"But what if American firms are driven out of business? The purpose of dumping in a foreign market is to eventually raise prices and earn a monopoly profit. But if prices later rise, profit opportunities reappear. That draws capital and competition back into the industry until the profits are eliminated."
When the purpose of dumping is to prevent the US from operating a market-based supply chain (as with critical minerals and metals) this logic does not apply. The purpose of dumping is national security, for which wasted capital and taxes on domestic households is an acceptable price to pay.
The first mistake the US is making is not putting national security supply chains on the DoD budget. The second mistake the US is making is assuming a supply chain response can be constructed and operated expeditiously and effectively with respect to the national security risk it poses. How long have we known about this risk and where are the new critical minerals and metals mines and refineries?
Will this lead to open-ended rent-seeking, where every industry insists it's essential to national security? Absolutely. Is doing nothing because of rent-seeking an acceptable, Adam Smith-like course of action? No.
Even Adam Smith, in The Wealth of Nations, recognized this.
I don't know anyone who's advocating we do *nothing* on genuine national security concerns. My focus was on anti-dumping arguments, which from my experience tend to focus on faux-national security beliefs like "foreigners are taking our jobs."
But you are correct that Adam Smith identified national security as a genuine exception to the rule of free trade and I would agree with that view. You still run into the issue, though, of politicians needing to identify the correct solutions and implement them, which according to your example they've failed to do on critical minerals.
"But what if American firms are driven out of business? The purpose of dumping in a foreign market is to eventually raise prices and earn a monopoly profit. But if prices later rise, profit opportunities reappear. That draws capital and competition back into the industry until the profits are eliminated."
When the purpose of dumping is to prevent the US from operating a market-based supply chain (as with critical minerals and metals) this logic does not apply. The purpose of dumping is national security, for which wasted capital and taxes on domestic households is an acceptable price to pay.
The first mistake the US is making is not putting national security supply chains on the DoD budget. The second mistake the US is making is assuming a supply chain response can be constructed and operated expeditiously and effectively with respect to the national security risk it poses. How long have we known about this risk and where are the new critical minerals and metals mines and refineries?
Will this lead to open-ended rent-seeking, where every industry insists it's essential to national security? Absolutely. Is doing nothing because of rent-seeking an acceptable, Adam Smith-like course of action? No.
Even Adam Smith, in The Wealth of Nations, recognized this.
I don't know anyone who's advocating we do *nothing* on genuine national security concerns. My focus was on anti-dumping arguments, which from my experience tend to focus on faux-national security beliefs like "foreigners are taking our jobs."
But you are correct that Adam Smith identified national security as a genuine exception to the rule of free trade and I would agree with that view. You still run into the issue, though, of politicians needing to identify the correct solutions and implement them, which according to your example they've failed to do on critical minerals.