What Do Greece, Puerto Rico, Detroit and Baltimore Have In Common?

Consider four disparate government jurisdictions:  Greece, Puerto Rico, Detroit and Baltimore.  Mostly what you've read recently about these places is that they have high government spending and unsustainable debt, supposedly incurred in the effort of the government to achieve some combination of helping the people, growing the economy, and creating greater fairness.  What you've probably read much less of is how the overspending and run up of debt play out in the realm of real economic performance.  

When you look at the statistics, what stands out dramatically in case after case is the association of too much spending and debt with high levels of idleness and unemployment, particularly among younger people.  Is it cause and effect?  You be the judge!

Greece is of course the European champion of profligate spending and exploding debt.  According to statistics at Eurostat here, government spending in Greece exceeded 50% of GDP continuously from 2008, and even broke 60% in 2013.  Add in a tax system famous for extreme levels of avoidance, and you get extraordinary deficits.  According to Trading Economics here, Greece's government budget deficits averaged 7.19% of GDP from 1995 to 2014, with peaks of 15.7% of GDP in 2010 and 12.3% in 2014.  (Supposedly the Greek government budget is now in surplus.  Do you believe it?)

If you think that those huge levels of economic "stimulus" must have really put people to work in Greece, the statistics sure don't show it.  According to World Bank numbers here, the labor force participation rate in Greece is just 53%.   That compares to 63% in the U.S., 62% in the U.K., 60% in Germany, and 56% in France.  (Do you notice a correlation there with government spending levels?)  But unemployment, and even more so youth unemployment, are where it really gets ugly. The latest numbers from Eurostat give Greek unemployment at 25.6%, and youth unemployment (ages 15 - 24) at an extraordinary 49.7%.  (The comparable numbers for the U.S. are 5.5% and 12.2%.)  And don't get the idea that these low labor force participation and high unemployment rates are somehow a consequence of the recent "austerity."  Greek labor force participation was the same 53% back in 2000 and even lower at 51% in 1995, even as it engaged in the usual Keynesian deficit spending prescriptions.  According to statistics here from indexMundi, Greek youth unemployment has averaged over 25% since 1990, never below 22% and sometimes over 30%.

In Puerto Rico it's the same thing: high spending and extraordinary public debt accompanied by dramatic underutilization of the labor force.  Puerto Rico's public debt of about $72 billion hit the headlines a few days ago when its governor announced that the debt "is not payable."  The $72 billion, a little over $20,000 per capita, seems not that much worse than New York's (around $19,000 per capita), until you realize that median household income in New York is almost triple that in Puerto Rico.  But anyway, all that government spending in Puerto Rico must at least have put lots of people to work, right?  In fact, add to all the spending by Puerto Rico full access to U.S. welfare, food stamp, medicaid and other handout programs.  By standard Keynes/Krugman theory, its economy should be booming.  But actually, it's the opposite.  Puerto Rico has spectacularly low labor force participation rate of under 43%.  That's a full 10 points worse than Greece.  And even with 43% labor force participation, Puerto Rico still has 12.2% unemployment.  (If Puerto Rico had the same labor force participation, 63%, as the rest of the U.S., and the same level of employment, its unemployment rate would be close to 50%.)  Youth unemployment?  The latest figures I can find are World Bank figures from 2013, which give a rate of 27.3% for Puerto Rico; and again, that must be taken in context of the spectacularly low labor force participation.

And check out the usual suspects of "basket case" U.S. cities, and time and again you find the same thing: blowout spending and borrowing does not cause the economy to improve, but instead is accompanied by high levels of idleness.  In Detroit, a city that famously spent and borrowed its way into bankruptcy, the labor force participation rate for black males is 52.1% according to most recent BLS data (2011).  That's even worse than Greek levels.  Baltimore?  The overall BLS statistics for the Baltimore/Tyson metropolitan area do not seem at first blush to reflect the same levels of idleness.  For example, these BLS statistics for 2011 show black male labor force participation for that area as 65%.  But in the aftermath of the recent Baltimore riots, multiple sources have reported that in specific areas like the one where Freddy Gray lived, non-working rates for working age black males were in the range of 50%.  For example, see this op-ed in the New York Times by Michael Eric Dyson.   The areas with the lowest rates of working are the same area where so-called "anti-poverty" government spending is the highest.

So perhaps it is time to consider the hypothesis that the high spending and borrowing is actually the cause, or at least one of the causes, of the unemployment and idleness.  It's not just that the "anti-poverty" programs don't work.  It's also that the high spending and borrowing actively discourage business formations and relocations.  What entrepreneur wants to put his or her business in a place where massive public debt indicates a future of increasing taxes as far as the eye can see?

Puerto Rico: Here Comes The Next Greece

Even as Greece has shut its banks and its stock market and prepares for its big default, the next big sovereign default is coming right behind it.  I'm talking of course about Puerto Rico.  On Sunday the New York Times reported that Puerto Rico's governor, Alejandro Garcia Padilla, had said that Puerto Rico's debt of some $72 billion "is not payable."

You are probably thinking: but Puerto Rico is part of the United States!  It has the huge advantages of free trade and free travel with the United States.  It's in the U.S. dollar currency union.  How could it possibly be in such a position?

But if you start investigating Puerto Rico's economy, you find that it is far worse than you might have imagined.  Median household income is only about $20,000 (per badly lagged Census data here from 2014).  That compares to well over $50,000 for the United States as a whole, and about $36,000 for the poorest of the 50 states, Mississippi.

Completely free trade should gradually be bringing Puerto Rico up to the income levels of the rest of the country, but it is not happening.  Instead, it's income is stagnating, and indeed the population has been shrinking.

And then there is the most astounding statistic of all about Puerto Rico, the labor force participation rate -- the percentage of working age people either working or seeking work.  For the U.S. as a whole, that rate has recently been 62.8%, itself a significant decline from numbers around 67% prior to the recent financial crisis.  In Puerto Rico the figure is around 42%.  That means there is a full 20% of adults who would be working if they were in the rest of the United States, but are not working in Puerto Rico.   Knowing that, is it any wonder that the government is broke?

Now, in considering why this might be, I would invite you to entertain the hypothesis that the federal minimum wage might have something to do with it.  That minimum wage is only $7.25 per hour, far lower than numbers like $15 per hour that are gradually taking effect in places like San Francisco and Seattle, or than the $12 per hour that President Obama has discussed for the country as a whole.  But for Puerto Rico, $7.25 per hour for a year of full-time work represents a very high percentage of that median household income figure above -- assuming full time work of around 1900 hours per year, it's in the range of 70%.  By contrast, full time work for one person at the current federal minimum wage is only about 40% of median household income in Mississippi, and not much more than 25% for the country as a whole.  A $12 minimum wage would only bring the full-time minimum wage worker's annual pay to about 35% of median household income for the country as a whole.

I am not the only person noticing these dramatic numbers.  Here is what Max Ehrenfreund had to say in yesterday's Washington Post wonkblog:

While labor organizers around the country along with most major Democratic politicians have said the federal minimum wage is too low, it seems clearly too high in Puerto Rico, at 77 percent of per capita income. That puts a lot of people with less education and fewer skills out of consideration for a job.

Of course it is not possible to do fully controlled experiments to see what is causing economic performance to lag in one location versus another.  But it's hard to come up with an alternative hypothesis that explains Puerto Rico's dramatically low labor force participation.  The next best one is that federal benefits, like food stamps, are of much more relative value in poor Puerto Rico, and strongly discourage work.  Of course, those two factors could be working together.

If the minimum wage hypothesis is correct, it means that that law has put a huge contingent of low-education, low-skill workers out of work in Puerto Rico.  Intended to benefit the poor, it in fact has made huge numbers of them much poorer.  As to the $15 dollar minimums in rich coastal cities like San Francisco and Seattle, likely the effect will not be so large as to show up quite so dramatically in the government statistics.  But that doesn't mean that the effect will be zero.  And those who get hurt are of course the poorest of the poor.  Shouldn't they be the ones that public policy should most be seeking to benefit?  

On Socialist Death Spirals

Here in the world of capitalism, we are accustomed to the idea that the economy grows every year.  Sometimes the growth is 4 percent in a year, and sometimes it's only 1 or 2 percent, but it is rare to have actual economic shrinkage that goes on for longer than a couple of quarters before growth resumes.  What's going on is that hundreds of millions of people, all seeking to better themselves, and working under the incentives of a (relatively) free marketplace, each year find many small ways to work a little more effectively or efficiently.

In a world of public ownership, government handouts, and "each according to his needs" -- that is, in a world of socialism -- the incentives are the opposite.  Where most of the economy is government-controlled, then for most people, the immediate way to improve your economic condition is to qualify for more handouts; and the way to qualify for more handouts is to become less rather than more economically productive.  For fully or substantially socialized economies one would expect to observe long-term gradual economic decline, and the more fully socialized the faster the decline.  Call it the socialist death spiral.

And yet when you look at statistics coming out of fully or largely socialized economies, that's not what you find.  Instead, what you find is that the official statistics for years and decades show growth comparable to, and sometimes faster than, that in capitalist economies; and then one day, it all falls apart.  Think the old Soviet Union and its satellites.  In my youth in the fifties, sixties and seventies, they regularly put out official numbers showing that their rate of economic growth was faster than that of the United States -- sometimes two or three times as fast.  They tightly controlled internal travel, so there was no way to check their numbers independently.  Then in 1990 and 1991, it all suddenly fell apart in a matter of months.  An economy that even the CIA thought was more than half as big as that of the U.S. turned about to be 10% the size at most.

Of course the numbers had been fictitious all along.  There really was a gradual decline going on, but the numbers didn't show it.  And, without knowing all the tricks the Soviets used at the time, the main one is obvious, namely counting all or most government spending as a full addition to GDP.  Where government owns the main businesses and controls most of the distribution of resources, not to mention prices, the measure of GDP becomes more and more arbitrary.

Something like this is going on in Venezuela right now.  In that country, Hugo Chavez came to power in 1999, and began a gradually-tightening transition to a government-controlled economy.  In his first few years, the official statistics conceded economic decline, as Chavez battled for control of the oil industry and suffered a strike of oil workers.  But starting in 2003, the official numbers showed rapid growth.  Here is a 2012 report from left-wing think tank CEPR on Venezuela's economy from 2002 to 2012.    A few highlights:

[E]ven after the [oil] strike was over [in early 2003], analysts predicted a dire future and a slow, difficult recovery. International Monetary Fund (IMF) forecasts repeatedly underestimated GDP growth by a gigantic 10.6, 6.8, and 5.8 percentage points for the years 2004-2006. Instead, the recovery was very rapid and the economy grew at a record pace over the next five years, with real GDP nearly doubling from the end of the oil strike (first quarter 2003) through the fourth quarter of 2008. . . .  

And then after the recession of 2009:

A recession began in the first quarter of 2009, and forecasts remained dire well beyond the beginning of the recovery in the second quarter of 2010. In 2011, the Venezuelan economy defied most forecasts by growing 4.2 percent, and is up 5.6 percent for the first half of 2012.  

But was it real?  It seems like a lot of the growth was government spending:

In 2011, government spending boosted and consolidated the recovery. . . .   For 2012, the economy grew 5.6 percent in the first half of the year, as compared with the first half of 2011. Here growth was led by construction, which expanded by 22.5 percent over the first half of 2011, due to the government’s program to build housing and alleviate a national housing shortage. In 2011, there were about 147,000 houses built under this program, with two-thirds built by the public sector and one-third from the private sector. 

Those "analysts" who have been "predicting a dire future" for Venezuela for all these years are probably people like me who think that GDP numbers inflated by blowouts of government spending do not reflect real growth.  The CEPR report basically gloats that these nay-sayers don't understand socialism and are always wrong.  The other way of looking at it is that government spending and control of the economic statistics can paper over economic decline for a long time, but not forever.  In the case of Venezuela, it seems that they are running out of time.  This year the IMF is predicting economic decline of 7 percent for Venezuela -- and that is with a continuation of counting government spending at 100 cents on the dollar in GDP.  Real numbers would likely be far worse.  Here's a report from Bloomberg this past week on the disappearance of beef from the country.  

Or maybe the IMF will be proved wrong and Venezuela will put out far better numbers when the year is over.  But it is likely that the Venezuela's numbers are just papering over what is in reality a gradual decline.  When the thing starts to come apart, it will come apart all at once.

So, dear readers, keep all this in mind when you read the next column by Official Manhattan Contrarian Worst Economics Writer Paul Krugman.  According to an article this week in Bloomberg News, since the financial crisis Krugman has written no fewer than 74 columns and blog posts attacking what he calls the "austerians," that is, the analysts and economists who advocate some combination of cutting government spending and raising taxes as the way to achieve real improvement in an economy.  In his screeds, Krugman constantly cites economic statistics from countries that increase government spending showing that their economy has "grown."  Is it real, or are they in a papered-over socialist death spiral?  I mean you, Greece.    

The FDA And The Irresistible Urge To Control Other People's Lives

A few days ago the FDA came out with a "final determination" that "partially hydrogenated oils," sometimes known as trans fats, are no longer considered "generally safe" for human consumption.  These substances will now be banned from the food supply as of 2018, unless someone can talk our all-knowing but merciful overlords into granting a reprieve for some specific use.

So yesterday New York Times food writer and op-ed columnist Mark Bittman uttered the typical New York Times take on the situation.  Basically, the take is "it's about time," and moreover it's only because of immense pressure from "Big Food" that they have waited so long, let alone granted another three years to comply while thousands more people get killed.  As usual in Pravda, no mention is given at all of the idea that individual citizens should have some freedom or say in the matter.

The good news is that — finally — the Food and Drug Administration is banning food containing trans fats, although really only sort of, and really only after overwhelming evidence (and more than one lawsuit) made their dangers impossible to ignore. And in typical pro-industry fashion, the F.D.A. is not only allowing companies three years to get trans fats out of most foods, but will consider manufacturers’ petitions to keep them in. 

Sorry, Mark, but this narrative is complete baloney.  As far as I remember -- and I was around at the time -- it was the government that pushed trans fats on the people.  OK, they didn't explicitly use the word "trans fat," but what they did do was go on a campaign against saturated fat.  And there aren't a hundred alternatives to saturated fat that come close to mimicking its taste and texture.

Here's a history of the subject by Steve Malanga from the Spring 2011 issue of City Journal.   Malanga traces government meddling in your diet back to the 1970s:

Nevertheless, in the 1970s, Democratic senator George McGovern’s Select Committee on Nutrition and Human Needs decided to fight the apparent epidemic by making recommendations on nutrition. . . .   Settling on the unproven theory that cholesterol was behind heart disease, the committee issued its guidelines in 1977, urging Americans to reduce the fat that they consumed from 40 percent to 30 percent of their daily calories, principally by eating less meat and fewer dairy products. The committee also advised raising carbohydrate intake to 60 percent of one’s calories and slashing one’s intake of cholesterol by a quarter.

The government was telling us all to reduce fat in the diet.  And not just any fat -- the fat they really said should be reduced was the fat in "meat and dairy products," that is, saturated fat.    Well, if you cut out meat and butter and your body still wants some fat, that leaves you with margarine and cooking oils as the obvious alternatives.  In other words, trans fat.

So where was the food activist community on this?  Of course, they were accusing the food industry of resisting the government's efforts so that they could keep selling the killer meat and butter.  Malanga:

A good example was the Center for Science in the Public Interest, which in 1975 organized a National Food Day that included, the New York Times reported, an “all-out attack” on foods that it considered harmful. On the hit list: prime beef, high in fat and cholesterol.  When the McGovern committee issued its guidelines, these advocacy groups attacked opponents as shills for the food industry. . . .

In the 70s you were a shill for the food industry if you stood up for meat and butter, and today you are a shill for the food industry if you stand up for margarine and cooking oil.  Go figure.

In 1980, and every five years since, the Department of Agriculture has come out with its official government-approved Dietary Guidelines.  In the 1980 Guidelines and every iteration since, they have strongly urged reduction of saturated fat in the diet.  The 2010 Guidelines -- which are the most recent version and are still out there -- continue to urge reduction of saturated fat in the diet, with barely a passing mention of trans fats.  (The 2015 Guidelines are expected out shortly.  We'll see how they walk this one back.)

Did the government know what it was doing when it urged reduction in dietary saturated fat?  They didn't have a clue.  This ridiculous campaign was based on no more than some simple-minded unproven ideas, like the idea that "fat" must be what makes you "fat," or the idea that fat is kind of sticky so it must be what is "clogging you arteries."  Forty years since the McGovern committee, and still there literally isn't any evidence whatsoever to support the idea that consumption of saturated fats leads to more heart disease or any other bad health outcome.  The longer this goes on the worse it gets.  For example, Malanga cites a meta-analysis of studies published in Scientific American in 2010:

More recent research has further undermined the cholesterol-as-bad-guy hypothesis. Scientific American summed up the disturbing state of the evidence in April 2010. The magazine cited a meta-analysis—that is, a combination of data from several large studies—of the dietary habits of 350,000 people worldwide, published in The American Journal of Clinical Nutrition, which found no association between the consumption of saturated fats and heart disease.

So now, exactly what reason is there to think that these people know any more what they are doing this time around than they did last time?  Do they, for example, have a study of large numbers of people showing a statistically significant correlation between eating high amounts of trans fats with heart disease and early death?  Absolutely not.  Read the "science" section of the FDA's determinations here, and you will search in vain for any such study.  Instead they rely on a weak chain of logic that could have multiple flaws:  the theory is that there is a correlation between eating trans fats and increased LDL ("bad") cholesterol in the blood, which in turn is correlated with increased risk of heart disease.  Plenty of the commenters to the FDA's proposed rule accused the FDA of cherry-picking studies to claim the correlation between trans fat consumption and higher LDL, and the FDA just responds, "We disagree."  And the link between blood cholesterol and heart disease is weak and has never been established at all for huge sections of the population, for example, women.  So that supports a total ban for the whole population?

Here is Bittman's take on whether a ban is justified:

Why wait three years? Why not get these heart-stopping products off the shelves now, as we do when food is contaminated with E. coli? If the evidence is that trans fats are more harmful than other fats, and other fats exist, why delay? Protecting Big Food’s profits is the only possible answer.

The answer, Mark, is that these people have no idea what they are doing.  They just want the thrill that comes from the feeling of power from ordering other people around.  This isn't remotely like e-coli, which has a near 100% correlation with serious infection.  This is double layers of weak correlation with lots of confounding factors that may be involved and no thorough understanding of the causal mechanism.  The uncertainties are huge and it is entirely possible that this whole thing is completely wrong, just like they were the last time with saturated fat.

Now in my own case, I never liked margarine.  I thought it tasted bad.  And baked goods made with margarine are hugely inferior to those made with butter.  So I won't miss the stuff. 

But lots of people could have good reason to want to buy food made with trans fats.  Baked goods made with margarine are a lot cheaper than those made with butter.  At a supermarket where I shop, the difference can be up to a factor of three.  So this is yet another example of elites unthinkingly imposing a big new burden on lower income people.  Based on essentially no evidence whatsoever. 

There Is No Understanding New York Progressive Thinking

Back in 1994 then New York Governor Mario Cuomo lost his bid for re-election and found himself out of a job.  Shortly he turned up on the doorstep of our law firm, and next thing you know he was one of my partners.  And not long after that he sat down across from me at a partners' lunch and started talking about some of the important things he had done as governor.  At the top of his list was opposition to the North American Free Trade Agreement, which he was describing as some kind of noble battle to save some jobs of steelworkers out in Western New York.

As you might imagine, this was too much for me and I launched into a mini-tirade.  Twenty years after the fact my memory of the details is fuzzy, but the gist was something like this:

You've just come off twelve years as Governor of New York, and yet you seem to know next to nothing about the economy of our state.  The steel mills out in Western New York are a tiny part of our economy and they are dying off quickly no matter what the government does.  The economic engine of this state is the New York City financial and business services community, and that community is fundamentally in the business of internationalizing the world economy.  It lives off international investment and international trade.  If there is one State and one City in the United States that stands to benefit more and be hurt less by free trade agreements, it is the State and City of New York.  And for the Governor of New York to oppose free trade agreements is to display a level of ignorance and incompetence that is completely incomprehensible.

Fast forward twenty years or so, and now it's the Trans Pacific Partnership.  The steel mills in Western New York are long gone.  Check out some photos here of the huge and eerily abandoned former Bethlehem Steel facility in Lackawanna.  New York City is down to a pitiful 75,000 or so manufacturing jobs (out of over 3.6 million private sector jobs total).  The City financial and business services community is bigger and more lucrative than ever, and more involved than ever in international investment and international trade.  The most rapidly growing area of the City's economy is the technology business, which lives on selling apps and ads and programs and designs to the world.  Further freeing up markets in Asia will be a tremendous boon to these growing and dynamic businesses.

So where do our politicians stand on the TPP?  You guessed it.  At least for the Democrats, they're basically all against it.

Start with Senator Schumer, next in line to succeed Harry Reid.  He was officially designated by the Manhattan Contrarian as "The Worst United States Senator" way back in 2012.  And believe me, he hasn't improved since.  His main focus is angling to increase income taxes that will fall disproportionately on his constituents.  Oh, except that he protects the "carried interest" game that his billionaire hedge fund backers live off.  On TPP?  He's against it, of course.  In yesterday's cloture vote that got the bare minimum 60 yea votes needed to proceed, he was of course a nay, and would gladly have sunk the thing.  This man knows full well that the thousands of twenty-something app developers who would benefit from more free trade are too busy working to pay attention to his vote on this thing.  Instead he responds to the now nearly-economically-irrelevant unions who use their last dollars to contribute to his campaigns.  Disgusting.

And our other Senator, Kirsten Gillibrand?  She's against it too.    She's way too busy pushing fake campus rape stories -- even long after they're discredited -- to learn anything about New York's economy.

In the Congressional delegation, some have avoided taking a position, but the New York Democratic Congressional delegation is close to unanimous against.  First, kudos to the lonely Gregory Meeks of Queens, who has actually publicly come out in support of TPP, to harsh criticism from the usual unions.  But how about my own Congressman, Jerrold Nadler, whose district includes the entire Wall Street area of Manhattan?  Against.   Sean Maloney, of the suburban 18th District (and another one of my former work colleagues)?  Against.   In the semi-stand up category is Charles Rangel of Harlem, who has said he is still thinking about it.  Probably that means he's planning to retire at the end of this term.

Oh, and then there's Mayor de Blasio and the New York City Council.  You may think this is none of their business, but of course they have taken the occasion to come out in opposition.  Here is Greg David of Crain's New York Business giving them a very appropriate lecture on economics.

The thing is, it's just not possible to understand much at all about New York's economy and not think that free trade is a huge plus for us.  What does that say about our "progressive" politicians?

Stopping The Trade Deal Will Not Save The Union Movement In The Private Sector

The most interesting aspect of the "Perils of Pauline" progress of the latest free trade bill through Congress is the split between the President and nearly all members of Congress from his party.  While the President begs the Congress to support his signature Trans-Pacific Partnership initiative, and the large majority of Republicans support him, something like 80 to 90 percent of Democrats oppose.  It's clear that the labor movement is pulling out every last stop to try to block the bill.  Kimberley Strassel in today's Wall Street Journal provides some of the background of what happens to a Democrat who supports the bill:

Big Labor waged an unprecedented hit job on this crew, pummeling them with TV ads in their districts. Months ago dozens of unions affiliated with the AFL-CIO instituted a freeze on campaign contributions, making clear that the coffers would only reopen after a fast-track vote, and only to those members who opposed it.

But why would this be such a critical priority for Big Labor?  Isn't their private sector membership almost all gone by now anyway?

To get an idea of why Big Labor is so focused on this, it helps to look in depth at one particular industry.  So I've collected today some statistics from the steel industry.

Back when I was in high school in the 60s, the big steel companies were among the great icons of American industry.  Names like U.S. Steel, Bethlehem Steel, and National Steel had comparable positions in the U.S. economy to the likes of Apple and Google today.  Jobs at these industrial powerhouses were avidly sought by top business school graduates.  According to this piece in Wikipedia, the steel industry in the U.S. employed 521,000 people in 1974.  The majority of those employees were union members.

It's been nearly all downhill since then.  Bethlehem Steel and National Steel went into terminal bankruptcies in the early 2000s, and what wasn't closed got sold off in pieces.  U.S. Steel has been shrinking for decades.  Its annual reports show a string of losses for years.  In March, the Washington Post reported that "U.S. Steel plants are on a layoff spree," attributing that to a world steel glut and burgeoning imports.

A website called unionstats.com has statistics for employment and union membership in the steel industry in the U.S. since the early 80s.  Its categories are not fully comparable to what Wikipedia called the "steel industry" above, but with that caveat, it is clear that employment in this industry has been gradually shrinking, and union membership plummeting, during this 30+ year period.  In 1984 in a category called "blast furnaces, steel works, rolling and finishing mills," they have 371,000 employees and 211,000 union members.  By 1994 it's 356,000 employees and 175,000 union members.  In 2004 the category has changed to "iron and steel mills and steel product manufacturing"; there are 282,000 employees and 91,000 union members.  Of course, that decade is when the likes of Bethlehem and National, along with other smaller players, closed their doors.   In 2014, employment in the category has recovered some to 303,000, but union membership is down to 71,000.  Over 30 years employment fell about 15%, but union membership fell almost 70%, much of that drop caused by major unionized entities going out of business.

Yesterday's Wall Street Journal has a big article comparing what it calls the country's "two remaining major steel producers," U.S. Steel and Nucor.  The huge difference between the two is that U.S. Steel is unionized and Nucor is not.  At two nearby plants outside Birmingham, Alabama, the two produce about the same amount of steel -- but Nucor has only about a third the number of workers.  The article includes the following chart:

Although the two are close in size, non-union Nucor produces substantially more, generates more revenue, and has much more capacity, all with fewer employees.  And also, Nucor had seven times the profits last year.  As it says in the chart, U.S. Steel "is now taking steps to imitate its rival."  But after a long string of losses and then eking out a profit of only $102 million last year, U.S. Steel is at great risk from any prolonged downturn in the industry.  If a shakeout puts one of the two out of business, clearly it will be U.S. Steel.

Frankly, I don't believe that the labor movement will ultimately be able to block the Trans-Pacific Partnership.  But suppose they do.  It's still the case that downturns and shakeouts periodically hit the manufacturing industries where private sector unionism is concentrated.  And when the next downturn or shakeout hits, the unionized companies are in the weaker position and far more likely to get taken down.  Gradually, the unions put their employers out of business.  They're asking the rest of us to give up the benefits of free trade in order to save the unsaveable.