58am
So MUCH policy does not pass cost benefit analysis. 🙁
Jose Pablo
Jan 4 2025 at 3:31pm
Cost-benefit analysis performed by who?
An “independent” body.
Yes, but picked by who?
Nominated by the President and confirmed by the Senate
But, wouldn’t this system end up like a kind of Supreme Court? “Progressive” policies will pass the cost-benefit analysis when a majority of the “independent body” positions are held by progressives and conservative policies will pass the test when a majority of the “independent body” positions are held by conservatives
Yes, Little Grasshopper, that would very likely be the case.
Then, Master, why engage in such expensive complications when the results will be about the same as with the actual system?
Just for the shake of the intellectual beauty of it, Little Grasshopper.
Matthias
Jan 4 2025 at 10:41pm
An cost benefit analyse.
Even a very imperfect analysis done by someone you disagree with is (almost) forced to make certain things explicit they’d rather not.
Eg in our case here that unions are more important than climate change.
Jose Pablo
Jan 6 2025 at 10:56am
The same applies to the Supreme Court sentences: they make certain things explicit. And yet this doesn’t make the outcome less predictable.
Tilting the scale is way easier in the case of cost and benefit analysis since we are always talking about intended consequences. A well-known route to nowhere near reality.
MarkLouis
Jan 4 2025 at 9:06am
Unsurprisingly, the revealed preference is always winning the next election (even though they are often unsuccessful).
steve
Jan 5 2025 at 11:30am
Agreed. No matter how much you want to address climate change you cant do it if you cant get elected. At present free trade is out of favor and distrust/hatred of China and Chinese (which I think is leaning over into Asians in general) is either a majority value or at least a majority of those willing to vote. Giving people an outgroup to blame and to hate wins elections and brings people to power.
Steve
nobody.really
Jan 9 2025 at 9:44am
Good point.
“I received my healer’s training in 1700, and I can declare categorically that healers of today are such hypocrites. First they tell me that I shouldn’t bleed the patient, even though the patient is in obvious distress. Then they perform a ‘surgery’ whereupon they CUT INTO THE PATIENTS SKIN, releasing blood all over the place! What could be more obvious hypocrisy than that?”
Alternatively, we could conclude that cutting into a patient is part of a longer series of steps designed to produce a salutary outcome. Likewise, we could conclude that the Biden Administration is engaged in a longer series of steps design to help Democrats regain the White House, which seems like a logical strategy for managing climate change.
To be sure, it’s possible that the Biden Administration’s actions are just pure hypocrisy, much like it’s possible that surgery is merely “bleeding a patient” by another name.
Jose Pablo
Jan 4 2025 at 3:19pm
It seems that a few union jobs are more important than global warming.
So what are we to make of the following story?
Hasn’t Public Choice Theory solved those questions a long time ago?
What politicians are looking for is pretty clear as it is the fact that they tend to make (for the most part) the most rational decisions once you take into account their incentives.
What seems to border insanity (as per Einstein’s definition) is to keep expecting the politicians to make decisions differently while subject to the same incentives.
Matthias
Jan 4 2025 at 10:44pm
Public choice theory is a bit too pessimistic and ignores much of the good work politicians and civil servants are doing.
Just imagine if we had some kind of “perfect” democracy and policy would actually reflect public opinion!
(With apologies to Bryan Caplan’s Myth of the Rational Voter.)
Jon Murphy
Jan 6 2025 at 7:50am
I don’t see what you mean. All public choice theory says is that people in the political sphere respond to incentives, just like anywhere else. If the incentives align with good actions, then good actions will tend to come about. If the incentives do not align, then poor actions will tend to come about.
Jose Pablo
Jan 6 2025 at 11:07am
Public choice theory is a bit too pessimistic
Theories are not “pessimistic” or “optimistic”, they are either good or bad at a) explaining the facts ex-post and/or b) predicting the consequences of a set of facts.
Public Choice Theory does that with the facts pointed out by Scott much better than the Politicians as Benevolent Maximizers of Global Utility Theory, that he seems to follow. Only to be surprised by how useless this theory is in predicting/explaining reality.
ignores much of the good work politicians and civil servants are doing.
As the Great Zoroastro used to say (and the Troyans experienced in their own flesh): “Beware of the people that bring you presents“.
I would recommend approaching politicians the same way that you approach e-mails from unknown people with links attached.
MarkW
Jan 5 2025 at 6:53am
Yes, if you’re particularly worried about global warming, then it makes no more sense to put up tariff barriers against EVs than it has against solar panels. But Democrats, at least, have been trying to sell the ‘green new deal’ as a package that includes not only lower emissions but also promised lots of high-paying ‘green jobs’ for the working classes, various benefits for ‘marginalized communities’ and, obviously would include plenty of lucrative deals for domestic green energy companies. They’ve (probably correctly) seen that political support would have fallen apart if this had been sold as an emissions reduction effort only without the various other sweeteners.
All that said, while BYD vehicles definitely should be allowed in the US, it’s interesting to see how they compare with alternatives in markets that do allow sales. Here’s one example. The BYD car is certainly competitive, but not obviously the best choice for the price. So it doesn’t appear that allowing BYD sales would necessarily revolutionize the EV industry in the US.
Scott Sumner
Jan 5 2025 at 11:29pm
I think you underestimate the appeal of BYD. In markets where they are allowed their sales are surging—taking market share from Western and Japanese firms. They are great cars, and far cheaper than Teslas.
Jose Pablo
Jan 6 2025 at 11:12am
So it doesn’t appear that allowing BYD sales would necessarily revolutionize the EV industry in the US.
Fortunately enough, this is not a conclusion you need in any way to reach ex-ante.
You allow BYD sales and if they “revolutionize” the industry great and if they don’t revolutionize the industry great too.
The best (and easiest) conclusions are the ones you don’t need to reach.