Disgusting: Cato says US is Unfair to China?!

October 29, 2014


China Daily is promoting the comments of Cato Institute's Bill Watson to assert that the US is abusing China in the trade relationship.  Astounding!

China Daily says:

Bill Watson, a trade policy analyst at the Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies, said the US sets anti-dumping duties against Chinese goods using what is called nonmarket economy (NME) methodology.

Um.  China is a non-market economy.  At least fifty percent of its economy is state owned and another 10 or more percent is state controlled.  And the trend is towards more state control, not less.

Watson said China's NME designation currently serves as an excuse for lawless protectionism, which not only inflames trade relations, but imposes enormous costs on downstream US industries and consumers.

Who is the lawless protectionist? China manipulates currency, strategically rebates taxes for export products, builds free factories for preferred industries, gives grants and forgivable loans to industries to achieve economies of scale, sets five year plans in Soviet-style planning.  They do this because mere low-ish local labor costs are not enough to penetrate the US and other markets.  The government has to manipulate pricing in all sectors of the economy.

Watson explained that part of the reason China has not raised it as a top issue is because China may see this as an area that the US is unwilling to make a move in.

Or maybe China doesn't raise the issue because they are the most predatory mercantilist in the world, and it would seem really, really foolish to complain about the US.  The US has the most open markets in the world.

Or maybe Watson is the fool.

Who funds Cato anyway?  How much money do they get from Chinese interest.  Or from US based crony capitalist interests?  How can Cato be pro-free market when they defend the heavy hand of foreign government price fixing, state ownership and state control? Do they want America to further unilaterally disarm in the global trade wrestling match?

This is what the War on Prosperity in America looks like.


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  • Geldstone argues the market logic with a different spin: Only a closed economy approaches a fully functional market economy. An open economy is a dysfunctional market economy: http://www.economicpopulist.org/content/unraveling-economics-5564
  • The whole point of anti-dumping rules is to deal with violations of market rules. If violations are not discouraged, then we would have no market rules.

    Anti-dumping rules are necessary to prevent market failure and protect the integrity of market systems. I get the impression that Cato’s position on market failure is that it doesn’t exist and the best response to market failure is greater reliance on self-regulating markets.