Open Markets vs Big Government Debate: Is Dumping a "Form of Theft"?

Dumping is a form of theft says Matt Stoller, a Fellow at the Open Markets Institute.

Here is a Tweet that caught my eye.

That Tweet was from @matthewstoller

Curiously, Stoller is 180 degrees off target.

Mercy Me

Dumping steel, solar panels, etc, is to the explicit benefit of the US (assuming of course dumping is the accurate word).

In simple terms, people like Matt Stoller protest that fact that the US is getting a great deal.

Stoller supports tariffs to stop the US from getting a a good deal.

Now, how silly is that? And check this out.

More Government Control Demanded

While wanting more tariffs, Stoller wants more control of how and what farmers produce.

End Austerity

Like Krugman, Stoller wants to end austerity. Other than Greece, I am still waiting for someone to tell me where we have austerity.

Google Crackdown Requested

Corporations like Google and Microsoft exist in the US because socialists would not let them exist in Europe.

To save the bookstores, family farms, newspapers, or whatever, they would have been busted apart long ago if they ever thrived in the first place.

Google is an amazing corporation. People use its search engine because they like it. And Google took its profits and invested in amazing things like self-driving technology that will soon run cars everywhere.

This is the genius of free and open markets, unhampered by government interference.

The Not Open Market Society

Stoller and the allegedly "open market" committee both want more government spending, more tariffs, and more intervention by the government in virtually every aspect of our lives, even agriculture.

Committee to Support "Big Government"

Neither Stoller nor OpenMarkets.Org is one bit interested in "open markets" which I would define as free market enterprise.

Instead, Stoller, along with Krugman, ought to be on the Committee to Support "Big Government".

Big Government Madness

The irony in Stoller's and Krugman's madness is that the populist revolts in France and Italy are taking place precisely because those countries suffer from too much regulation, too much taxation, and too much government!

Mike "Mish" Shedlock

Comments (23)
No. 1-15
stillCJ
stillCJ

Editor

Since this is about Chinese imports, let us not forget the issues of toxic contamination in many Chinese products, and inferior quality issues in products like steel which can lead to disastrous consequences. Because I do not trust Chinese crap, I will gladly pay more for US made products.

tz1
tz1

When something is below cost, do not assume the seller is the one suffering.

There were many large shoplifting rings getting things without paying for them from Wal-Mart and selling them on E-Bay and even advertising that they could fulfill special orders and a shopping list.

Should I complain because I got stuff cheaper off E-bay and not think about why it was so cheap? Below cost?

The common externalities - interest rates, eminent domain (having to pay for the land for the factory instead of having the government seizing it and giving it to me), dumping toxic waste into the river and toxic smog into the air (you do know about China's air pollution problems)...

China has a printing press and while you will scream that inflation is theft here, when they use it to finance their dumping, well, that is more benefit from theft "over there where we don't want to ask questions about".

Dumping can only be either a form of charity where some rich person or organization will reduce their wealth to provide something below cost, or there MUST BE THEFT SOMEWHERE. Either by the goverernment below market interest rates or the printing press or subsidies, or regulations that remove property rights, or direct theft as my shoplifter example, or creditors in the case of bankruptcy where you don't have to pay back interest or principal.

One more - taking the wealth from stockholders - it may be simple stupidity where someone produced too much to sell at market so must sell at a loss, but in any case, it when something is sold BELOW COST, that cost MUST be borne by someone. It is either charity, theft, or the result of a management pricing mistake.

I do not think China is being charitable, nor do I think they have simply had an "oops, overcapacity! Hokudanode?", even if it wasn't an economic attack (we'll see you through while their free market destroys those with high fixed cost and latency).

Economic loss CANNOT be eliminated only transfered. Dumping implies economic loss. Who is losing and are they doing so voluntarily, or through volunatarily taking risks, or why don't you care about the violation?

Realist
Realist

Selling something below cost is a common business strategy. The reasons for employing this strategy are varied. A grocery store might sell eggs at a loss to attract shoppers into the store, hoping they will buy other items as well. A company might sell you a printer below cost (say $30) , in the hope that you will soon need ink that is priced at $100. Resource producers (agriculture, metals, oil and gas etc) are price takers, and have to sell their products at market prices, even if that means taking a loss. Other companies will take a loss on sales to gain market share. So selling products at a loss happens a lot. If you are a company that uses steel, aluminum, lumber etc, you are always looking for lower prices on your inputs. As long as the product quality is the same, you will naturally buy at the lowest price. You likely don’t care if the item is sold below cost. That is the free market working. When governments interfere in free markets with things like tariffs, it is to force companies to do things that they normally wouldn’t do, like forcing them to pay higher prices for their inputs. This makes these companies less competitive. And that is why Tariffs will eventually be removed on products that are input items for US companies. Tariffs on finished goods might remain a lot longer. What’s shocking is that the US never seems to learn its lesson, and keeps pursuing these failing strategies.

pgp
pgp

Selling and controlling information isn't clever, criminals have been doing it for centuries. Nor are search engine results biased towards the highest paying member, particularly useful. Controlling the flow of information is dangerous and it certainly isn't democratic.

Lauding corporations for producing anything of value is often shortsighted at best. The idea that corporate exploitation can benefit a population is kindergarten idealism. Capitalism is about choice by competition and not about monopolies that control courts, politicians and information.

Matson
Matson

The only real theft in this entire article is government "taking" of either tax revenues or manipulation of free markets! Get rid of government, reduce the real theft, and watch how everyone will prosper.

caradoc-again
caradoc-again

When each side agrees to standards - air quality standards, hazardous waste handling standards etc then OK. Even worker safety standards. Otherwise that which we share (air, water etc) is damaged and the perputrator of the damage has an unfair advantage as they dodge those costs.

"Dumping" is another simple word used to avoid looking at the matter in its entirety. Excess production shipped to a market below cost is one thing, how China goes about it is another.

Sechel
Sechel

The only theft that China engages in is stealing trade secrets. Selling something below cost is not theft and ironically nobody would ever argue that if the player engaging were to be domestic, but make it a foreign seller and common sense seems to go out the window. I'm actually surprised that there's so much focus on China selling things we need at bargain prices but virtually none on the corporate espionage China engages in. The former we should not be concerned about , the latter is something we very much should care about. And for reasons I fail to grasp our focus on 180 degrees where it should be.

JonSellers
JonSellers

I disagree with Mish on this. "Dumping" is usually a form of monopoly. It is done in an effort to harm and weaken competitors. In the case of China, it is subsidized by the government in the form of bank loans that are simply written off by government controlled banks.

The genius of capitalism is competition and creative destruction. Competition drives companies to minimize prices, maximize quality, maximize choice, and maximize business investment in the economy. Monopolies do just the opposite. And Google increasingly sucks. Half the page of search results are ads that I have to filter through to find any valuable information.

I'm happy to pay a little more, and have a little more regulation, to maintain an economy based on competitive capitalism.

JL1
JL1

Dumping by China in steel and many other products steals from USA:

  1. Well paid jobs from workers
  2. The taxes federal government and states would get from the workers and from the factory
  3. The knowhow from the workers so if inventions are made they are made in China and they benefit China.
  4. In short China only steals the future of USA.

This process should have already led to a crash in corporate investment and consumer demand in USA but Fed policies and ever increasing debt levels in Federal government, states, cities, companies and consumers has so far hidden the consequences.

Blurtman
Blurtman

Imagine if all goods and services were from China how wealthy we'd be!

ReadyKilowatt
ReadyKilowatt

When I was a kid every so often a missionary would come to Sunday service to talk about all the good they were doing in far-off lands. Sometimes they'd have slides to show at Youth Group. At some point there'd be a special offering pitch to keep the charity going.

I watch a youtube channel produced by a South African expat in China. What I see far surpasses anything the missionaries ever did. We should be celebrating the success of China, not complaining. And moving those missionaries to the distressed cities in the US, where they might actually do a better job than Uncle Sam at helping the poor and homeless.

Webej
Webej

As a champion of the market, Mish should be able to understand why there is anti-trust legislation against parties that are in fact monopolizing certain markets. The market may not need extra rules, but there is not much of a market if one farmer has in fact cornered most of it. There is no such thing as a free market if there is no competition. With competition, a profit is extremely difficult, as Adam Smith duly noted. The fact that Amazon and Google cross subsidize other activities, such as autonomous driving, shows that they are in fact just as domineering as are government agencies that start meddling outside their original mission.

Pater_Tenebrarum
Pater_Tenebrarum

If the protectionists were right, Hong Kong would be in the poorhouse, with record unemployment, since it has essentially no trade restrictions at all. In reality its economic output per capita is one of the highest in the world - and the same is true of every other country and territory that has no trade barriers. Must be magic.

Christian dk
Christian dk

China dumps steel and the USA/Fed/PPteam dumps the gold / silver price every sunday midnight, that is really funny...uncle Sam dumping 100-200 tons + of Paper gold kontrakts at the absolutely most illiquid time of the week is pure manipulation of the price to force liquidate the papers longs into selling/margin call and with in 1 minut, the price is back or above that it was before the PPteam did its price adjusting. Who and how kan the paper long investers be so stupid to think that they can bet and win against the Casino ? Judging by the enormous volume of trading, it is MORE likely that the 100 times daily trading of daily world production is rigged on both sides, short and long so that no real trading og PM metals actually influence the price at all. To Claim that the gold and silver price is NOT manipulated while ignoring the 1945-1971 Fixed/rigged gold price via the Bretton woods con speaks for it selv.

skedge
skedge

What a bunch of free trade eggs-in-one-basket monopoly pinheads.