02 May 2007


Listening to NPR the other day, I heard an ad from one of the sponsors, steel.org. I wish I had it verbatim, but the spot went something like

"Each job in the steel industry creates 4 more jobs in other sectors. Each year American steel workers spend over $40 million on computers and high tech products. New Steel; feel the strength."

Now maybe I have the numbers 4 and $40 million off, but you get the gist. My initial reaction was probably the one steel.org wanted -- wow, the steel industry is creating jobs and supporting growth in the high tech sector. Upon reflection, though, neither of those statistics struck me as reasons to support the American Iron and Steel Institute.

"Each job in steel creates 4 jobs in other sectors" -- This would appear to suggest that more jobs in steel is beneficial to the economy as a whole. More accurately, that is, the steel produced by one steel worker provides material support for four jobs in other sectors. All the more reason to have it made most cheaply, thereby increasing the amount other sectors can purchase and hence the number of other jobs those sectors support. If more steel means more jobs, let's get the most steel possible (which means buying it as cheaply as possible). In fact, there is a point at which more steel may create more jobs, but not more efficient jobs. At that point more jobs in steel is bad for the economy because it means fewer in industries with higher need.

"Each year American steel workers spend over $40 million on computers and high tech products." -- Bill Gates probably spends a similar amount on various products, many of which are high tech in nature. The truth is he consumes much of their value, just like the steel workers consume much of the value of the products they buy. Ostensibly, the AISI wants us to believe this is somehow good for the US because it stimulates the high tech sector. In fact, we'd be better off if the steel workers socked away their money instead. As it is, we have $40 million fewer high tech products from which to choose, meaning that the ones that remain are $40 million more expensive (supply and demand). If the workers save their money, we have $40 million extra worth of products on the market, which puts downward pressure on the cost. In addition, investors have $40 million extra from which to borrow and advance the technology that drives the high tech sector.

Nice try, AISI.

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