Corruption and Trade

Alex Tabarrok notes that American furniture manufacturers are essentially using trade law to extort money from Chinese manufacturers--putting them on the review list for "dumping" (selling below cost in order to gain market share), and then taking them off the list when they get a large payment.  Alex doesn't like it much:


The Chinese firms have paid millions of dollars to Lay-Z-Boy (really, I am not making this up) other US furniture makers and to their bagmen lawyers to avoid having the ITC sicked on them. I suppose one could argue that the payments are an efficient way of redistributing the gains from trade. The question then becomes why are US firms assumed to own the rights to sell to US consumers?
The answer, of course, is that they don't, and that this is outrageous behavior.  Obviously, I don't support laws against dumping, one of the most egregiously abused trade restrictions for which there is very little real-world evidence.

And yet, politically, this may be a good thing.  If the manufacturers were not getting these side payments, they might be pressing for even tougher laws.  In an ideal world, this sort of corporate welfare combined with a little not-so-friendly blackmail would never be possible.  In the messy world we live in, where trade restrictions are often very possible, this might be better than the alternatives.
Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

Never Tell People How Old They Look

Age discrimination affects us all. Who cares about youth? James Hamblin turns to his colleague Jeffrey Goldberg for advice.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Never Tell People How Old They Look

Age discrimination affects us all. James Hamblin turns to a colleague for advice.

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

Video

Pittsburgh: 'Better Than You Thought'

How Steel City became a bikeable, walkable paradise

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

More in Business

Just In