Tariffs on Cheap Chinese Mattresses

Cheap Chinese Mattresses

In the last few years a product called Bed-in-a-Box has roiled the United States mattress making markets and allowed for the shipping of cheap Chinese mattresses. Prior to the Bed-in-a-Box model is wasn’t particularly cost effective to ship cheap Chinese mattresses to the United States and therefore companies here largely didn’t have to deal with such competition. Now they do and they’re doing something about, petitioning the government to save them.

The Federal Government is now claiming Chinese manufacturers are Dumping cheap Chinese mattresses on the United States and Commerce Department is going to institute tariffs of over 1000% on them. Dumping is an Anti-Trust issue and actually under the purview of the United States government so they do have an argument in this case. The Commerce Department claims the Chinese are dumping their mattresses at an unreasonably low level in order to drive out competition and create a monopoly from which they will eventually raise prices and lower quality.

There are very few instances of Dumping actually doing those things. Now, it is clear when a competitor comes in with equally high-quality product at a much lower price, the established businesses will suffer. The mattress firms petitioning the Commerce Department admit the cheap Chinese mattresses are of equal quality to their own so that’s not an issue. People are getting a product they want at a price they like, that’s good for consumers and I’m sure there are plenty of people sleeping on those mattresses every night and happily so.

The question becomes if the price is intentionally low in order to drive out competition and an eventual increase in price and lowering of quality is planned. I think we need look no further than Walmart to find the answer to this question. China has been inundating the U.S. market with cheap products for decades and, while they certainly have gained a stranglehold on many markets, they haven’t increased prices once they were established, they have kept prices low. This because manufacturing in China is cheaper for a variety of economic reasons that I won’t get into today.

There is nothing wrong with good prices. That’s a good thing for consumers. It’s obviously bad for the manufacturers of mattresses in the United States but that’s what healthy competition is all about, it’s the nature of capitalism. In this case, it can be, and has been, argued that the problem isn’t solely the cheap Chinese mattresses but Bed-in-a-Box competition from other U.S. firms as well. That the Commerce Department is intentionally raising prices for consumers simply to keep an industry afloat that could not otherwise compete.

Welcome to capitalism in the United States. Like higher prices and worse? Keep voting for such.

Tom Liberman

Anti-Trust Legislation

anti-trustAs a Libertarian I’m largely against government interference in the freedom of people to do as they will. There are limits and one of those is anti-trust laws. These laws are put in place to make sure that competition is waged on a level playing field. This is an area, in my opinion, that separates Libertarianism from Anarchism.

In any case, the purpose of this blog is to talk about why anti-trust legislation is needed. To start things off I’ll talk about the definition anti-trust. I’m going to generalize and a full perusal of the anti-trust Wikipedia article and its linked definitions is a worthwhile study.

Anti-trust laws are designed to stop things like collusion and cartel. Collusion is when a group of people agree to limit open competition. It is usually marked by uniform pricing among competing items. A cartel is an open agreement to set prices at a certain threshold.

A second thing they are designed to prevent is market dominance and particularly monopoly. Both of these situations occur when one supplier controls such a large percentage of a particular commodity that they can set a price as they choose rather than being forced to offer a competitive price by competition.

Acquisitions are also under the purvey of these kinds of laws. If one company attempts to purchase all its competitors then monopoly or dominance ensues. Both of those things hurt the consumers ability to get product at a fair price.

There are host of other anti-competitive practices that include things like dumping; wherein a company forces competition out of the market through cheap pricing, refusing to deal; when a group of companies refuse to purchase from a particular vendor to put them out of business, dividing territories; when two or more companies agree not to compete with one another.

In my mind we need anti-trust laws for the same reason we need laws in the first place. It is human nature to take advantage of a situation in any way possible. One of the pro-capitalist arguments is that it caters to human nature and I agree with this but we must also take human nature into account when we make our laws. Anti-trust laws and general regulation hopefully provide a level playing field against unfair practices that hurt capitalism and the consumer.

If we can apply broad regulation that levels the playing field then the business that is operated most efficiently wins. I think it is important for the business community to understand that some regulation is required to prevent unethical people and businesses from dominating the market and putting all the ethical people out of work.

I’m almost finished here but I think I need to explain what I mean by broad regulation. I don’t recommend legislation that takes every possibility into account because that sort of law is doomed to failure. What I mean is more general types of regulation that simply allow each company to play on the same field.

We have laws that make sure manufacturers put the quantity of material in the food container on the package. This regulation is easy to comply with and understand. That’s the goal of all regulation, simple and cheap to implement for the producer, easy to understand for the consumer. It’s not always easy to achieve but I do think it is necessary to allow capitalism and the free market to thrive.

I welcome disagreement as always!

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Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist

Teaser – Anti-Trust Laws

Anti-trustAfter my Crony Capitalism post a little while ago several fellow Libertarians posted comments in support but mentioned that they didn’t think the government had the ability to create a level playing field through regulation. That this field was created by competition itself.

Tomorrow I’ll share one group of situations where I think federal oversight, in the way of broad regulations, is sometimes necessary in order to have a free market. Why I think unfettered capitalism doesn’t work without a modicum of government oversight.

I’ve got my bunker all prepared for a blast back from Libertarians!

Stay tuned and see you tomorrow!

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist