Obama has promised big spending on infrastructure. This should be a welcome program for the steel industry, but the steel industry wants more; they want strict Buy American provisions.

Leading this in Dan DeMicco, CEO of Nucor, the largest American steel maker. Ken Iverson, the famous head of Nucor during its great growth years stood uniquely against government protection of the steel industry, and Ken led the dramatic improvement of domestic steel productivity.

Such protectionist legislation is bad for several reasons:

It encourages similar constraints overseas and thus limits our export capabilities, not only in steel but in other commodities and products. It increases the costs of our federal projects by eliminating much competition. It allocates supply disproportionately to federal vs private projects, causing possible supply shortages in the private sector. It increases distribution costs by making supplier keep duel inventories of domestic and imported if they sell material for use in federal projects.

But such rules are unclear and possibly self defeating. Does it restrict steel produced domestically by foreign owned mills? How will that affect domestic jobs? Will that not encourage foreign mills to open up domestic presences to compete even more with domestic mills? Was GM helped by the proliferation of foreign owned auto plants developed in the U.S.?

Such protectionist platitudes hide the fact that the extra costs they incur is born by some one else; and we know who that is.

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