Entry for August 25, 2006

The cartoon is by Mike Konopacki from March 2oo6, in response to a  reports by the National Association of Manufacturers– “U.S. Manufacturing Innovation at Risk”  by Joel Popkin and Kathryn Kobe.

From Mark Reutter, author of Making Steel, “Gladwell Strikes Out,”his August 24 reaction to the New Yorker’s  Malcolm Gladwell article, “The Risk Pool” in the August 26 issue posted August 21.

Malcolm Gladwell ends “The Risk Pool” where a good reporter would begin. Namely, what has happened since 2003 when New York-based investor Wilbur Ross purchased bankrupt Bethlehem Steel and its once premier steel plant at Sparrows Point, Md. 

Rather than investing in new machinery or seeking new markets for steel, Mr. Ross flipped the properties to London-based industrialist Lakshmi Mittal in April 2005, gaining a personal profit of $267 million. Together with stock earnings from the initial public offering of his company, International Steel Group (ISG), and related trades, Mr. Ross and his Wall Street allies pocketed $1.185 billion. This sum is almost identical to the $1.1 billion that steel retirees lost over the same period in health-care benefits from the sale to Ross and the sum absorbed by the federal government’s Pension Benefit Guaranty Corporation. 

Rather than “saving” the steel industry by ending unsustainable retiree benefits, Mr. Ross ingeniously diverted the cash flow from the working class to the investment class.

*

UPDATE:  On August 28, I wrote Mark with my reaction:

I only scanned the New Yorker article, and the odd thing, an first glance, is that while the author  decries the dispersal of the risk pool, he doesn’t seem to offer who will institute a change and how to get there. Wilbut Ross represents not the dispersal, but the evaporation of the pool.  Let me know if your letter appears.  (Couldn’t find letters to the editor online, unlike The Nation..)

Here’s his response of August 29:

about NYer letter, though I will be both flabbered & gasted if they out their star writer. But what the heck, the NYer doesn’t have a monopoly on ink anymore thanks to blogs like yours and all the other web stuff. …

Take care,
Mark

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