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?

Unintended Consequences: Public Choice

One of the great features of Public Choice is its ability to predict outcomes that always shock public interest advocates.  I mean, why would anyone "misunderstand" the good intent of my good intentions?

Zach Weiner found this gem, in Deborah Davis's book, GUEST OF HONOR, and emailed it to me.  Nicely done, Zach!

Will China's development destroy the world?

Um, maybe?

I'm not an expert on global warming, but I do think that of all the fossil fuels, burning coal is the worst for our environment, and China is burning a buttload of coal!

While coal consumption in the rest of the world grew somewhat slowly over the last 12 years, consumption in China more than doubled. China now burns almost as much coal as the rest of the world combined:

(clic the pic for an even more smoky image)

China is both the biggest coal producer AND the biggest coal importer.

Can it be that the biggest single problem facing the world is the need to find a much cleaner energy source for the developing world?

One thing is for sure: a rich world carbon tax is not going to do much, if anything at all, for the environment. Unlike acid rain, carbon dioxide emission is a global externality, not a local one.

re-writing history

The following quote is from Acemoglu & Robinson's blog:

 This is not to deny that ideology and ignorance play a role in the fates of nations. For example, clearly, if European leaders at Maastricht knew the problems that single currency and implicit bailout guarantees to financial markets on sovereign debt of peripheral countries would create, they would not have opted for it, instead choosing another path to increasing integration in Europe.

 I don't think this is right at all. Plenty of economists (both liberal and conservative) were pointing out that Europe was not an optimal currency area and that the single currency wouldn't work.

Instead, I'd say arrogance and over-confidence often play important roles in the fates of nations and the Euro is a prime example.

Other examples? What gets us into trouble more often, ignorance or arrogance?

Markets in Everything / The Culture that is Japan

Non-price competition in the Japanese fast food market has lead to some interesting menu items at American based chains.


Here's the $16 foie gras burger from Wendy's:

and Pizza Hut's "pigs in a blanket crust" pizza:

many more exotic entrees can be seen at the link above.

I wonder if good old price competition (4 whoppers for a nickel!!!) is outlawed/discouraged in Japan, or if the Japanese consumer somehow finds price competition unseemly? My money is on the former.

Hat tip to Mrs. Angus!

The cure is worse than the disease

What do you do when you find 10 human heads? Send 12 policemen to look for the bodies.

What do you do when those 12 policemen are murdered?.............

Legalize drugs?

It is amazing what damage the US anti-drug policy is having in other countries. According to the linked article, over 47,000 people have died in drug violence in Mexico during the sexenio of Felipe Calderon.

Our drug laws are responsible for a horrible toll of carnage and disfunction in Latin America.

Iz our children learning?

No George, but our teachers are cheating and that's almost the same thing, innit?

"Award-winning gains by Atlanta students were based on widespread cheating by 178 named teachers and principals, said Georgia Gov. Nathan Deal on Tuesday. His office released a report from the Georgia Bureau of Investigation that names 178 teachers and principals – 82 of whom confessed – in what's likely the biggest cheating scandal in US history.

This appears to be the largest of dozens of major cheating scandals, unearthed across the country. The allegations point an ongoing problem for US education, which has developed an ever-increasing dependence on standardized tests.
The report on the Atlanta Public Schools, released Tuesday, indicates a "widespread" conspiracy by teachers, principals and administrators to fix answers on the Criterion-Referenced Competency Test (CRCT), punish whistle-blowers, and hide improprieties."

Sounds like a RICO case just waiting to be filed.