The new Business Week tells us that one of President-elect Obama’s first tests involves his policies for addressing China’s infamous “dumping” of products in the American market.
The article reminded me of a June 2001 column included in Walter Williams‘ latest book, Liberty Versus the Tyranny of Socialism. Early in the Bush administration, before the president pushed through his ill-advised steel tariffs, Williams wrote: “[T]he real definition of dumping is when your competitor charges a price you think is too low.”
Looking back to the Reagan administration’s “voluntary restraints” on steel imports, Williams notes:
[I]mport restrictions saved nearly 17,000 jobs in the steel industry by enabling them to charge higher prices. Politicians love this: the beneficiaries are visible and seen. However, higher steel prices made American steel-using industries, such as John Deere, less competitive in domestic and international markets, leading to a loss of 52,400 jobs, a net job loss of 35,400 jobs. These are the invisible and unseen victims of steel import restrictions. Politicians love invisible and unseen victims of their policies.
