A concern of the tariffs means that producers are forced to pass on these price increases to their consumers. In terms of the broader understanding of economic systems, where relative prices reflect relative costs, efficient manufacturers are becoming less efficient due to trade policies, and consumers may start flocking to cheaper alternatives.
Moreover, lobbying to this extent reminds me of the idea of public failure, where small interest groups utilize collective action to create advantageous laws and practices. The revolving door of regulators is also at play here, since key trade officials clearly have close ties to the Steel Industry and will draft policies that are beneficial to this sector, undoubtedly.
This article makes me wonder if there is a solution to this spending which could be more efficiently utilized in the production arena instead of the political one, or if lobbying is so entrenched in our political system that we would need to dig deeper in order to find a solution that does not put so much power into the hands of people with specific agendas.
Article Link: https://www.wsj.com/articles/big-steel-a-tariff-winner-steps-up-its-spending-in-washington-11549987962
3 comments:
Hilary,
This definitely brings up concerns about how much control people with specific agendas have within our government. I feel that industries really should not have so much influence in the government. It takes the government away from working for the betterment of the people as a whole. You also bring up a great point about what if they spent that money on production. I think it would be interesting to see a side by side comparison to see where their money is better spent, politics or production.
Hilary and Caroline,
Everything brought up in this article is extremely interesting. Although, the part that sticks out to me was mentioned by Caroline. Its very uneasy to me that political agenda's weigh so heavy on this topic. On the other side I could understand why our domestic steel industry should weigh in on our decision, aka we should look out for ourselves. In this case, its a little different. We'll see how this pans out over the course of these unsteady times in our government, and these new economic times as the economy pumps the brake a little.
Tariffs and quotas have helped the United States steel industry keep competitive with international producers in the short term but unless the US steel industries start using capital to invest in research and more efficient manufacturing processes, these tariffs will not help the US steel industry in the long term. The US steel industry is using capital to lobby for their interests in the government. This money would be better spent in research and improving manufacturing processes so that the steel industry could be more efficient and lower costs which would be reflected in lower prices for the consumer. I agree that due to the increase in tariffs it will be hard for firms to stay in business because consumers will look for the lowest possible cost. The government is becoming too involved in the economy which is overall affecting the efficiency of markets.
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