Why U.S. Steel’s Controversy Reflects Deeper Issues in American Manufacturing
Introduction
All contenders for the U.S. presidency agree that U.S. Steel should remain under American ownership and not be sold to Japanese company Nippon Steel. However, blocking the deal could discourage future foreign investment and potentially lead to the closure of U.S. Steel factories. While accepting the deal may seem like the logical choice, there are deeper issues at play that complicate the situation.
The Decline of American Manufacturing
Over the past 40 years, American industry and manufacturing have suffered significant losses due to foreign competition. Industries such as textiles, apparel, steel, shoes, toys, and more have been gutted, leaving behind empty factories and a reminder of a bygone era. What remains are high-end boutiques catering to the elite, rather than the mass market. This decline in American manufacturing has become a political issue, particularly for President Trump, who believes that tariffs are the solution.
The Impact of Globalization
Advocates of free trade argue that the loss of manufacturing jobs is a natural consequence of globalization. As previously closed markets opened up, the division of labor expanded globally. However, there are other factors at play that complicate the picture. The abandonment of the gold standard and the creation of a global dollar standard allowed foreign central banks to accumulate U.S. debt, which in turn subsidized their manufacturing base. Japan and China, the largest beneficiaries of this subsidy, have become direct competitors with American firms.
The Paradox of the World Reserve Currency
Being the world reserve currency has its advantages, but it also poses risks. The endless creation of new units of currency to meet global demand threatens domestic production over time. As a result, the United States has seen a loss of capital, infrastructure, supply chains, and manufacturing skills. Japan’s proposed purchase of U.S. Steel may be assisted by the vast subsidies it receives from U.S. debt held by its central bank. This raises questions about the long-term implications of foreign ownership of critical American industries.
Policy Mismanagement and the Backlash
The decline of American manufacturing cannot be solely attributed to free trade. The mismanagement of domestic economic policies, such as high taxes, regulatory controls, and a lack of adaptability, has made it difficult for businesses to thrive. Additionally, the U.S. monetary system, which relies on the printing of debt, has contributed to chronic trade deficits. This mismanagement has fueled a backlash against global economic liberalism, leading to a rejection of foreign ownership of American plants.
A Path Forward
To save and restore American industry and manufacturing, a dramatic domestic reform is needed. This includes deregulation, removing labor mandates, balancing the federal budget, and implementing a sound monetary system. These measures would make American-owned companies globally competitive once again. However, these positions have lost popularity in public culture, leaving the choice between foreign ownership or the closure of industries.
Conclusion
The controversy surrounding U.S. Steel’s potential sale reflects deeper issues in American manufacturing. While blocking the deal may seem like a symbolic victory, it ignores the mismanagement of domestic economic policies and the flaws in the U.S. monetary system. To truly save American industry, a comprehensive reform is needed. Without it, the tragic consequences of policy mismanagement will continue to affect critical industries and communities.
