A Bastiatian Thought from New Zealand

How does this differ from wanting to live off welfare?

His LOCAL supermarket?!?!?!? How naive! Don't people know buying locally is tantamount to protectionism! :)

Dumping goods at less than the cost of production implies that some producer is not receiving the value of his produce, and I'm not believing that the producers are the ones sanctioning their own losses.

If theft is less costly than production, thieves will steal produce, and they will fence their booty for less than the cost of production to compete with the poor fools fettered by the inconvenient necessity of honest profit.

I don't call statesmen "thieves", but the same logic applies to mercantilist politicians, regardless of the labels, so I have a problem with this gleeful celebration of imposing rents on producers in both the mercantalist state and the free trading state, and I'm not convinced that common people in the free trading state ultimately benefit from the rents either.

At some point, the theft ceases or thieves simply gain enough legitimacy or freedom from competition to stop offering the discounts. The temporary beneficiaries of theft then must reorganize again to produce goods they previously enjoyed at a discount to the cost of production, because they can't enjoy both the previously discounted goods and the goods they produce under the discounted regime.

In Austrian parlance, this post-discount predicament is called "recession", isn't it? Is it now cause for celebration?

<quote>Dumping goods at less than the cost of production implies that some producer is not receiving the value of his produce</quote>

Not necessarily. I might also imply that the producer values his produce too much.

Produces sell at a loss all the time. They do so to minimize their loss.

Temporarily liquidating excess inventory presumably is not what people mean by "dumping", but I take your point.

I'll add that "dumping" doesn't imply any unprofitable organization. If a state taxes some producers to subsidize others, in order to sell the subsidized produce below its cost of production, then the taxed producer loses the full value of his produce, even if he remains profitable, and the subsidized producer is still profitable by virtue of the subsidy. No one sells at a loss in this scenario, but I call it "dumping".

I don't call your liquidation scenario "dumping" even though someone does sell at a loss; however, if a producer persistently finds himself in this liquidation scenario and never goes out of the business of selling at a loss, I'm not believing it.

The state's forcible involvement in these transactions denies the taxed producer his full market value, and at some level, this subversion of the market is what "dumping" always implies in my way of thinking. Exchange rate manipulation by monetary authorities amounts to the same thing.

I don't know, I agree with your first thought M. Brock - someone somewhere is not getting their due. The capitalist scenario when someone is selling cheaper than someone else is due to their production per unit cost being cheaper. If someone is selling below cost then they effed up and are trying to cut their losses (some retailers who sell flat-panels TVs seem to do this every now and then) while they can or they are being forced by someone else to sell their produce artificially cheap.

A liquidation scenario could impede someone's ability to sell at a profit, but the liquidation scenario is temporary. Productive organizations constrained to profit can't liquidate at a loss indefinitely.

On the other hand, if a monetary authority provides a lot of cheap credit, many productive organizations may appear that otherwise would not appear, and many of these organizations may ultimately fail to profit, and when they fail to profit, they may liquidate inventory as they dissolve through bankruptcy, and as they dissolve, they leave many idle resources on the capital market at once, and these idle resources then must reorganize again, and if the newly idle resources cannot reorganize profitably as fast as dissolving organizations excrete them, a recession occurs.

Isn't this precisely the Austrian theory of the business cycle?

Mercantalist trade policies can be destructive to both the mercantalist state and its free trading partners. That's my point. The mercantalist state robs its own citizens of wealth, but it doesn't necessarily harm citizens of the free trading state. If the argument ends there, I agree with Eric and Don. I'm not suggesting that free trading nations should harm themselves to police mercantalist states.

If the mercantalist policies also harm citizens of the free trading state, then they do have a problem, and denying the problem doesn't change it. Maybe the imports benefit some citizens of the free trading state but harm others more, as the fencing of stolen goods can benefit some but harm others. Are we supposed to ignore the fencing of stolen goods because the purchasers benefit from lower prices as long as the theft continues? Knowingly buying stolen goods is a crime. Should it not be a crime? Should it be a crime only if the goods are produced domestically?