Sunday, June 25, 2006
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Capitalism 1, Nationalism 0
One of the great things about capitalism is that when there is enough money at stake, national prejudices fall by the wayside.
Which brings us to Mittal Steel's latest acquisition. Heather Timmons and Anand Giridharadas explain in the New York Times:
A new steel giant is being created out of a bitter battle, after Arcelor agreed today to a merger with its rival Mittal Steel in a deal valued at 26.8 billion euros, or $33.5 billion.Timmons and Giridharadas also raise The Big Question in the closing paragraphs:
The fight for Arcelor was closely watched around the world, as it evolved into a clash between two major forces shaping the world economy: the ascendancy of India and China as sources of new business models and ambitious new companies, and a rising tide of protectionism in the West, fueled by anxiety that new competition will erode a way of life.
posted by Dan on 06.25.06 at 05:16 PM
Well, except that no one I know in the steel industry can figure out exactly what Mittal are going to DO with all their acquisitions. Operating in third world countries is one thing, but you can't just improve your results by turning off all of your pollution control equipment in Belgium. Nor can you just assume that a $60 billion steel company will be more efficient than two $30 billion companies; experience says it might well be LESS efficient.
Crankyposted by: Cranky Observer on 06.25.06 at 05:16 PM [permalink]
Another way of looking at this deal: one can often convince someone with too much money to pay too much. The only sensible thing Mittal can do with Arcelor is shut it down. That may very well work out quite well for Mittal.
Of course net exporters with surpluses will make direct investments in net importers. But let's not kid ourselves that the process will be elegant or pleasant.
One might want to consider the substrates of global capitalist triumphalism: Calvinist elitism, teleological corruptions of evolutionary theory, and so on. Lots of people seem to be underestimating the number of dead ends globalization will entail.
And Singaporese diploids saying "ain't" for pithy emphasis doesn't help.posted by: CS on 06.25.06 at 05:16 PM [permalink]
Mittal steel's strategy is to enable the consolidation of the steel industry, and this merger might just about stimulate this consolidation. Steel is risky business because of the highly fragmented nature of the industry, which means steel companies have little control. Further mergers and acquisitions of this kind would ensure greater stability.posted by: vkri on 06.25.06 at 05:16 PM [permalink]
I'm sure Mittal's strategy is "consolidation" of the steel industry, leading to greater "control" and "stability" for leading suppliers. Sounds like a pending antitrust train wreck.posted by: CS on 06.25.06 at 05:16 PM [permalink]
yes, this is greater stability and price control for the steel companies-i.e more money for Mr Mittal, among others. He is clearly in this for the money after all.posted by: vkri on 06.25.06 at 05:16 PM [permalink]
Um, right. And the impulse to "greater stability and price control" is exactly why the US, EU nations, etc have well-developed antitrust law. The intent is to limit any seller's, or group of sellers', price control. Globalization is deemed good when it increases competition and decreases price control by sellers. Attempts at global consolidation of sectors will collide with national antitrust doctrine.posted by: CS on 06.25.06 at 05:16 PM [permalink]
Correct me if I'm wrong, what connection does he actually have with India or its economy. I'd venture to say nothing. Much ado about nothing. And by all appearences it was a bad deal for Mittal. Some might argue that the score board should read Nationalism 1, Capitalism 0
Actually, Nationalism 0, Capitalism 0.posted by: CS on 06.25.06 at 05:16 PM [permalink]
And meanwhile, a Russian oligarch, Alexei Mordashov, walks off with $140 million of Arcelor's money as a kiss-off from their failed deal.
Hats off to the Arcelor managers. They may have sounded like a bunch racists, but in the end they got a really good deal for their shareholders.posted by: SteinVT on 06.25.06 at 05:16 PM [permalink]
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