In the newspaper today was an article about an Australian Customs Service investigation into the price of toilet paper. Basically, some companies say other companies are selling toilet paper too cheaply, and they are losing market share because of it, and want the government to do something about it.
It hinges on what’s called ‘anti-dumping’ legislation, where it is considered unfair for a foreign company to sell goods in Australia below a “normal value”, sometimes defined as the cost in the foreign company’s local market, or the cost of production. If a local company loses out to the foreign company, the government can impose a penalty on the incoming goods. The locals get assisted at the expense of everyone else – it’s the privatisation of gain and the socialisation of cost, plain and simple.
It’s bizarre. If some company wants to lose money in supplying us with toilet paper, why not let them? They are essentially transferring money from their pockets into ours!
Well, the argument against is that it hurts local manufacturers, and some jobs are lost. That’s a loss to a few people, sure. But the benefit to the general public of lower costs isn’t even considered by the legislation when weighing up the pros and cons of the ‘dumping’. Only the cost to local companies gets measured.
This is a recurrent problem in policy evaluation. A small but widespread benefit is often trumped by a concentrated cost, even when the benefit is far greater in total. It explains a great deal about how badly governments govern. But that’s a big topic that I won’t get into here.
What makes this particular example extra dismal is that the ‘local’ companies, Kimberly-Clark and SCA, are actually not Australian-owned, they simply make just enough toilet paper here to qualify as local!
To further illustrate the absurdity of anti-dumping legislation, imagine a complaint from prostitutes that wives born overseas give it away for free to their Australian husbands, or that St Vinnies (French in origin) hurts the bottom line of David Jones. Stupid, right? But that’s basically what is happening right now.