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Quotation of the Day…

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… is from page 214 of Martin Wolf’s 2004 volume, Why Globalization Works [2]:

UnknownEvery well-informed economist knows that anti-dumping lacks all economic justification, even in theory, let alone in its still more indefensible practice.

DBx: Reality teems with mere possibilities.  Yet almost everything that is possible is so improbable that you are safe in betting all that you own that these mere possibilities will never occur.

It’s possible that I’ll be killed later today by a pig being flung through my window.  After all, I can easily imagine a brute buying a catapult and, after setting the contraption just outside my window, stuffing it with a pig and flinging the beast at me with precision aim.  But despite the horror of the easily imagined event, I’ll take no precautionary action against it.  It’s simply too far fetched to believe.

Much the same can be said about so-called “dumping” that is imagined to lead to domestic consumers in the future being victimized by foreign monopolists.  One can indeed imagine foreign firms – especially ones that are subsidized by foreign governments – charging prices so low that these firms bankrupt all of their rivals and eventually gain monopoly power.

Yet one trouble with this imagined outcome is that history knows no credible examples of it.  Another trouble with the story is that economic theory – when done well and wisely – identifies so many reasons why such a strategy will likely fail in reality that to worry about such an outcome is equivalent to me worrying about being killed later today by a catapulted pig.  And a third trouble with the story is that in practice it is used to bestow monopoly power on domestic firms who use it to frighten the populace into letting the state with certainty today punitively tax domestic consumers as a safeguard, allegedly, against the mere possibility of their being punitively taxed tomorrow by imagined monopolists.

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