September 22, 2003
The International Trade Commission Should Be Ashamed
The International Trade Commission should be ashamed of itself for pulling its punches:
WSJ.com - Steel Tariffs Pose
Quandary for Bush: The steel-consuming industries were clearly disappointed that the ITC didn't back their claims that they suffered massive job losses due to the tariffs. The commission concluded that auto-parts makers and similar industries were hit with steep price increases last year.... The report noted that earnings among steel consumers diminished by more than $600 million in the past 18 months, but that more jobs were lost in steel-consuming industries [in the year] before tariffs were implemented than [in the year] after...
From March 2001 to March 2002--the year before the tariffs--real GDP grew by 1.0% and the unemployment rate rose from 4.2% to 5.6%. From March 2002 to March 2003--the year after the tariffs--real GDP grew by 2.2% and the unemployment rate only crept up from 5.6% to 5.7%.
Do you think that the unfavorable macroeconomic conditions--the "recession," it is called--in the year before the tariffs had something to do with steel-user job losses in that year? If so, you're a lot smarter (or at least a lot more honest) than the hacks who write reports for the International Trade Commission.
Now I realize that Robert Guy Matthews and Neil King, staff reporters for the Wall Street Journal, were under extremely tight deadline pressure to produce their article. And I realize that it's very hard, when you're under tight deadline pressure and when agencies like the International Trade Commission are trying to deceive you, to figure out exactly where the mendacity lies in time to get it into the next day's paper.
But can I appeal to their editors to give them a chance for a follow-up article? An article in which they can get nice quotes from IIE economists like Gary Hufbauer and Martin Neil Baily about just how the ITC study's failure to take out the overall business cycle's shift in demand was a deliberate rigging of the study to make the steel tariff look less bad?
It would be only fair to the Journal's readers, after all.
Posted by DeLong at September 22, 2003 07:57 PM
I've done a little poking around in the ITC reports, and I posted some of my findings on Angry Bear, Sept 21. The astonishing thing to me is that, despite the individual pieces of data that tell a pretty bad story about the tariffs, the tone of the report is remarkably positive about them. I'm very curious to know the degree of political pressure that they feel.
Given a choice between accuracy and pro-Bush nonsense the WSJ will go for the latter every time.
This issue is not going to help Mtich Daniels in his run for Indiana governor. Indiana has lost a lot of mfg jobs especially among steel mfg and auto parts suppliers. The word betrayal is commonly used.
The problem the union wants solved is the benefits to workers retired from big dinosaur steel plants that are no longer viable. Tariffs were a poor way of solving that problem. It is difficult to imagine an administration ignoring economic advice from a group of economists all of whom were in agreement that the tariff was a bad idea. Then again, it is difficult to imagine an administration ignoring the expert advice of its military and intelligence agencies and embarking on a prolonged occupation of a hostile nation.
This administration is bad at policy. It looks like Walker and the GAO is trying to force some movement to address the revenue problems.
Meanwhile Mr. Bush offers stale jokes about economists "on the one hand and on the other hand" and comments about "exacting fiscal discipline" in his Brit Hume interview.
"I've done a little poking around in the ITC reports.... The astonishing thing to me is that, despite the individual pieces of data that tell a pretty bad story about the tariffs, the tone of the report is remarkably positive about them."
Imagine the political pressure on the ITC! Imagine the political pressure on the Environmental Protection Agency to assure New York that all was well with air quality about the World Trade Center tragedy.
I worked for the Bureau of International Labor Affairs with the Department of Labor in Washington in the 70's. I was an economist who spacialised in analysing the impact of steel imports on US industry and our decisions were used by the ITC and other federal groups to support concessions to the industry and benefits to steel workers. I routinely concluded that job losses were caused by macroeconomic effects, i.e., declining demand during economic downturns. Alsmost as routinely, I was called by the office director telling me to reverse my finding. He frequently noted that he was getting calls from the whitehouse or congressman asking about progress on our analysis. My office director would tell me to reverse my findings for reasons like 'he wasn't going to tell a senator who was on the appropriations committee for our budget that we were going to issue a determination that could cost his state $2b in extended unemployment benefits'. I would review my data and very seldom find anything that would merit a reversal of the conclusion. He would frequently send my determination back to my immediate boss who would re-write the analysis and reverse the determination. Even a casual review of his analysis would clearly not support the new determination and sounded like the ITC findings related to the 2001 steel tariffs. Somethings never change.