And You Thought HMOs Were Heartless

The British National Health Service recently announced and odd treatment schedule for patients suffering from age-related macular degeneration, which is the leading cause of blindness in developed countries.

The NHS has decided that it will only approve treatment for macular degeneration once the disease is present in both eyes, and then it will only treat the eye that has been damaged the least with no treatment being recommended for the other eye.

Treatment for macular degeneration is widely available in the United States, Canada and most European countries, but apparently the British health system balks at the cost.

Source:

Outrage over blindness guidelines. The BBC, June 13, 2002.

More on the Counterproductive Nature of Sugar Tariffs

Back in February I mentioned that high tariffs on sugar had caused Kraft to announce that it would close the LifeSavers plant nearby and move it to Canada. The Christian Science Monitor has an article that points out this is an industry wide phenomenon in the hard candy industry.

According to the Monitor, high sugar prices are driving many hard candy manufacturers out of the United States. Brach’s Confections, which employs 1,100 people in the Chicago area, has announced that it will close down that factory by 2004. It will contract that work to Mexico or Argentina.

A George candy maker, Bobs Candies Inc., has moved its 40 percent of its candy cane operations to Mexico to avoid the high tariffs on sugar. Hershey Foods Corp. is closing its Colorado factory that produces the excellent Jolly Rancher hard candies, but will not say yet where production will be relocated.

Greg McCormack, president of Bobs Candies, tells the Monitor,

I don’t know whether there will be a domestic hard-candy industry in 10 years’ time. . . . You’re going to see tens of thousands of jobs leave this country — jobs that paid $10 to 20 an hour.

Unions and others say that it is the labor costs — not the high price of sugar — that is driving candy manufacturers across the border, but the reality is there are enormous savings to be had by avoiding the tariff. McCormack, for example, expects that his company will save $2 million annually just from cheaper sugar costs.

Source:

Bitter reality: Candy less likely to be ‘Made in US’. Laurent Belsie, The Christian Science Monitor, April 8, 2002.

Farm Subsidies, Tariffs and Lifesavers

TechCentralStation.Com’s Ryan H. Sanger takes down George W. Bush for his recent statements linking farm subsidies, of all things, to the 9/11 terrorists attacks.

Sanger reports that at the National Cattlemen’s Beef Association meeting in Denver, Bush told the cattlemen that, “It’s in our national security interests that we be able to feed ourselves . . . This nation has got to eat.”
As Sanger notes, given the relatively high levels of obesity in the United States, no one seems in danger of going hungry anytime soon. The truly bizarre thing about U.S. agricultural policy, however, is that it encourages low prices for some commodities while encouraging high prices for others.

On the artificially low price side, Sanger correctly notes that the problem with farm subsidies is that they create an excess of supply which makes farming unprofitable — at which point farmers turn into beggars at the government trough demanding one handout after another.

But the other side of the coin is that the United States uses tariffs and other devices to artificially raise the price of some agricultural commodities. A prime example of this is sugar — tariffs on sugar imports are set at such a high level that sugar in the United States costs up to twice as much as it does elsewhere.

The people who make Lifesavers understand that reality. Until a few months ago the major North American plant producing Lifesavers was located in Holland, Michigan — just a couple hours from where I live. But the high sugar costs in the United States finally took their toll, and the company announced it would close the plant and move to Canada where sugar producers don’t have the same influence. Sugar costs about half as much as it does in the United States, even after the exchange rate is accounted for.

Ah yes, thank goodness those tariffs are there protecting American jobs.

Source:

Beast of burden. Ryan H. Sager, TechCentralStation.Com, February 20, 2002.

Clever Conman in Canada

This story has flown under the radar of the mainstream news in the United States, but a U.S. citizen in custody in Canada claims to be a U.S. Naval intelligence offer who had foreknowledge of the September 11 terrorist attacks. The stories about this man claim that sometime in August he put his warning about a terrorist attack in writing in a sealed court document.

It turns out, though, that the document is not under seal and uses a pretty obvious technique to predict a terrorist attack — predict and predict often.

A JPEG of the man’s handwritten note can be found here. The man lists seven separate targets, including vague ones like “Water supplies” along with more specific targets like the World Trade Center, the Pentagon, and the Sears Tower.

Given that a) both the Pentagon and World Trade Center and the Pentagon had been targeted by terrorist before September 11, and b) that the man would likely spend several years in detention in Canada as extradition proceedings grind on, predicting those targets as well as “water supplies” or the “Royal Bank Toronto” is hardly proof that this man had any sort of inside knowledge.

Finally, note that this exhibit wasn’t entered into evidence until October 7, 2001. Until then it was apparently held in a supposedly sealed envelope held by someone at the jail where the man was being kept. Gee, there are only about a couple hundred ways to pull the “sealed envelope” trick on an unsuspecting mark.

The Real Danger Facing America — Softwood Imports from Canada

In the wake of the September 11 attacks, the Bush administration took action in October to rid America of the scourge of softwood imports from Canada. On Halloween night, the Bush administration imposed 12.58 percent “anti-dumping” duty on top of an already announced 19.31 percent “countervailing duty” which was levied in August. What’s the problem here? The Bush administration thinks Canadian companies aren’t charging enough for softwood.

This from the same Bush administration that was recently claiming it absolutely had to have Fast Track authority to negotiate free trade agreements. Why does the United States need more free trade agreements, when it is not even interested in living up to the one it signed with its northern neighbor?

The main beneficiaries of the new tariffs will be the U.S. lumber industry. After decades of haranguing the government for subsidies and cheap rights to federal lands, the lumber industry had the gall to complain that the Canadian lumber was excessively subsidized — a claim that the World Trade Organization has investigated twice and found baseless.

The main victims of the new tariffs will be the Canadian lumber industry and the American consumer who will end up being socked with additional costs far in excess of the benefits garnered by the timber industry.

How does George W. Bush expect anyone to take him seriously as a free trader and a person who “trust the American people” when his administration can’t even stomach Americans freely trading with Canada? Apparently those donations from the timber industry count more than the votes from the people Bush supposedly trusted.

Source:

Costs of the softwood tariff. David N. Laband and Daowei Zhang, Mises Institute, November 21, 2001.

Companies Steel Themselves Against Competition

For the past several months
U.S. steel companies, their unions and Democrats on Capitol Hill have
been whining that steel manufacturers from Brazil, Japan, Russia and other
countries are “dumping” steel in the United States. These critics
charge that companies from these nations are unfairly selling steel at
a price that is simply too low for American firms to compete. As a letter
from 13 U.S. governors to President Bill Clinton summed up the case, “Our
businesses cannot compete with unfairly priced, dumped and subsidized
products from desperate foreign markets. Each day of lost market share
equals real job losses and serious financial consequences for a vital
American industry.”

Although the Clinton administration
initially resisted calls to take action against the “dumping”
of steel, the Commerce Department ruled in late March that Belgium, Canada,
Italy, South Africa, South Korea and Taiwan all illegally dumped stainless
steel into the U.S. market. Stainless steel from those nations could face
tariffs as high as 60 percent if the U.S. International Trade Commission
decides the “dumping” hurt domestic steel makers. Although stainless
steel makes up only a small percentage of the steel market, this decision
makes it all the more likely that the Commerce Department will rule that
Japan, Russia and Brazil illegally dumped hot-rolled carbon steel into
U.S. markets.

As with most “anti-dumping”
appeals, however, the real problem is not with the foreign producers but
with the domestic steel industry; special protectionist measures now will
only reinforce and exacerbate those problems.

As a September 1998 article
in The Economist noted, long-running protectionist legislation
on behalf of the steel industry has encouraged firms to avoid taking measures
to reduce their costs or improve their operating procedures. Whereas in
other countries consolidation of firms has followed relatively flat steel
prices, The Economist notes “in the hour or so it takes to
get from Gary, Indiana, to Chicago you will pass nearly half a dozen full-scale
integrated steel plants, each with its own supplier networks, inventory,
production schedules, marketing and sales force.” ThatÂ’s an extremely
expensive method of business for a rather undifferentiated commodity such
as steel.

In fact it is so inefficient
that the traditional steel industry faces serous domestic challenges from
small-scale competitors once derisively referred to by the big steel companies
as “mini-mills.” Unlike the traditional steel companies, which
use ion ore and huge blast furnaces, the mini-mills use scrap metal and
electric-arc furnaces. Dismissed only a few years ago as insignificant
players, mini-mill companies such as Nucor now produce almost 40 percent
of U.S. steel and Nucor recently passed U.S. Steel as the number one domestic
producer of steel.

The more traditional steel
companies have tried to run their own mini-mills with little success.
An Alabama plant, Trico, financed by a group of traditional steel producers,
lost nearly $40 million last year. The large steel companies with their
bureaucratic, old style production methods have been unable to replicate
the set of management processes and coordination necessary to make mini-mills
succeed.

The large steel companies
are using the current surge in steel imports, caused in part by the huge
boom in the U.S. economy, to seek quotas to protect them from their own
inefficient production methods. House Republicans and Democrats joined
together in late March to approve the Steel Recovery Act which would limit
the amount of steel imported into the U.S. to the average of level of
steel imports from July 1995 to July 1997.

This bill would be a disaster.
According to the Precision Metalforming Association, limiting steel imports
to this average would have left American industry 4 million tons of steel
short of what it needed. The result would be a dramatic rise in the price
of steel in the U.S., which would result in increased cost to consumers
— a special tax on consumers to benefit the steel giants. In addition
without an opportunity to sell its steel in the world’s largest market,
foreign nations won’t have access to the dollars they need to help recover
from the ongoing Asian economic crisis. Setting up protectionist barriers
in America now would be like throwing gasoline on a raging fire.

The regimen of protectionist
barriers on foreign goods such as Japanese cars already harms American
consumers (almost $1,000 per car in the case of the automobile quota);
the last thing Congress should be doing in the midst of AmericaÂ’s economic
boom is imposing even more burdens on business and consumers.