How To Protect Yourself From "Dumping" and Profit in the Process
By Art Carden
Local politicians and protesters are in a huff about foreign producers “dumping” steel on the US market. They’re making the usual noise about protecting communities, foreigners “flooding” American markets, and so on.
If you’re worried about losing your job because foreigners are “dumping” steel on the US market, or if you’re worried that foreigners will jack up prices once they’ve eliminated American producers, here’s how to profit from their nefarious strategy:
1. Take your savings and start stockpiling the steel that foreigners are producing below cost. Get a home equity line of credit or something and borrow money if you have to.
2. Once the foreigners decide to jack up the price, undercut them by selling your steel stockpiles. Pocket a handsome profit from the difference between the below-cost price you paid and the just-below-what-the-evil-foreigners-are-charging price at which you sell the steel.
3. If you have enough money to do it, keep buying steel until you drive the evil foreigners out of business. After all, they won’t be able to sell steel at a loss forever. If they have to start raising prices, then you can match them or undercut them and make a pile of money. You might not be able to do it individually, but I’m sure US Steel or the steelworkers’ union can mobilize the resources to make an impact.
4. If foreigners are systematically selling steel in the US below their domestic market price, buy as much steel as you can at the artificially-low price and then use the foreigners’ own steel to undercut them in their domestic market.
5. A lot of people are worried that state and municipal governments won’t be able to meet their pension obligations. If foreigners are dumping with an eye toward juicy future profits, the strategy outlined above could provide a windfall that would ensure solvency for states and municipalities for decades to come.
The fact that no one appears to be doing this combined with the fact that the proposals are cloaked in the language of fairness suggests to me that there’s something fishy going on here. Here’s Jagdish Bhagwati’s article on “Protectionism” from The Concise Encyclopedia of Economics. It contains this choice quote from one analyst: “If the same anti-dumping laws applied to U.S. companies, every after-Christmas sale in the country would be banned.”