Anti-dumping tax and libertarian thought
Posted by prakash_iyangar 12 years, 7 months ago to Economics
Generally, a free market or libertarian thought avoids any tax or penalties for any economic activity and restricts taxation to basic services provided by the government.
however, in case of dumping or say subsidization of exports by someother country.. in this case the liberty of the producer in the domestic market is hampered by it not being a level playing field.. he is not able to pursue his happiness in a competitive world where the market is distorted by the other country's act.
In this case would the government be right in imposing a tax to ensure that the liberty of the domestic producer to work in a market without govt intervention is not infringed?
however, in case of dumping or say subsidization of exports by someother country.. in this case the liberty of the producer in the domestic market is hampered by it not being a level playing field.. he is not able to pursue his happiness in a competitive world where the market is distorted by the other country's act.
In this case would the government be right in imposing a tax to ensure that the liberty of the domestic producer to work in a market without govt intervention is not infringed?
If you tax only on end stage consumption domestically then foreign and domestic producers are treated the same and the foreign goods have no tax advantage. This is in essence what the FairTax does.
Productivity issues are best left to the free market.
So while it can create other unintended consequences, tariffs and regulatory policies should only be considered to deal with foreign regulatory (or lack of) policy issues and governmental subsidies, and even then only as a last resort since over time the subsidies mainly hurt the foreign nation's own citizens.
1. Can you please give an example of dumping going on today to help focus my mind on something concrete?
2. Your last sentence bothers me because it labels one government intervention (foreign) as bad, proposes a counter government intervention (domestic) as good, and then hails that this has been done in the name of ensuring the market is free from government intervention. My spidey sense is tingling. It strikes me as creating an environment where a group can whine to their nanny state declaring "it's not fair!", and expecting them to make life fair. Fairness is achieved when politicians run on the "I'll implement the tariff" platform, and businesses throw millions into their campaign. We will end up with tariffs paid for by special interests, tailored to help only them.
All that being said, I am also of the thought that
3. ALL foreign goods coming into the USA ought to have a 1% tariff placed on them as the default setting. Free trade with the USA ought never to be permanent - only reserved for special occasions. When tariffs are implemented, they ought to be targeted to a country's goods in their entirety, and not to any particular business sector.
There may be arguable reasons, but once government has that power, it can and it will intervene even if the reasons are dubious.
Suppose nation 'A' wants to provide goods to nation 'B' at a taxed subsidized price. It is a bit more complex. Governments can subsidize for longer than a profit seeking company but I still think the 'gift' should be allowed. There may be a small economy that has just one product, economy 'A'. If another nation subsidizes their own production of that product then economy 'A' gets wiped out -something like Cyprus and banking. I reckon this kind of reliance would be the result of government intervention and is unstable anyway.
Maybe I have missed something as most nations do intervene. But the reasons could be short term political pressure. In those circumstances, as local firms cut production, governments rush to be seen to be 'doing something' to protect jobs industries investments. But maybe adjustments can and would made be to take advantage of other opportunities.
if enforce patents, that will cut down on some of it. it will encourage local industries to innovate. good for them, the country and limit the effectiveness of dumping
tariff [ˈtærɪf]
n
1. (Government, Politics & Diplomacy)
a. a tax levied by a government on imports or occasionally exports for purposes of protection, support of the balance of payments, or the raising of revenue
b. a system or list of such taxes
2. any schedule of prices, fees, fares, etc.
3. (Economics) Chiefly Brit
a. a method of charging for the supply of services, esp public services, such as gas and electricity block tariff
b. a schedule of such charges
4. (Business / Commerce) Chiefly Brit a bill of fare with prices listed; menu
vb (tr)
1. (Law) Brit the level of punishment imposed for a criminal offence
2. (Economics) to set a tariff on
3. (Economics) to set a price on according to a schedule of tariffs
[from Italian tariffa, from Arabic ta`rīfa to inform]