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Wow, what a terrible article. Can you think of a use for an unpaired left shoe? Sure, if the matching right shoes are also available. That's the whole point
by michael_dorfman 16y ago
Wow, what a terrible article.
Can you think of a use for an unpaired left shoe?
Sure, if the matching right shoes are also available. That's the whole point of the anecdote, which is so absurd as to most certainly be an Urban Legend.
My friend’s father ordered a huge shipment of sneakers from a U.S. company with the stipulation that all the left-footed shoes be packaged separately from all the right-footed shoes. The left-footed shoes were to be shipped to Bombay, and 60 days later the right-footed shoes were to be shipped to Calcutta.
Step 1: I buy X thousand shoes for a price of Y$/pair, and probably pay a little over the regular market price, because I want special handling, and double postage.
The shipment sent to Bombay went unclaimed, so after 30 days it was auctioned off
Step 2: I fail to claim the shoes when they arrive. I now am out the money I paid for the shoes, and have no shoes.
Because no one could think of a use for a huge shipment of left-footed sneakers, no one bid against my friend’s father and he picked up these shoes for next to nothing.
Step 3: I now pay for these shoes again.
Step 4: Profit!
Naturally, I can try to get out of paying for the shoes in step 1, but then our story would simply be one of fraud.
The strategy is ingenious, and it reminds me that a savvy businessperson is someone that can see value where others see none.
Quite the opposite, really.
- confuzatron 16y agoHere's the clue to why doing this made sense: "But import duties greatly reduced the profit margins of importers." It's as if the shoes were smuggled into India in plain sight. Presumably the cost of buying the 'useless' shoes at auction came to less than the import duty.
- btilly 16y agoYou missed it. The profit comes from the fact that the money paid in step 3 is less than what would have been paid in import duties had he collected the shoes in step 2. And then, having successfully imported shoes at below the cost that other entrepreneurs were capable of getting, he was able to resell those shoes at below market rates and still have a higher profit margin. If he paid more for special handling, that would have been covered. If the shipments were big enough, then postage is based on some combination of weight and volume. This is unchanged.
- michael_dorfman 16y agoWe're still back to "fraud", then, which is not a particularly creative (or viable) strategy in my book.
- confuzatron 16y agoOK, where's the "fraud", or are you just harrumphing at having missed the point of the article?
- Retric 16y agoFailing to pay the correct import taxes. Consider someone who reports importing used furniture vs antiques.
- confuzatron 16y agoI'd call it 'gaming the system' rather than 'fraud', but am not a lawyer. @maushu, the real solution here is to get rid of the dumb trade barriers in the first place. The 'problem' of dodging round them pales into insignificance in comparison, if indeed it is a problem at all. Presumably a lot of Indian politicians thought the way you did, until policies changed, and India started growing.
- davidw 16y agoI agree with getting rid of the trade barriers, but dodging them is not a solution and leads to a society where avoiding "inconvenient" laws is seen as the norm. This is very much a slippery slope - and is one of the things I feel is problematic with modern Italy. Berlusconi has been on trial for attempting to corrupt judges, but many people seem not to care - who hasn't tried to skirt around the law, anyway?
- Gormo 16y agoThe businessman in the example did not avoid the laws. Far from it - he found a way to comply with them at the lowest possible cost. Deliberately subverting the law should not be commended. But in this example, he was able to work around the deleterious effect of a bad law while fully adhering to its provisions. I can't see a problem with this.
- Luc 16y ago> Naturally, I can try to get out of paying for the shoes in step 1, but then our story would simply be one of fraud. Well, the story still is simply one of fraud. I think a judge would easily side with the tax authorities if it came to delivering an opinion on this cute little 'hack'. Sounds like an urban myth, anyway...