Thank You Democracy

Sebastian Mallaby of the Washington Post writes of the ridiculous maneuvering and hoop-jumping the Commerce Department goes through to achieve the dishonestly named "fair trade".

This is where things get interesting. "Dumping" usually means selling a product for less than it is sold for at home. But there is no home price for frozen shrimp in Thailand, where shrimp are eaten fresh. So the Commerce Department apparently intends to take, as a proxy, the shrimp price in Japan: If shrimp sell for less than the Japanese price in the United States, this will be deemed dumping. Next, since the price gap with Japan is actually not much, Commerce observes that shrimp in Japan are generally sold raw with their head and shell on, whereas shrimp sold in the United States are processed. So the Commerce Department plans to adjust the U.S. prices, putting the shells and heads on again and uncooking them, too. Then, safe in the knowledge that everyone's confused, it will declare a big dumping margin.

Meanwhile, Commerce will apply a second kind of alchemy to Vietnam. Like Thailand, Vietnam has no domestic market for frozen shrimp. But instead of using Japan's price as a benchmark, Commerce will figure out the cost of shrimp production in Vietnam, undaunted by the fact that there are no real prices in a communist economy for inputs such as electricity. Precisely because this cost calculation is impossible, it affords Commerce maximum leeway: It can derive costs by looking at supposedly comparable countries, then announce whatever answer it feels like.

Aren't you glad we live under a system where "we" can have other people like Robert Byrd vote to arbitrarily decide with whom and on what terms "we" can exchange "our" property?

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So-called "dumping" wouldn't

So-called "dumping" wouldn't even be necessary if it weren't for government intervention in the economy.

It's an integral part of what Schumpeter called Export-Dependent Monopoly Capitalism.

Government, through subsidies, protection, and other cartelizing interventions, encourages overaccumulation. By underwriting the inefficiency costs of large-scale organization, it artificially shifts economy of scale upward.

The result is enterprises much larger than they would be in a free market, that cannot dispose of their full output at full capacity. So to keep unit costs down, they are forced to operate at full capacity, dispose of as much as possible at cartel prices in the protected domestic market, and dump the surplus abroad at whatever price it can fetch.