Many lay people, aided by the teachings of economists, believe that the major economic processes in life are driven by the inexorable laws of economics. Prices rise and fall responding to demand and supply, which are the aggregation of thousands of atomistic decisions by individuals; trade occurs when there are differences in comparative advantages between nations; wealth accrues to the smart and the hardworking. There is something mildly consoling about this view. When one sees the all-too-visible inequities of economic life, this belief in inexorable laws comes a close second to fate, karma, and religious determinism as a source of comfort.

What most people grossly underestimate is the importance of politics in economics. Transparency not being the hallmark of politics, this is a mistake easy to make. An illuminating illustration of politics behind economics is the recent steel-tariff controversy. President Bush's preaching of free trade and practice of raising steel tariff to nearly 30 per cent caught many by surprise. Bush justified it by referring to the report of the International Trade Commission, which had been asked by him to do a ‘global safeguard investigation’ into the subject of steel imports and had concluded in December 2001 that increased imports were hurting the nation across the board. But a little research shows that the real reason for the tariff was political. Steel is an important industry for Pennsylvania and West Virginia, and these states have midterm elections coming up in November 2002.