Steel Imports. Why is it so difficult to answer political questions factually?

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Steve3007
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Steel Imports. Why is it so difficult to answer political questions factually?

Post by Steve3007 » March 2nd, 2018, 8:34 am

A major story in the news these last few days is the US president's declaration of intent to impose large tariffs on imports of steel and aluminium to the US. General economic opinion appears to be against this idea and worried that it will result in a needless lose-lose trade war. The EU, China and other countries are threatening retaliatory measures. But if the tariffs were imposed only on China, would they be justified? Is it true that China is "dumping" steel on world markets by selling it at artificially low prices?

In my naivety, I thought it might be possible to find an objective true/false answer to this particular question relatively quickly without having to take a degree in global economics. I had a quick look. One of the articles I found discussing the subject was this:

http://theconversation.com/fact-check-i ... teel-76916

At first, the answer seemed to be clear: Yes China is indeed harming global markets by dumping steel, so maybe the proposed trade war with China, at least, might be justified. But the answer doesn't seem to be as clear as that because, according to the review at the bottom of the article, it doesn't seem to be possible to objectively define a global fair market price for steel.

Given that even apparently factual questions are open to debate, do we the economically semi-literate public have any hope of deciding whether or not we agree with our leaders' economic decisions?
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea." - Eric Cantona.

Eduk
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Re: Steel Imports. Why is it so difficult to answer political questions factually?

Post by Eduk » March 2nd, 2018, 3:46 pm

So my first thought is that if you know nothing about economics (I think you're being kind saying semi literate) then you should expect not to be able to agree or disagree with your representatives economic decisions.
Then I think well wouldn't it be nice if they laid out the key principles and philosophies which guide their economic decisions and attempt to clarify and explain to the public in terms that could be understood.
Then I think economics by necessity must be hidden from public knowledge. After all if you are predictable you can be turned into a money pump. In the real world an eye for an eye is necessary.
Then I think the average politician doesn't understand economics any better than the average illiterate person. But they do understand taking advantage of people, so in many ways they are 'better' economically than the average.
I'm not sure what all that adds up to though.

Steve3007
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Re: Steel Imports. Why is it so difficult to answer political questions factually?

Post by Steve3007 » March 3rd, 2018, 7:52 am

Eduk wrote:So my first thought is that if you know nothing about economics (I think you're being kind saying semi literate) then you should expect not to be able to agree or disagree with your representatives economic decisions.
Yes, sounds logical so far. (Although it's interesting that you appear to be down with this modern trend of beginning sentences with the word "so". It's even been remarked on by such people as Stephen Fry and John Humphrys on Radio 4. Sorry. Completely irrelevant. Do go on.)
Then I think well wouldn't it be nice if they laid out the key principles and philosophies which guide their economic decisions and attempt to clarify and explain to the public in terms that could be understood.
Yes. Trump kind of does that, I suppose. Some of our politicians do it on subjects like Brexit and the funding of public services. It still doesn't tell us how likely the proposed legislative actions are to achieve the ends of those principles and philosophies.
Then I think economics by necessity must be hidden from public knowledge. After all if you are predictable you can be turned into a money pump. In the real world an eye for an eye is necessary.
You mean, life is game of poker and our leaders should keep their economic cards close to their chests so our rivals don't see them?
Then I think the average politician doesn't understand economics any better than the average illiterate person. But they do understand taking advantage of people, so in many ways they are 'better' economically than the average.
Yes, so as long as the gut instinct of the street fighter translates successfully to a country's economic policy, everything should work out.
I'm not sure what all that adds up to though.
Me neither.
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea." - Eric Cantona.

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LuckyR
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Re: Steel Imports. Why is it so difficult to answer political questions factually?

Post by LuckyR » March 8th, 2018, 1:57 am

Steve3007 wrote:
March 2nd, 2018, 8:34 am
A major story in the news these last few days is the US president's declaration of intent to impose large tariffs on imports of steel and aluminium to the US. General economic opinion appears to be against this idea and worried that it will result in a needless lose-lose trade war. The EU, China and other countries are threatening retaliatory measures. But if the tariffs were imposed only on China, would they be justified? Is it true that China is "dumping" steel on world markets by selling it at artificially low prices?

In my naivety, I thought it might be possible to find an objective true/false answer to this particular question relatively quickly without having to take a degree in global economics. I had a quick look. One of the articles I found discussing the subject was this:

http://theconversation.com/fact-check-i ... teel-76916

At first, the answer seemed to be clear: Yes China is indeed harming global markets by dumping steel, so maybe the proposed trade war with China, at least, might be justified. But the answer doesn't seem to be as clear as that because, according to the review at the bottom of the article, it doesn't seem to be possible to objectively define a global fair market price for steel.

Given that even apparently factual questions are open to debate, do we the economically semi-literate public have any hope of deciding whether or not we agree with our leaders' economic decisions?
Your post brings up a good point, namely what is the appropriate role of and respect for "expert opinion"? In these complicated areas we cannot expect to substitute a quick review for the knowledge professionals have acquired over their careers. Having said that, experts have a longstanding track-record of being poor predictors of future events. I am speaking of the soft sciences of biology and medicine to a minor extent as well as the downright squishy sciences like economics and sociology to a huge extent.
"As usual... it depends."

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Frost
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Re: Steel Imports. Why is it so difficult to answer political questions factually?

Post by Frost » March 8th, 2018, 9:28 am

Steve3007 wrote:
March 2nd, 2018, 8:34 am
A major story in the news these last few days is the US president's declaration of intent to impose large tariffs on imports of steel and aluminium to the US. General economic opinion appears to be against this idea and worried that it will result in a needless lose-lose trade war. The EU, China and other countries are threatening retaliatory measures. But if the tariffs were imposed only on China, would they be justified? Is it true that China is "dumping" steel on world markets by selling it at artificially low prices?

In my naivety, I thought it might be possible to find an objective true/false answer to this particular question relatively quickly without having to take a degree in global economics. I had a quick look. One of the articles I found discussing the subject was this:

http://theconversation.com/fact-check-i ... teel-76916

At first, the answer seemed to be clear: Yes China is indeed harming global markets by dumping steel, so maybe the proposed trade war with China, at least, might be justified. But the answer doesn't seem to be as clear as that because, according to the review at the bottom of the article, it doesn't seem to be possible to objectively define a global fair market price for steel.

Given that even apparently factual questions are open to debate, do we the economically semi-literate public have any hope of deciding whether or not we agree with our leaders' economic decisions?
Steve, Ricardo's Law of Comparative Advantage settles the matter decisively, which is that China is not harming anyone by producing cheap steel. Do less competitive industries lose jobs? Yes, but then money is freed up for other uses instead of higher steel prices.

With that said, there is concern with China's artificially boosted economy, which is unstable. If they collapse, steel production will not be able to be maintained, especially considering it is a heavy capital goods industry which is hit hard from credit expansion-induced artificial booms. Such bust would produce a temporary readjustment period. So there is legitimate beef with China in their artificially stimulated economies, but the U.S. certainly cannot complain about that. Just remember the Great Depression that started in 1929 which was a global problem because of the U.S. inflating its currency to try to help Britain post WW1.

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