Every one of these would deny it, yet it really is undeniable. Socialism is about the government owning the means of production and directing its use to the ends of the state rather than the ends of consumers. What our political class wants is not exactly that; I should have more accurately called it fascism, as fascism allows for private ownership of the means of production but directed in the service of the state. And that is pretty much what all industrial policy supporters want. But the economically descriptive term of fascist comes with such baggage…to use that term in my title would no doubt trigger a few.

Regardless, where is the unity? Normally there is little unity except in the principle that industrial policy is desired. For example, the Democrats love industrial policy to direct the auto manufacturers to embrace electric vehicles while terminating the internal combustion engine. But that industrial policy is anathema to Mr. Trump and Mr. Vance, but they are fully supportive of other industrial policy initiatives. After all, “We believe that a million cheap, knockoff toasters aren’t worth the price of a single American manufacturing job.” So, no, you can’t buy a cheap imported toaster. But there is unity finally in this cacophony of economic ignorance: Ms. Harris has now joined Mr. Trump and Mr. Biden (ensuring that Mr. Vance and Mr. Walz are all moving in lock step) that U.S. Steel should not be allowed to merge with Nippon Steel.

We’ve already discussed why this is happening; Cleveland Cliffs (another U.S. Steel manufacturer) wants to buy U.S. Steel and offered a much lower price. Further, this would put Cleveland Cliffs in the monopoly position of the only domestic manufacturer of certain types of steel, teeing them up for tremendous monopoly profits as more tariffs are levied against foreign steel. The Nippon Steel offering would expand investment in U.S. Steel’s operations and keep U.S. Steel where it is (i.e., no operations moving to Mexico or China); only the company would be owned by the shareholders of a foreign company, from a country that is one of our closest allies against the PRC. But Nippon Steel isn’t in a position of being able to bring union voters and crony capitalists to bear on this election cycle.

Who loses in this? Not only U.S. Steel’s shareholders, but longer term their workers lose, since there won’t be the same investment that Nippon Steel is prepared to make to increase productivity, which is the only long term sustainable way to increase wages. Of course U.S. consumers will lose, as Cleveland Cliffs will exploit their monopoly position where they can to increase prices. Cleveland Cliffs, having been rewarded for investing in lobbyists to sway political favors, will no doubt use even more of their profits for further rent seeking (buying political favors) behavior rather than investing further in their business to make it more productive and competitive on an international level, which will beget yet further calls for more tariffs and more protection. The WSJ called it right in their editorial two days ago, “Biden, Harris, Trump, Vance and the Dumbest Economic* Idea”:

We’ll admit that the competition for the dumbest economic policy is fierce these days—with prices controls on food, a 10% across-the-board tariff, and national rent control on the table. But opposition to the Nippon deal deserves careful consideration for this distinct dishonor given the deal’s manifest benefits and nonexistent harm.

*Here is a deeper dive into the economics of this. When Nippon Steel is willing to pay more than Cleveland Cliffs, it means they believe they have a more valuable way to use the assets of US Steel than does Cleveland Cliffs–they’re not in the business of overpaying for assets and losing money. This is because they believe their $1.4B in additional investment in U.S. Steel manufacturing will make the combined entity even more productive, leading to higher profits, as well as higher steel output from American steel manufacturers. So a Nippon Steel deal leads to higher productivity, higher output, higher wages, and higher employment. What did the lower Cleveland Cliffs offer suggest? It’s possible that Cleveland Cliffs also can create a lot of value with the combined company, and maybe their lowball offer coupled with political payoffs is just a cheaper way to buy the company than paying a market price. But given their political focus I’m doubtful. Prima facie, their lower offer suggests the combined entity would be less profitable, with less total output for American steel production. This is the political allocation of capital and it’s the bitter fruit of conservative and liberal leftists.

EDIT Update: One more very important comment for Christians to consider. This specific industrial policy is pure theft, a taking without just compensation. The shareholders are the owners of the company, and they have every right to sell to whomever they want that provides the most attractive offer. We do have national security restrictions and yes, I consider those appropriate. But that is not remotely in play here, we only have the “American steel should be owned by Americans” spurious reasoning without any economic or national security case being made as to why that is so. First Japan is a close ally. Second, all the assets (which would be expanded by add’l Nippon Steel investment of $1.4B) remain in the U.S. Should there ever be a national defense emergency the country could nationalize the company then (but they should pay a market price even then!). This is political theft by corrupt politicians in pursuit of narrow special interest votes (unions and Cleveland Cliffs). We need to call them as we see them. BTW, if any of you disagree, I would love to see you make the case in the comments. Maybe there is a case to be made. I haven’t seen one.