[Marxism] Overproduction - underconsumption

S. Artesian sartesian at earthlink.net
Wed Oct 14 15:37:31 MDT 2009

Gee, speaking of steel and China and overcapacity-- from yesterday's Wall 
Street Journal:

China Takes a Hard Look at Its Steel Industry
Beijing and Companies Move Toward Lowering Taxes to Promote Consolidation 
and Cut Capacity

"Frustrated in previous attempts to consolidate its fragmented steel 
industry, Chinga is working on a new way to promote mergers and reduce 
capacity, possibly giving a boot to other global steel companies.

China has hundreds of steel mills [around 800 actually-- my note] many of 
them small and inefficient.  But the central government's desire to close 
small plants and consolidate the industry has been stymied at the regional 
level.  Local government officials have resisted the potential loss of jobs 
and tax revenue.  Steelmakers, meanwhile, have been kept in check by riots 
protesting planned plant closures.

[Isn't it funny how that part of the equation never shows up in the homages 
sung to increased capacity by our developmentalists?  And I get accused of 
'defeatism'?  Or perhaps the Chinese workers are being misled by their 
ultra-left leaders, leaders secretly allied with Western imperialism, to 
engage in direct action thereby undermining the fatherland? ]

Under a plan being worked out, steelmakers' national tax bills would decline 
by year end, with some of that money instead going to regional taxes, 
according to people familiar with the matter.  That would soften the blow of 
closed mills by giving regional governments additonal tax revenue to 
stimulate their economies and help find jobs for displaced steelworkers.....

[sure, that worked so well for steelworkers in Pittsburgh, Pa. and Buffalo, 
NY. Allentown, Pa. during the Reagan era, didn't it?]

Details on the tax plan are still being worked out by the Chinese Iron and 
Steel Association and China's central government in Beijing, said Wu Xichun, 
the association's honorary chairman.  "The tax burden for Chinese 
steelmakers is too high," Mr Wu said [channeling the spirt of Milton 

About 17% of revenue for Chinese steel makers goes to pay taxes, about 
triple the rate for US steelmakers, he said.... [hmmm... how could that be--  
first law of Laffler/Friedman Robotics  1.more tax, less growth; less tax, 
more growth.  Here we have China's capacity growing despite a higher tax 
burden... Do you think maybe the real issue isn't taxes but profitability?]

China has the capacity to produce at least 610 million metric tons fo steel 
a year-- about 100 million more tons than it currently needs.

The central government has said excess capacity has been permanently shut 
down.... The association noted that China already has reduced its exports 
substantially to 4% of production through August from 12-13% last year...

The [World Steel Association-- remember them, and the locomotive of China?] 
global trade group expects that growth in Chinese demand will slow to 5% 
next year, based on Chinese steel assoication forecasts, as support from 
stimulus measures wanes.

Not so big a locomotive is it?  Not quite the tractive effort you would 
expect from the next big thing in locomotives is it?

Who's Friedmanizing now? 

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