Best Phrased Question of the Day

From Alex Tabarrok;

why are US firms assumed to own the rights to sell to US consumers?

This is in reference to a WSJ article detailing how U.S. furniture manufacturers blackmail Chinese manufacturers, extracting literally millions of dollars from them in exchange for not asking the U.S. International Trade Commission to charge them with “dumping.”

Does the word “blackmail” sound too harsh? How about “shakedown”?

“Everybody in the industry in the U.S. and China understands that these payments are clever shakedowns,” said William Silverman, a lawyer representing U.S. furniture retailers, big importers of Chinese products, at an October hearing of the U.S. International Trade Commission.

Or “extortion”?

About seven years ago, [the Thompsons] began making hand-carved bedroom furniture near Shanghai, but they recently ceased production there amid uncertainty over duties.

At the ITC hearing in October, Ms. Thompson recalled that in 2007 she called Joseph Dorn, a Washington lawyer representing La-Z-Boy and other furniture makers, and asked for help in averting a review of duty levels at her company. Mr. Dorn “asked me what I could give him that would entice his client…to drop me from the review,” she told the ITC.

She added, “My husband and I were not, and are not, willing to pay what we believe were extortion payments.”

Silly me; I thought protection rackets were illegal in the U.S.

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About J@m3z Aitch

J@m3z Aitch is a two-bit college professor who'd rather be canoeing.
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4 Responses to Best Phrased Question of the Day

  1. D. C. Sessions says:

    Silly me; I thought protection rackets were illegal in the U.S.

    No, but lawyers have a monopoly on running them.

  2. Dr X says:

    This kind of coercion doesn’t matter because the beneficiaries are Americans.

  3. ppnl says:

    It is pretty common to use the threat of legal action to extort money and property. For example Intel forced an organization to stop using a “Yoga inside” sign. This would have been a hard case for Intel to win in court. In fact it is unlikely that Intel would have ever allowed it to go to court. But legal costs force many people to simply cave.

  4. James K says:

    Just one reason why anti-dumping and other “predatory pricing” rules are a bad idea. While there may be some theoretical situations in which they could be useful, in practice this is what they tend to be used for.

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