Apparently, economic populism buys elections these days. The message that a politically embedded and culturally segregated elite class has profited serially at the expense of everyday Americans is high-value political currency. That the notion has broad political and emotional resonance does not, however, evidence its truth — but let that go for the moment.
Another question is precisely what these tribunes of the people do once they reach office. In the end, the self-proclaimed populares all too often prove themselves utter frauds.
As 2025 begins and Joe Biden’s term in office ends, the president has blocked Nippon Steel’s purchase of U.S. Steel — a proscription cheered on by President-elect Donald Trump. In this case (as in many others), vaunting rhetorical populism has given way to shabby corporatist cronyism and the doling out of spoils to elite political interest groups. It was on patrician–plebian strife that Scranton Joe campaigned, and Trump won the White House. Yet, in blocking the Nippon deal — predicated on bogus national-security claims — the patricians in Washington will help only their friends, the patricians of the American steel industry and the patricians of Big Labor. Everyday American consumers, steelworkers, U.S. Steel’s shareholders will suffer.
Nippon Steel, a publicly traded firm headquartered in Japan, outbid American steelmaker Cleveland-Cliffs ($55 per share to $40) to purchase U.S. Steel. Miffed, Cleveland-Cliffs and its ally, the United Steelworkers (USW) union, enlisted the federal government to snuff out the deal.
To pretended populists, the actual desires and needs of the populace matter little. The daylight democrats care little to hear the thoughts of the demos. USW may have preferred to keep U.S. Steel within the family, but the shareholders and the unionized employees of U.S. Steel preferred Nippon. More than 98 percent of shareholders voted in the affirmative, because Nippon offered far more (for sound reasons) than any other bidder. U.S. Steel’s employees militated for the deal, as the Japanese firm promised to honor existing labor agreements, upgrade facilities, and provide $5,000 bonuses. “90 percent or more of the steelworkers are for the sale,” one worker said at a rally in December.
Should the deal fail, many workers will likely lose not just those benefits but their jobs. Without the $2.7 billion Nippon has allotted to replace aging industrial technology, U.S. Steel likely move production south to newer facilities, the company’s CEO said in September. Sayōnara to many of the 11,417 jobs that the company supports in Pennsylvania alone. “Such figures would grow with Nippon Steel’s additional $1 billion investment in the Mon Valley: Parker Strategy group estimates Mon Valley Works could generate an additional $1.2 billion in economic impact for Pennsylvania, $47.9 million in local and state taxes, and 6,080 jobs in two years,” write analysts at the Hudson Institute. “Even in the low-end scenario, Nippon Steel’s additional investment would generate $576 million in economic impact for the state, $19.1 million in additional taxes, and 2,432 jobs in two years.” Opportunity costs abound.
Free enterprise benefits everybody besides beaten competitors. A technologically reinvigorated U.S. Steel would make products more efficiently, at a lower cost. This would cut costs for downstream manufacturers and, ultimately, for consumers.
Commentators make much of “globalization” and the harms it purportedly imposes on the American manufacturing sector and manufacturing workers. However, this process of churn — which economist Joseph Schumpeter called “creative destruction” — is necessary for economic growth. If sometimes painful, it usually enriches everybody, even those in industries it has disrupted. Ox-drawn plows had to give way to modern industrial farming, even though the transition meant that many who once had earned their livelihood from the soil no longer could.
The populists often blame government for allowing the destructive aspect of creative destruction to proceed, arguing (erroneously) that its harms are intolerable. Now, those same populists have pivoted to condemn the creative aspect of the process as well, saying that Nippon’s investment in American workers and American manufacturing cannot be tolerated. Foreign direct investment stock in the U.S. came to $12.3 trillion in 2022, of which $2.2 trillion funded manufacturing. Many, many American workers — including Vice President–elect J.D. Vance’s father — have found good jobs working for foreign firms.
But all that makes little different to then opponents of the Nippon–U.S. Steel deal. One begins to suspect that they simply dislike foreign investment and commerce categorically — American businesses and workers be damned. Of course, the beneficiaries of protectionism are the politically favored businesses who might, absent interventions, find their market shares in danger from vigorous foreign competition.
To win votes, Joe Biden and Donald Trump pledged themselves to the working class. But their rich and powerful friends in industry and labor know — and artfully leveraged — the ugly truth. The workers and shareholders of U.S. Steel just discovered it, too — to their detriment.
David B. McGarry is the research director at the Taxpayers Protection Alliance.