With all the discussions on free trade, tariffs and non-tariff barriers, I decided to skim quickly into a short and fun book by trade economist Jagdish Bagwati. It is his 1988 book and is entitled Simply Protectionism. I wrote a short review of the book in the Fortune issue on June 5th, 1989.
One of the issues is what we currently see as “dumping” by American companies.
This is an important paragraph in my review.
American companies often claim that foreign competition is unfairly subsidized by the government, petitioning the US government to impose offsetting obligations and anti-dumping measures on foreign suppliers. Bhagwati is looking at measures such as harassment, primarily to discourage competition from foreigners. He says that US rice producers, for example, have acquired an anti-selling obligation to sell rice from Thailand by establishing that the Thai government subsidizes rice exports by less than 1%, and that Thailand also slapped it with a 5% tax on rice exports. We think that foreign companies usually dump when they sell at a lower price on the market than themselves. However, the US government has taken anti-dumping measures against golf cart competitions, even though they are not being sold on golf cart controllers.
I didn’t have the space to cover the discussion of his humorous debate by Stephen Cohen and John Zissman in my 1987 book. There’s space here. Cohen and Zasman wrote, and Bugwati quote:
There are other types of connections in the economy, such as linking crop dusters to cotton fields and ketchup makers to tomato patches. Here, the linkage is narrow and removes concrete… linkage is a binding, not a joint or substitute point. Close or offshore the ketchup plant off the coast of Tomato Farm. There are no two ways to do that.
Respond to Bhagwati:
Now, when I read the pro fund claims about tomato farms and ketchup plants, I was eating my favourite Crabrere & Evelyn Vienge Marmalade. It certainly didn’t happen to me that England had grown its own orange.
(Bagwati, by the way, wrote an article called “Protectionism” for the editor of David R. Henderson.
