From: fulk@cs.rochester.edu (Mark Fulk)
Subject: Re: "Dumping"
Organization: University of Rochester
Distribution: usa
Date: Tue, 15 Dec 1992 18:53:29 GMT

In article <184633@pyramid.pyramid.com> pcollac@pyrnova.mis.pyramid.com (Paul Collacchi) writes:
>In article <1992Dec11.152259.14531@cs.rochester.edu>,
>fulk@cs.rochester.edu (Mark Fulk) writes:
>|>
>|>  
>|> Notice that Japan:
>|> 
>|> A) has very limited land area, for a substantial population.
>|> B) consists 70% of non-arable mountains.
>|> C) has no mineral resources worth mentioning.
>|> D) is not self-sufficient in food, except for rice, which costs
>|>    several times the world price there.
>|> E) contains many of the world's most successful manufacturing firms.
>|> F) places numerous barriers in the way of foreign competition.
>|> G) owns much of the world's debt.
>|>  
>|> Gee, I wonder when the Japanese are going to notice how much those
>|> trade barriers are hurting them :-).
>|> -- 
>
>Mark, are we to conclude from this that a high percentage of non-arable
>mountains leads to economic prosperity?  If not, then why did you chose
>F) versus B)?  Surely there must be a good explanation that goes with
>it, only I haven't read one yet.

You must have missed the point.  Points A-E are all disadvantages suffered
by Japan; it is dependent on imports for all of its raw materials and much
of its food.  Despite a very impressive list of disadvantages, including,
incidentally, distance from the world's most lucrative markets, Japan has
prospered amazingly well.

>I'm quite certain that Jim and I are on opposite ends of the economic/
>political spectrum, but I have not seen *one* of his points intelligently
>rebutted by anyone.  There has been much bait and switch, and much confusion
>but we have yet to be given an example by which the Japanese gained economic
>prosperity as the result of a combination of unfair or uncompetitive
>trade practices, notably dumping abroad and protecting at home.
>
>His basic points all stem from two principals:
>
>    you protect a highly capitalized, high competitive market by keeping
>    it free, and
>
>    you cannot effectively compete in a highly competitive, highly capitalized
>    markets by engaging in non-competitive practices.
>
>
>Both dumping and protectionism are non-competitive since they do nothing
>to strengthen the perpetrator.  You strengthen yourself when you find 
>a way to do something better, faster, cheaper, etc.
>
>If the US is losing jobs, I have not seen a cogent explanation showing that
>those jobs are ending up in Japan.

I don't think the majority of those jobs are ending up in Japan.  Most of
them are just being obsolesced.  You may have seen my GM/Toyota comparison
posted here a few months ago: Toyota uses 1/4 as many workers per car.

Furthermore, dumping has not led to prosperity; it has been a rather small
factor if it has mattered at all.  The only clear example that I know of
is the flat-screen business; Jim has misstated that there was no such
industry in the US when, in fact, there clearly was.  The Nintendo case
is not dumping, but rather it was an anti-competitive practice.

The two principals apply, insofar as they ever apply, in _stable_existing_
markets.  The flat screen business is an example of something else; when
the Japanese started into it, the market was very small and the product
was very expensive.  Most of the flat screens went to the military, who
liked the security advantages.  Nonetheless, it was clear that eventually
flat screens were going to be a lot cheaper, and there was an obvious
and very large market for them once they became cheap enough.  Lowballing
flat screens early on had several effects: the market increased a bit faster;
the Japanese makers had more sales to show their bankers, which is impressive
if not profitable; and other makers were scared off the market because
they couldn't see how to compete with the Japanese prices.  The market
has expanded so rapidly that I am sure the Japanese have earned back
their early losses many times over; and they have not had to drop their
prices as rapidly as if their had been more competition.  Certainly,
if they keep their prices high enough, someone will come along and
undersell them.  But that will take sufficiently long that they will
have gotten a large return on their ``dumping'' investment.
-- 
Mark A. Fulk			University of Rochester
Computer Science Department	fulk@cs.rochester.edu
Xref: sparky sci.econ:9430 talk.politics.misc:64534 misc.misc:4075