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Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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Samizdata quote of the day – Now they’ve bought it they’ve no clue about British Steel The sad reality here is that virgin steel production in the rich countries is a dying technology. We just don’t need it any more. Pretty much every steel we do want can be made from scrap in an electric arc furnace. And those few – very few – steels that cannot be won’t cover the costs of running our own blast furnace. It’s over, like hydraulic power companies and thorium lamp mantles. This is, of course, what happens with every company, every technology, eventually. It stops being worth doing so people stop doing it.
The only thing of value here is what lefties and socialists put on manly men doing manly things, buffly. And while that’s a perfectly acceptable, even sensible, kink there’s no reason why the rest of us have to pay for that. But there we are, nothing so conservative as a socialist or lefty. Nothing can ever be allowed to die off, all must be preserved.
And, you know, wouldn’t it be nice if they’d thought through what their plan was going to be before they spent the half billion? With that more – ooooh, much more – to come?
– Tim Worstall
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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I remember the Obama ‘stimulus’ package being altered in response to complaints of ‘We don’t want this stimulus package to just create jobs for burly men.’
So is this a UK/US difference, or just socialist party lines making their usual frequent changes?
Does the defense industry need the higher quality steel that must be made virgin? I don’t really know, but I suppose that is potentially a justification for keeping some virgin capacity in Britain.
It is also worth considering — is the purpose of a business to make products and services, and employment is just a necessity to make that happen, or is the purpose of a business to produce jobs and the products and services are a necessity to make that happen? I mean obviously I think the former, but I think a lot of people think the latter. Can we also consider the total systemic cost? In system A we have an unprofitable steel plant subsidized by the government that produces two things — steel and jobs. In system B we have no steel plan but the subsidy instead goes to pay the unemployment benefits of the people who used to work there. Can we also factor in the second order costs of what happens when large numbers of people don’t have a job and are idle, given that idle hands are never a good thing? Of course better if these ex employees do something different and useful and produce profit that way, but in these towns where large number of people are unemployed it is pretty hard to start again — even if Joe Biden thinks they should all “learn to code.”
Obviously, I am very pro free markets so hate these sorts of interventions, but I think these are questions, questions about our axioms and assumptions. They are worth asking especially at this time in history where new technologies like AI and robotics could well cause massive displacement in traditional job allocations. For sure humans still have a lot to contribute in such an economy, but are we all willing to shake it up and make the necessary changes? It is easy to think of these steel workers in their mono culture, unable to adapt. But what about the rest of us when our traditional job allocations are consumed by the AI juggernaut? Can we, are we willing to adapt? Do we even know what to do?
Cargo cultism at its root. Society was happy and profitable while our big steelmaker was alive and doing mysterious things (like making money), and so if we keep it alive, we’ll be happy and profitable too!
It’s like that three-part gnomes-underpants thing. They don’t ever look too closely at that missing middle step.
I wonder how many burly men would have been employed if the money had been used to sort out our network of crumbling, potholed roads? Or are shitty roads another form of make-work for car mechanics?
How much would running a blast furnace cost with cheap home produced coal and no carbon taxes? And perhaps a little less attention to the hurt feelings of a few newts? (Yes , blasphemy, I know!) Might even make a profit and supply cheap steel to help other industries become profitable without subsidies. ( Double plus ungood blasphemy.)
If “rich countries” do not even make steel they will not stay rich.
Newsflash – playing with Credit Bubbles in “financial centres” is not a real economy.
Rather than attacking the government created sky-high energy prices, and government backed “collective bargaining”, that are destroying British industry, not just the steel industry – basically every industry, the post pretends that industry does not matter – than a nation of close to 70 million people can just import everything it needs, and “pay for” the imports with IOUs.
It matters that the People’s Republic of China now produces many more times steel than the United States does – and that Chinese manufacturing industry in general is twice the size of American manufacturing.
And it certainly matters that British industry, not “just” the steel industry – every industry, is in terrible trouble.
As well as the illogical nature of the article – the flippant language of the article is also stupid.
No, most people who think manufacturing matters are not homosexuals (not that it would be relevant if they were homosexuals) – with a “kink” for “manly man, doing manly things – buffly”.
A country of close to 70 million people can not survive if it imports food, raw materials AND manufactured goods, and “pays for” these imports with endless I.O.U.s
Work out WHY the steel industry and other industries are no longer competitive in Britain – and correct policy so they are competitive. Get rid of the government interventions that have made energy so expensive in Britain – and get rid of government backing for “Collective Bargaining” – no more nonsense such as the obstruction of the entrance of place of business being legalized as “peaceful picketing” (“dry water”, “friendly intimidation”).
British industry used to dominate the world and its relative decline (we are no longer even in the top ten industrial nations) was not, wholly, a “natural process” – it was also the result of government interventions, from Prime Minister Disraeli (yes all the way back to 1875) to Prime Minister Burnham.
But Socialist morons (but I repeat myself) do think that the only justifiable industry is stuff that injures you if you drop it on your foot. We’ve invented tractors and steam shovels and blasting powder, yet still there’s political hard-on for sweaty men swinging mallets.
I think Paul is largely correct. And it is not just making things. The absolute choker on the UK economy is energy costs. Yeah, for sure there are other issues such as NI, business rates, ludicrous red-tape… But energy costs are massive here. Yes, in windy Britain which has oil and gas and invented nuclear power…
@Paul Marks, who wrote “If “rich countries” do not even make steel they will not stay rich.”
With all due respect, this is mercantilist nonsense. Rich countries should make steel only if ut make economic sense for them to do so – not as some sort of nationalist shibboleth. And, while it may have made economic sense for the UK to make steel 100 years ago, it no longer does. The economically-sensible thing to do, in the world of 2026, is to recycle steel, and to import the small quantities that cannot be economically made by recycling from places where it makes economic sense to get them.
Consider that akluminium alloys are far-more strategically important than steel, yet the UK has never had a significant aluminium production capacity and has always imported these critical materials from places where they made far-more economic sense to refine them. What’s so special about steel? apart from votes, that is?
llater,
llamas
NickM – sadly so.
llamas – read my comments again.
Paul Marks – with all due respect, I did, and it didn’t make any more sense the second time. Perhaps you can clarify.
llater,
llamas
jgh,
Like, whatever! I don’t think our socialist morons actually give a monkey’s about industry making things. It is not intersectional enough. I do. You know what I’d like to spend the rest of my life doing? Perhaps creating a gender-neutral “safe” space for pan-sexual persons of restricted growth? Actually, didn’t Disney do that way back? My understanding is the the Munchkins got up to antics… Anyway, whatever. I wanna build computers. High-end custom machines specifically tailored to the client. Not cheap but you will get bang for buck. I have done this for myself (and a few others) for years. I take care. I route cables with care, I get cooling spot-on (not unrelated to how the cables go), I know specs. And you know what else? I just love it when I get a pile of bits to fire-up. When I take a bunch of what, to the unskilled eye, looks like “bits and bobs” and a true monster (a gaming Colossus, a graphics workstation – or whatever you want!) comes to life with the fans purring and the LEDs lit. I just love it when a PC comes together.
Fraser –
… is the purpose of a business to make products and services, and employment is just a necessity to make that happen, or is the purpose of a business to produce jobs and the products and services are a necessity to make that happen?
Adam Smith worked this out 250 years ago. The answer to your question is: neither. The purpose of production is consumption. There is no use in a business that produces something that no one wants.
Yes, the purpose of a business is to make products and services, but that doesn’t go far enough. The products and services have to be those that a sufficient number of consumers are willing to hand over their money so that they may consume those products.
Labor, i.e., “jobs”, is nothing more than another cost in the production of those goods and services, one that goes in the same debit page of the ledger as input materials.
@Philip Scott Thomas
Labor, i.e., “jobs”, is nothing more than another cost in the production of those goods and services, one that goes in the same debit page of the ledger as input materials.
I think that is true too, but many people do not, and that is precisely the point I was making.
If one is intending to return to the Bronze Age then there is nothing special about steel – indeed if we are to reject manufacturing entirely, not intending to make anything, then there is no need to worry about high energy costs, government backed union power, high government spending and taxation – or anything else.
Indeed farming is also not necessary – as we can hunt, and eat, each other.
The above is indeed a plan – but not a good one.
I suggest that Mr Worstall reconsider his position.
Asking as someone not knowledgeable about the steel industry:
Have we truly made as much steel as we need, such that we CAN look to the far cheaper re-use of existing stocks and scrap for future requirements?
I think that much of this discussion depends on the answer to this question.
bobby b. – I think the answer to your question is ‘not yet – but soon’.
Despite the claims of those trying desperately to keep the 19th-century technology of the UK steel industry going, the vast majority of steel used in developed nations is boring, simple, low-alloy stuff. Things like rebar, basic structural steel sections and beams. Thse are easily-made with recycled steel. The next class up, the HSLA (High Strength Low Alloy) steels, are a much-smaller proportion of the total steel usage, and these are likewise easily made by recycling steel, albeit at higher cost due to the more-complex processing required to get to specific compositions. The specialty steels – tool steels, high alloy steels, very specific compositions like railway steels, earthmoving equipment, that sort of thing – which are most-easily made from more-or-less virgin low-alloy steel – are a drop in the bucket of total usage.
The advances made in the last few years in in-process metallurgy – checking and adjusting alloys in the melt – combined with the proliferation of induction furnace technology, have transformed the steel industry. Much of this is driven by simple energy economics – the greatest part of the energy cost of making steel is in digging up and transporting the raw materials and the multiple melts required to make it into steel – any steel. Compared with that, the energy cost of recovering, transporting and converting any scrap steel into new, useable steel is absolutely trivial. It’s part of what has turned steel scrap from what was close-to-being nuisance waste 40 years ago into a valuable and sought-after commodity today. I know of industrial buildings around here that were purchased so that they could be demolished simply to recover the steel, and the buyer expects to turn a profit on the deal.
In another 10 or 20 years, when developing economies catch up with these technologies, while I doubt that the production of new, ‘virgin’ steels will end entirely, I doubt it will amount to more than a few % of what we make even today. Making iron and steel from raw ore is just such a fabulously-costly and -complex business that almost-any other way to get steel is better than that.
llater,
llamas
For those who really do not know…..
Sir Dudley North, Adam Smith, A.L. Perry (the leading American free trade economist of the 19th century), and so on, did NOT support endless imports “paid for” by IOUs – they supported production, imports of some goods – paid for by the exports of other goods.
The modern doctrine that even the steel industry (steel is what many other things are made of) does not matter – because we can produce endless “money” (fiat money) from nothing, and use it to “pay for” the import of everything – would have struck Adam Smith and the others as insane – because it is insane.
Believing that a nation of almost 70 million people can not survive by creating endless fiat “money” and playing with Credit Bubbles is not “mercantalism” – production (actually making things) is what Sir Dudley North, Dean Tucker, Adam Smith, A.L. Perry, Frank Fetter and the other economists believed in, they were not “mercantalists” – and believing that money should be a real commodity (such as gold or silver) that people choose to value before-and-apart-from its use as money does NOT make someone a “mercantalist” either (indeed all the great economists were “Hard Money” people).
Reduce energy costs by reverseing the government interventions that have made energy so expensive, stop government backed “Collective Bargaining” (see W.H. Hutt “The Strike Threat System” – the system is a the creation of government), radically reduce government spending and taxation.
Save the steel industry, the chemical industry, and other basic industries – save them by rolling back the state (and the clients of the state – such as the unions), do not pretend that industry, making things, does-not-matter.
It may be too late for the United Kingdom – the decay may have gone too far, but it is not too late for the United States.
Save America – save American industry and, yes, American farming. The world does not love Americans with their “reactionary” Freedom of Speech and Right to Keep and Bear Arms – it will not feed them or provide them with manufactured goods in return for endless fiat money IOUs, not for ever. It may do so for awhile – till Americans are dependent, but then the International Community will tighten the noose around their necks – very Agenda 2030, “you will own nothing and you will be happy” – for government and the international corporate entities (that work with government) will have their boot on your throat.
Save American industry and American farming – by rolling back the government, for example those regulations that have concentrated such things as meat processing in a few, Corporate, hands.
Again I wish Britain could also be saved – but the flippant nature of the article, and of political discourse generally here (with its assumption that neither farming or industry matter – that all that matters is creating “money” from nothing and playing with Credit Bubbles) indicates that there is little hope for this nation, for the British people.
Today’s speech by the Prime Minister of the United Kingdom was deeply depressing.
True he is just a figurehead – but this speech represents the thinking of the establishment in general, it is Policy (capital P).
More regulations, the undermining of private property rights (they can even take your house now – if it is not inhabited for more than six months – for whatever reason), more wild government spending, more state control.
It will not just be the steel industry that the government destroys – it will be all productive industries.
They will rely on creating “money” from nothing (the antics of Bank of England and “The City” that depends upon these antics) – not understanding that this will make the “money” worthless.
In the United States there is still some hope (not much hope – but some) – for example a great new steel works building project was announced a couple of days ago.
Here in the United Kingdom there may well be no hope left – which makes the flippant tone of the post even less appropriate.
President Trump announces a new, $15 billion steel plant in Iowa, with a feeder iron ore mine in Minnesota, the largest steel plant in US history. 10 million tons of virgin steel a year at full production.
It may be a heresy in this church to say it, but economics is not the only consideration in sourcing important materials. You may be buying from your rivals, or enemies. The current situation, where the US is pressuring China on oil, and China is pressuring the US on rare earth metals, is one example.
The argument that virgin steel production is inefficient because of energy costs is likewise unpersuasive. Energy is abundant beyond measure, unlike the intelligence and courage to use it. Making new steel has been profitable and efficient for a very long time.
Which triggered my question above on the viability of/need for virgin steel production.
Minnesotan here. The newly reopened Iron Range steel mine in Northern Minnesota is a Big Thing here, for an area that used to be the steel capital of the US but has fallen on dead times.
(We lost out on placing the mill next to the mine – the obvious efficient plan – due to our Green and Stupid state government. I’m still amazed the mine was allowed.)
My concern was that we’re opening an anachronistic industry for sound and fury instead of economic gain. If re-use can accomplish what we really need, well, it’s a heck of a lot cheaper than mining/transporting/milling.
(Thanks for the analysis, llamas.)
“No, most people who think manufacturing matters are not homosexuals (not that it would be relevant if they were homosexuals) – with a “kink” for “manly man, doing manly things – buffly”.”
I have heard it whispered that there’s a section of society that can, occasionally, find interest in a sweaty yet fit male physique – heterosexual women.
We got any of them left these days?