Don't Stop the Steel - The Manufactured 'Fiasco' Surrounding U.S. Steel

Speaking recently, Lourenco Goncalves (CEO of steelmaker Cleveland-Cliffs) labeled Japanese Nippon Steel’s ongoing acquisition of U.S. Steel a “fiasco.” Nippon (the world’s fourth-largest steel producer) paid handsomely for the smaller firm (the 27th-largest) — $14.9 billion. In doing so, Nippon outbid Goncalves’ Cleveland-Cliffs by 25 percent ($55 per share to $40). Anticipating significant profit potential, the Japanese company plans to modernize the U.S. Steel’s outdated facilities and tighten up its operations. Moreover, Nippon pledged to retain U.S. Steel’s current workforce, to honor its union contracts, and to keep its iconic company name. What should have been a simple acquisition by a large, well-run firm taking over a smaller, floundering one ended up being needlessly complicated. The “fiasco” originated not in any misstep by Nippon or U.S. Steel but from political cronyism. Much of the fault lies with Goncalves himself and his union allies. To further their personal interests,
they lobbied the federal government to block the deal. Still more fault lies with federal officials (including President Joe Biden and several senators) whose economically nationalist outlook apes Goncalves’ views. This coalition is threatening a deal that would ordinarily speed through regulatory review — to the benefit of American workers, industry, and consumers.

Each rationale advanced against the deal lacks internal consistency or factual accuracy. No valid economic rationale or national-security imperative suggests that the merger should not proceed. In the end, opposition seems grounded in a single dubious proposition: That it is inherently bad that the once-great U.S. Steel should come under foreign ownership. This argument has powerful emotional resonance for a certain phylum of populist politician, but it provides little basis for economic regulation. U.S. Steel, meanwhile, has become bloated and uncompetitive, more a has-been brand name than an economic powerhouse. Once the world’s largest corporation, U.S. Steel has mismanaged itself into obscurity, endangering its employees’ jobs along with its own shareholders’ profits. While it remains America’s third-largest steelmaker, the company has preferred rent-seeking to innovation, falling from the S&P 500 in 2014. In August, U.S. Steel’s market capitalization made it only the 925th-largest
American company, though it rose once the Nippon acquisition appeared likely. Its roughly 22,500-person workforce numbers fewer than the respective workforces of Petco and Dave & Busters. Nippon’s entry would likely reverse this decline. “Without exception Nippon has some of the highest-quality steel-making technology of any steel producer in the world,” Bruce Craig, a veteran steel metallurgical engineer, wrote to The Wall Street Journal. “America would benefit by having Nippon Steel upgrade the quality of our steel-making,” he continued.

Aussie Hack Proves Worst Fears of Age Verification

At the state and federal level there has been a flurry of interest in and implementation of various forms of digital age verification for access to online content, from social media platforms to pornography. While there are legitimate concerns about children accessing potentially harmful content on the internet, skeptics of these policies have argued that they are both unconstitutional and present enormous privacy risks. While the courts weigh the former, hackers just proved the latter. This week, third-party IT vendor Outabox, which provided identity-verification services to Australian hospitality venues from which adolescents are barred, fell victim to a data breach, compromising the data of more than a million customers. A website purporting to belong to the hackers has threatened to release these records and claims the victims include senior government officials.

The Outabox hack gives the lie to the dubious claim that third-party services nullify the privacy risks that are inherent to age and identity verification. The fact remains that aggregating user data – especially sensitive, personal user data – provides attractive targets for cybercriminals, leading invariably to data breaches. Some age verification policies aimed at social media would still allow older adolescents access, meaning the pools of identification data created by these policies would include sensitive information about kids as well. As an international cadre of experts has acknowledged, there is no existing technology that is widely applicable, sufficiently reliable, and privacy-protective for digital age verification. There are, however, plenty of things governments can do to help protect children online without creating glaring problems. Online safety curriculums in schools and public education campaigns aimed at helping parents find and implement existing parental controls at
all levels of internet access (from the broadband provider, to the device, to the individual website) are perfectly constitutional and present no new privacy concerns.

Blogs:

Monday: Against Biden’s Newest Bid To Make Air Travel More Expensive ([link removed])

Tuesday: Bill of the Month: Government Spending Oversight Act of 2024 ([link removed]) and State Bill of the Month: Tennessee HB 2269 ([link removed])

Wednesday: What You Should Be Reading: April 2024 ([link removed]) and Delayed Menthol Ban Gives Biden Administration More Time to Reduce Smoking by Advancing Harm Reduction ([link removed])

Thursday: The EPA’s New Power Plant Rules Will Drain the Energy Out of America’s Power Grid ([link removed])

Friday: No Excuse for FOIA Backlogs ([link removed])

Media:

April 26, 2024: Reason Magazine ran TPA's op-ed, "Will Antitrust Policy Smother the Power of AI?"

April 26, 2024: The Advocate (New Orleans, LA) mentioned TPA in their article, "Conflict of interest concerns arise about state lawmaker's broadband bill."

April 26, 2024: Bangor Daily News ran TPA's op-ed, "Repeatedly raising the price of stamps doesn't work."

April 26, 2024: Herald and Review (Decatur, IL) ran TPA's op-ed, "Repeatedly raising the price of stamps doesn't work."

April 28, 2024: Walla Walla Union-Bulletin ran TPA's op-ed, "Repeatedly raising the price of stamps doesn't work."

April 28, 2024: Marin Independent Journal (Marin County, CA) ran TPA's op-ed, "Repeatedly raising the price of stamps doesn't work."

April 29, 2024: IPWatchdog mentioned TPA in their article, "FCC Restores Net Neutrality Regime Amid Criticism."

May 1, 2024: Real Clear Markets ran TPA's op-ed, "The Manufactured Fiasco Surrounding U.S. Steel."

May 3, 2024: Dan Savickas was quoted in the Daily Mail's article, "Joe Biden's raid on the rich: The 11 states where capital gains tax rates would increase to at least 50 percent."

May 3, 2024: Inside Sources ran TPA's op-ed, "Delay in Authorizing Vaping Devices Takes Toll on Public Health."

Have a great weekend!

Best,

Patrick Hedger
Executive Director
Taxpayers Protection Alliance
1101 14th Street, NW
Suite 1120
Washington, D.C. xxxxxx

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