> scam
I'm glad someone makes money off of my old clothes rather than they go in the trash.
> destroys local tailors' businesses
That's a variation on the broken window fallacy.
I'm glad someone makes money off of my old clothes rather than they go in the trash.
> destroys local tailors' businesses
That's a variation on the broken window fallacy.
I don't have a problem with that per se, only that it happens under the pretense of charity and that the model exploits economic inequality in a globalized world on the expense of those the "charity" claims to help.
> That's a variation on the broken window fallacy.
I fail to see the connection because the broken window fallacy is about a coherent economic system, not about a global economy where one can make a profit by exploiting inequalities. The proverb says: Give a man a fish and you feed him for the day, teach a man to fish and you feed him for a lifetime. Following that idea, I am much more for transfer of knowledge than for transfer of goods. And in extension also for sourcing urgently required products locally (and if required donating to build the required industry) than just sending products.
One does not have to see that in any ideological way: Just publish all numbers, show me that it's more cost-effective to send assembled products to a place and I won't object. But the article just showed that we again failed to run the numbers, thereby wasting money and potentially harming the local economy in the target country.
Giving away second hand clothes to developing countries is indistinguishable from "dumping", a trade practice which more developed countries (including the U.S) frequently take trade action against.
I think you're accounting only for first-order effects and ignoring costs to reboot industries that have been shut down.
EDIT: To clarify, I think your position is logically consistent and my guess is that you'd explain WTO actions / anti dumping enforcement as regulatory capture and protectionism.
Not if you do it right.
If your goal is to destroy an industry in another country, you can stop dumping after that industry has been destroyed. Then, the people of that country will have no choice but to buy from you, because there is nobody left in that country that produces the goods you produce.
So I suppose the point I'd like to refute is that "dumping is always a losing game for the dumper".
The following article: http://www.nap.edu/read/5902/chapter/28
Discusses the case of the British steel industry between about 1880 to 1914. It's not 100% clear that dumping was the proximate cause of their industrial decline (these things are very hard to be sure about!), but a strong case is made that it was a major factor. It's actually a pretty interesting read.
Britain had a free market for steel, while the U.S. and German industries enjoyed substantial protection in their home markets. It's better to run a steel plant at 100% capacity, so it actually makes sense to sell extra production overseas even at a loss. Quote:
"The U.S. Consul General in Berlin reported in 1916 that "the Steel Verband believes in dumping. They justify their position as follows: Large steel plants must work at a certain maximum capacity without interruption if they are to remain efficient and produce at a minimum cost. It is impossible for the home market of any plant in any country to absorb a large output without interruption in the flow of orders due to periods of depression, from economic causes outside the influence of the steel industry. Also, the increased complication of the coal, iron, and steel industries, the increased use of furnace gases for industrial purposes (gas engines), for running lighting plants for neighboring towns, also the concentration of all stages of production in a few large mills, have made it increasingly difficult to reduce production in any one line of all the allied processes, without causing grave losses and disorganization in other lines. The Steel Verband therefore maintains that it is better for the entire economic life of the country in slack years at home to dispose of surplus products abroad at prices which may even cause a loss, inasmuch as the loss incurred by dumping abroad is in no comparison to the losses which would be incurred if production were reduced at home. "
Of course in an ideal world everyone in Britain was now "free to do other things than make steel" but of course that ignores the fact that when the steel industry goes, so does a lot of related industry, manufacturing investment, industrial expertise and research and development. This means that a country which falls behind due to dumping will tend to fall further behind.
Interestingly enough if you look through US anti-dumping / countervailing duties messages here: http://adcvd.cbp.dhs.gov/adcvdweb/ it seems like steel is still pretty relevant today.
I'm aware that many countries have anti-dumping laws and protective tariffs. I suspect the "dumping" charge is just an excuse to insulate oneself from competition. The cost of protecting an industry in this way is higher prices for everyone else in the country.
Economic prosperity comes from exploiting comparative advantage, not blunting it.
You can't privately dump. Well, you can try.
Since you're selling at a loss on the open market, others with capital will see an unexpected price and wonder if you have developed a unique efficiency. After some basic research, some will guess at what you're trying to do.
They then have some great options. Invest in competitors or substitutes for the coming reduced supply. Or, stockpile the goods you sell, buying cheaply from you and even undercutting you in the future. Or, develop ways to reduce fixed costs. Build "fast spin up" sites with on-call labor so you can quickly return to market.
The dumping strategy works pretty well in a game with only two players. It does not work against the entire global system of capital and investment.
That's a straw man. Markets have lots of failure modes, this just isn't one of them.
It's like an underpants gnome plan. Maybe it looks OK on paper, but it falls apart under any outside strategic pressure.
Which will be at a loss, so you need just as much money. This is especially hard in developing countries. The market will still be destroyed, and you'll end up with a oligopoly.
> Or, stockpile the goods you sell,
Many things can't be stockpiled, and stockpiling also costs money (see the above)
One example where private dumping is tried, is uber with the taxi business. Uber regularly subsidizes fares (e.g. [1]). Local independent taxi drivers don't have the economic backing of investors and can't fight against dumping.
[1]: http://economictimes.indiatimes.com/news/international/busin...
You say that reality tends to punish irrational practices which means that some escape this punishment. Hence I will conclude that with time irrational business practices accumulate in the free market.
To me it seems that you are using some game theory ideas to explain how markets behave. The problem is that you forget to incorporate concepts from the "reality" you speak of in the last reply - more precisely timespace.
If you incorporate timespace, the enounciation becomes "the probability of the market punishing dumpers increases with time and becomes certainty after an infinit milenia have passed"
Right, and there are other responses in those situations, as described above.
But even if you retreat to the position that dumping is really only feasible for goods that can't be stockpiled, then you already agree with me in enough cases for this to be moot.
Almost all public concern about dumping is directed at things like tires or concrete or steel that could be easily stockpiled if it were really a dumping strategy, if prices were returning to monopolistic high levels after reduced competition.
What's usually happening is that the other region simply has lower costs of production or is selling off overproduction at their own loss.
Often there exists a price point where it is more profitable to sell less than 100% at a larger price point instead of lowering the price until you can sell everything.
At this point the question is what to do with the rest supply. Physically dumping it is one option that might not be legal. Selling it to another market[0] may net you a small profit on top of the already good profit of the amount sold at the optimal price point.
[0]: this might be another country or even as white label to local distributors.
(Source: farming school economics. : )
Nobody makes money off your old clothes. People make money off of the money donated to keep the charity running. That is okay if the charity is actually helping people; but if it isn't that money isn't being used right.