AIDING A PRODUCER TO THE DETRIMENT OF ITS CONSUMERS.

Cafe Hayek links to an instructive Wall Street Journal commentary by a member of a trade association whose interests were at odds with those of the American Iron and Steel Institute.

The Institute, understandably, make all sorts of national-security arguments for not being dependent on foreign steel, and all sorts of injured-innocence arguments about dumping, and they got much of what they asked for.

But the imports might have served a purpose, and who knows what sort of expense-preference behavior is at work when deliveries of steel from overseas are more dependable than deliveries from the local mill.

By the late 1980s, high steel prices and quota-induced shortages were undermining factory efficiency as just-in-time processes gave way to just-in-case workarounds. Unconcerned, the steel industry demanded five more years of even tighter quotas.

That launched a political fight sometimes called the Steel Wars. A robust coalition of American steel users—led by Caterpillar, where [author Bill Lane] worked—was formed to push for an end to the quotas. Big companies provided much of the political access, but what carried the day was the hundreds of small metal-bending concerns represented by the Precision Metalforming Association. Congress quickly learned that 30 times as many people worked in factories using steel than in mills making it—and they were mad. Most of them seemed to be located in the same congressional districts as steelworkers.

And thus does the rent-seeking of the Institute provoke the formation of another coalition of rent-seekers, the Coalition of American Steel Using Manufacturers.  That coalition had more potential voters than the Institute, as the local mill was slow to deliver steel to fabricators not far from the plant gate.  There are agglomeration economies in having the fabricators close to each other, as well as locational advantages in having a ready supply of prompt industrial scrap to recycle.  There's been plenty of creative destruction at work in steel manufacturing, which ought to provide cheaper, better steel to the fabricators, as well as incentives to, oh, deliver the sheets and bars when the fabricators are expecting them.