Friday, January 20, 2017
THE PLUNDERING REGIME OF DONALD TRUMP: SERVING THE SUPER RICH OFF OUR BACKS - Protectionist profiteer Wilbur Ross Would Make America China Again
Protectionist profiteer Wilbur Ross Would Make America China Again: Wilbur Ross, President-elect Trump's pick for Commerce Secretary, doesn't merely espouse government planning of the economy, he lobbies for it and profits from it. One of the problems in our country, Ross said in 2010, is we don't have an industrial policy. By industrial policy, Ross meant federal laws that steer resources to certain sectors for certain activities. Ross, in a CNBC interview in the summer of 2010, expressed his admiration for China's five-year plans, the ones originated by Communist revolutionary Mao Zedong. Is that something we should do here, Wilbur? journalist Andy Serwer asked. Yes, Ross responded, before lamenting our lack of an industrial policy. Ross explained how he would use government to steer the economic ship: We ought, as a country, to decide which industries are we going to really promote — the so-called industries of the future.
"One of the problems in our country," Ross said in 2010, "is we don't have an industrial policy." By "industrial policy," Ross meant federal laws that steer resources to certain sectors for certain activities.
Ross, in a CNBC interview in the summer of 2010, expressed his admiration for China's five-year plans, the ones originated by Communist revolutionary Mao Zedong. "Is that something we should do here, Wilbur?" journalist Andy Serwer asked.
"Yes," Ross responded, before lamenting our lack of an "industrial policy."
Ross explained how he would use government to steer the economic ship: "We ought, as a country, to decide which industries are we going to really promote — the so-called industries of the future."
This may sound like the sort of picking-winners-and-losers that defined Obamanomics. But in fact, went further, chastising Obama as too laissez-faire.
"The Obama administration talks a lot about green industries — wind power and solar," Ross said. "Well, the truth is, China did a lot about it." Ross then praised the Communist Chinese government for forcing customers to buy wind- and solar-generated power at inflated prices.
"They're now the leader in wind technology."
If only Obama had China-ed it up a bit more, Solyndra might be alive today.
This is the norm for Ross: advocating government intervention, and favoring the judgment of central planners over the judgment of the market.
This sort of industrial planning isn't just less economically efficient than free enterprise, it's also a recipe for cronyism — for enriching the politically connected at the expense of outsiders. Ross's own career shows this.
Ross's claim to business fame has been buying up failed companies, saving them, and selling them for a profit — sometimes a massive profit. This part of what he does, often disparaged as "vulture capitalism," is actually useful to society, because it returns the useful assets of failing businesses to where they can create value. This prevents fire-sales and it minimizes idle capital, while making men like Ross very wealthy. That's a good thing.
But there's also a dark side: Those who buy up the debt or equity of distressed companies often find that big government is essential to their turnaround. And Ross played this game more than once.
Ross in February of 2002 bought up LTV Steel and Acme Steel, folding them into his new creation, International Steel Group. Ross got a discount because domestic steel companies were withering under competition from lower-priced foreign producers. The next month, though, the Bush administration imposed tariffs, as high as 30 percent, on imported steel.
International Steel spent years lobbying to extend and expand such protectionist measures. In mid-2004, Ross took his company public and made billions in profits.
Ross pulled off a similar gambit a couple of years later, according to Dan Ikenson at the libertarian Cato Institute: "Ross was a prominent advocate of textile quotas, which were important to his turning a profit for International Textile Group, essentially a replica of his steel-industry foray."
Ross's International Coal Group (which bought up failing coal companies) also relied on government aid, including subsidies from Illinois.
And while these subsidies and protectionist measures saved jobs at a few specific firms, they cost U.S. jobs elsewhere. U.S. companies that use steel — such as automakers — suffered thanks to the tariffs that made Ross billions.
Wilbur Ross's success in business is, to all appearances, mostly due to risk-taking and smarts. His belief in Chinese-style industrial policy is probably honestly held. But the fact that central planning has enriched Ross personally tells us something: Big government tends to enrich the wealthy and well-connected, at the expense of everyone else.
Timothy P. Carney, the Washington Examiner's senior political columnist, can be contacted at email@example.com. His column appears Tuesday and Thursday nights on washingtonexaminer.com.
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