INFORMATION UPDATE #19July 10, 2014

Intervention and Non-InterventionThe Harper government is fond of

saying it should not intervene in private business decisions even when those decisions have a disastrous injurious effect on the economy and lives of Canadians, and even when those pri-vate business decisions are made out-side the country.

Hands off, it’s a private business decision! a Harper minister declared when U.S. Steel executives decided from Pittsburgh to close down Hamilton steelmaking permanently, a decision that caused obvious injury to Canada’s

domestic steel industry. The terrible ef-fect on livelihoods, the economy and thousands of pensioners was a private foreign business decision of no conse-quence according to the Harper gov-ernment and its many state agencies.

Yet recently we hear of investigations by the Canada Border Services Agency into foreign dumping and subsidizing of rebar coming into the Canadian mar-ket. This investigation has spurred the Canadian International Trade Tribunal to initiate “a preliminary injury in-quiry to determine whether there is a

reasonable indication that the alleged dumping and subsidizing have injured the domestic industry.”

One could ask why the Canada Border Services Agency did not jump to the defence of the Hamilton domes-tic industry when U.S. forces obviously and deliberately injured it. Is it because the Border Services Agency, and by ex-tension the Harper government, is inte-grated into U.S. Homeland Security and only acts when the injury comes from elsewhere, such as in this rebar case from China, Turkey and south Korea?

AlgomaAnother case in point is what is hap-

pening to Essar Steel (Algoma). Essar Steel Algoma Inc. in Sault Ste. Marie is now an Indian-held steel company. For a fraction of its value, KKR & Co., Bain Capital and others have pur-chased Algoma Steel debt. They are now pressuring Essar Algoma into a

possible restructuring later this month from which they hope to make big gains, of course without concern for the Canadian steel sector and the lo-cal economy.

Finance capital has no interest in solving problems in Canada’s steel or other industries or in the broader

economy so as to move forward in a new direction. To do so would kill op-portunities for big scores. The people have to face the reality of the situa-tion and act in a manner that contrib-utes to establishing a new direction for the economy which benefits the people.

Local 1005 USW Information MeetingThursday, July 17 – 4:00 pm

Michelangelo’s Banquet Centre, 1555 Upper Ottawa

Information and Discussion on:• Challenges Facing Canada’s Steel Industry and the Options Before Us

• Local 1005 Contract Negotiation Proposals

Members and pensioners only. For information 905-547-1417 or e-mail info@uswa1005.ca.

June 20, 2014. Protest against MANA’s lockout and government inaction to defend the steel industry, Ministry of Labour, Hamilton.

To contact USW Local 1005: Call 905-547-1417 or e-mail info@uswa1005.ca.Visit the website: www.uswa1005.ca

U.S. Steel Pays $58 Million to Settle Complaint Price Fixing and Collusion

U.S. Steel has agreed in an Illinois federal court to pay $58 million to settle a complaint that it colluded with others to inflate steel prices. U.S. Steel also agreed to provide specific information to the court implicating other steel compa-nies in the collusion to fix prices.

Regarding the fixing of prices, the is-sue is confused. Does the market col-lude to fix the price? The market price has to be fixed in a manner that a profit can be made. U.S. Steel says a south Korean steel mill fixes the price of steel tubes too low and dumps them in the U.S. market. The industrial consumers of the steel tubes say the U.S. free trade market fixes the price at an acceptable level, at least in their view. Perhaps U.S. Steel’s complaint about price fixing should be directed against the collusion of the free trade market and not against a particular producer in south Korea. The U.S. free trade zone colludes to fix the price. One could say collusion be-cause the market fixing the price does so without cooperation or transparent discussion and scientific understand-ing of how or on what basis the market price is determined. The large number of complaints over price fixing indicates that the market collusion to fix prices is tainted with interference by specific powerful private interests who collude to fix prices in their favour.

The plaintiffs in the case against U.S. Steel say the price of steel was fixed too high. What price is just right? Or did the problem arise because several steel companies colluded to fix a price too high rather than too low or just right in the view of the purchasers? In that case, the price is the issue rather than the collusion. In the complaint involving steel tubing from south Korea, the issue is also the price, which is too low in the view of U.S. Steel but not according to the industrial consumers. The collusion of the U.S. free trade market is not con-sidered the problem.

It seems the plaintiffs against U.S. Steel want the U.S. free trade market to collude and fix a lower price rather than have several companies collude and fix the price too high, although they would

not complain if the companies fixed the price too low. The fight goes on and on and bad things happen whether compa-nies or the U.S. free trade market col-lude and fix the price. At any rate, with regard to the steel they purchase, the plaintiffs want something other than the producers to collude and fix the price because they do not trust them to fix a proper price in their view. The same holds true for steel tubes coming into the U.S. from south Korea. U.S. Steel wants something other than the collusion of the U.S. free trade market to fix the price.

How do the plaintiffs fix the price of what they produce? Do they collude amongst themselves in the manner that they have colluded or perhaps openly cooperated to bring the case against U.S. Steel and other steel producers? Perhaps they agree to the collusion and fixing of a price by the U.S. free trade market but only if the price serves their narrow private interests. In the dispute against south Korean steel tubes, the anger is directed against the low price and not the collusion and price-fixing of the U.S. free trade market.

The disputes and discussion over market prices consistently fail to deal with how a price should be determined or fixed in a manner that helps and does not destroy the economy. The fixed mar-ket price should reflect the price of pro-duction. A market price that is consistent with the price of production allows the producer an average rate of profit. The purchasers of the commodity can then

pass on the transferred-value within whatever they produce, demanding a market price that reflects their price of production.

Of course, such a situation requires broad cooperation and transparency amongst all involved and not the anti-consciousness and collusion of a free trade market dominated by the narrow private interests of monopolies and car-tels. Fixing a market price consistent with the price of production demands an open transparent determination of pricing where all the factors are openly known, and those involved are con-scious of the economic science neces-sary to determine a price. A public au-thority acting in the public interest with control over the wholesale market is necessary to sort out this problem.

The constant fighting over the fixing of prices is another indication that the sta-tus quo is in crisis, does not work, and a new direction is necessary. The fighting amongst private interests in the form of privately-owned parts of the economy accusing each other of price fixing is in contradiction with the broad cooperation and scientific economic precision on all issues needed in the modern economy of industrial mass production. The work-ing class has to step up and demand an end to this fighting amongst private interests that is wrecking the socialized economy. The modern economy needs cooperation, science and pro-social consciousness not this constant fighting amongst self-serving private interests.