Dumping on (anti-)Dumping

US anti-dumping laws transfer income from American consumers to American producers. Of course it's rarely stated that way. Generally it's alleged to protect American jobs.  At least one of our current presidential candidates is pushing tariffs as job-savers.

The WSJ gives a great example, the case of the US wooden furniture manufacturers. They sued China for dumping in 2002 and in 2004 they won, receiving both hundreds of millions of dollars in payments from China (thanks Byrd Amendment!!) and tariff relief.

Wow, isn't that great for American workers?

Well.......

Stanley Furniture Co., in High Point, N.C., received the biggest payout, $83.5 million, and says it used the money to invest heavily in a new line of domestically produced children’ furniture. But made-in-America wasn’t enough of a draw, said Stanley’s chief executive, Glenn Prillaman, who shut down the line in 2014. In 2015, Stanley’s U.S. employment fell to 71, down from 2,600 in 2005.

“The money allowed us to fight that fight on the scale that we fought for as long as we did,” he said. But “the consumer wasn’t willing to look past short-term gains of getting something for less” and continued to prefer imports.


In other words even with the tariff protection and $83.5 million of cash, the company continued to be so inefficient that they more or less went under.

Then there's the case of the company who spearheaded the suit:

As for Mr. Bassett, he says the $54.4 million in Byrd amendment money his Vaughan-Bassett Furniture Co. received financed factory modernization. Now, the outlook for the Galax, Va., firm “has never been brighter in 15 years,” said Mr. Bassett, the firm’s chairman. In part that’s because Vaughan-Bassett is making solid wood furniture, which is becoming increasingly trendy.

Even so, he said, Vaughan-Bassett’s employment of 560 is down by about half from 1,200 in 2005 when the company started receiving Byrd amendment money. Employment is even down from 700 workers in 2009, during the depth of the housing collapse. The new computerized machinery Vaughn-Bassett bought requires fewer workers, he said.

In other words, he took his dumping money and automated production while dumping his workers!

Now Bassett was smart and Stanley was dumb, so kudos to Bassett for making a smart business move.  But should US consumers have to pay for Stanley to automate their production?

So if price protection and millions of dollars won't protect American jobs either because of a poorly run company or a decision to automate, what to do?

My own view is to acknowledge that the unintended consequences of anti-dumping make it impractical as a job protection device.

If the Chinese government wants to subsidize Americans' purchases of furniture, so be it.

 Let's use something like a Universal Basic Income to deal with job displacement. Let's subsidize worker mobility so that furniture workers out of a job can move to a more dynamic sector of the economy possibly in another area of the country. Let's stop subsidizing home ownership, which when prices fall (which they will do again people!), people aren't "stuck" in a jobless geographic area.

But handing US taxpayer money to manufacturers who are going to squander it or do things the government doesn't want is a bad option. Maybe the government should also mandate what the companies getting relief must do with the money? Yes, that's the ticket. What could possibly go wrong?

Interesting, and Revealing

So, this is an interesting case.  In Wisconsin.  In Madison, WI, in fact.

An excerpt:

Snugglers contend touching helps relieve stress. But Madison officials suspect the business is a front for prostitution and, if it's not, fear snuggling could lead to sexual assault. Not buying the message that the business is all warm and fuzzy, police have talked openly about conducting a sting operation at the business, and city attorneys are drafting a new ordinance to regulate snuggling.

"There's no way that (sexual assault) will not happen," assistant city attorney Jennifer Zilavy said. "No offense to men, but I don't know any man who wants to just snuggle." 

The asst. D.A. doesn't say that there are no men who like to snuggle, she just says she hasn't met any.  Gosh, Jenn.  How's that dating going for you?  Not so well?

UPDATE:  Snuggle house is closed by prudery.

UPDATE II:  Japan is much less uptight about this.

The Philosopher Drinks the Porter?

An interesting theory.  Workaholics have something to do, alcoholics just drink.  But they are the same people.

This paper considers the role of alcohol in agency problems in order to provide an economic rationale for alcoholics and workaholics. In our model, alcohol reduces productivity, but also can make imbibers blurt private information. We show that in the optimal contract, low-productivity workers are compelled to over-indulge in alcohol, while high-productivity workers overproduce output. Thus, workers are made into “alcoholics” and “workaholics” depending on their productivity. We conclude that excessive drinking (working) may be the result, not the cause, of low (high) productivity of workers. 

Nod to Kevin Lewis 

Employee Award Programs

The Dirty Laundry of Employee Award Programs: Evidence from the Field 

Timothy Gubler, Ian Larkin & Lamar Pierce
Harvard Working Paper, February 2013

 Abstract: Many scholars and practitioners have recently argued that corporate awards are a "free" way to motivate employees. We use field data from an attendance award program implemented at one of five industrial laundry plants to show that awards can carry significant spillover costs and may be less effective at motivating employees than the literature suggests. Our quasi-experimental setting shows that two types of unintended consequences limit gains from the reward program. First, employees strategically game the program, improving timeliness only when eligible for the award, and call in sick to retain eligibility. Second, employees with perfect pre-program attendance or high productivity suffered a 6-8% productivity decrease after program introduction, suggesting they were demotivated by awards for good behavior they already exhibited. Overall, our results suggest the award program decreased plant productivity by 1.4%, and that positive effects from awards are accompanied by more complex employee responses that limit program effectiveness.

"The Kicker..."

So, a guy cuts off his own foot so he doesn't have to work.

You would REALLY have to hate working to do that.

The guy planned ahead: not only cut off his foot, but then barbecued his foot to make sure it could not be reattached.

What I like is that the article mentions "the kicker" (!): being footless won't mean the guy will be disabled.

Nod to the Blonde, who always adds some foot notes to my day.

The culture that is Japan

or, high art in low places.

People, we have a long way to go to catch up with the Japanese. Feast your eyes:

many more great ones here.

Look, This is Not Complicated

Let's spell it out.

If you are invited to go on the Jon Stewart Show, you should go. It will be fun, Jon asks softball questions, it will be great, you will get to talk about your book

If, on the other hand, John Oliver, or Asif Mandvi, or Jason Jones, want to talk to you, just laugh at loud and hang up the phone. Do NOT talk to them. Do not do an interview. Do not even answer questions in writing. They already have an angle. They are smarter than you are, or at least they will seem smarter after they finish editing the interview.

Why do otherwise smart people convince themselves that they are going to be anything other than reamed? Froma Harrop is revealed here to be an unbelievable hypocrite and a self-important fool.

The Daily Show with Jon Stewart
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She just couldn't believe anyone could disagree with her, and be anything but a "terrorist." She even goes so far as to say that that was NOT a metaphor. She meant it literally: disagree with me, and you are a terrorist. Didn't we all make fun of George Bush when he tried that same stupid line?

Now, I have always just thought Froma Harrop was another economically illiterate lefty journalista. Given that she never took any actual courses in college, it's not her fault.

But.... it turns out she is actually a really, really scary lady. Thanks, Jon Stewart, and thanks to John Oliver! Don't ever call me, by the way. I won't answer, John O.

Lagniappe: From Wikipedia.... Harrop is the President of the National Conference of Editorial Writers. One project of the NCEW is the Civility Project, aimed at restoring civility to America's public discourse. Her position was criticized by the Wall Street Journal, which noted the contrast between this role and her comparison of the Tea Party to terrorist groups such as al-Qaida. In her response to the criticism, Harrop stated, "I see incivility as not letting other people speak their piece." She subsequently deleted all the comments from the post and shut down the commenting feature of her blog.

Some partial year end good news!

People, it looks like both the 45 cents / gallon subsidy for domestic ethanol AND the 54 cents / gallon tariff on imported ethanol are both dead as of January 1!

Amazing. I guess when the economics actually lines up with the political correctness, good things can actually happen.

Sadly though, the ethanol mandate (how many gallons of ethanol must be blended into gasoline each year) is still alive and well. At least it can be filled by cheaper and less environmentally wasteful Brazilian sugar-cane ethanol.

Maybe someday, we can just have a Pigouvian tax on carbon and drop the command and control BS. Not holding my breath though.