Posted on 02/27/2017 1:08:50 PM PST by TakebackGOP
Actually, it did. it helped make it deeper and longer.
As did many other Big Government policies.
Tariffs are what funded the Feral Government until they decided to pass an income tax in 1913 and start stealing steal our money to use on NONSENSE.
>We had periodic depressions. We had one in 1921. Teh government did nothing. it was over in a year to a year and a half.
In 1921 the president cut the federal budget in half and discharged a huge amount of the debt. Depressions are a function of debt overloads and discharging debt fixes them.
>Policies like Smoot-Hawley (and the New Deal) made a normal depression into The Great Depression — longer and deeper than it ever would have been otherwise.
Smoot-Hawley was designed to help farmers but was ineffectual because we were running a trade surplus at the time. Today we run massive trade deficits and tariffs are the correct solution to the off shoring of American industry because tariffs were how we built our massive industrial powerhouse in the first place.
The main cause of the long depression was states passing laws preventing the discharge of bad debts. We went right back into that depression in 1946 until states and the feds ended the new deal and resumed normal bankruptcy proceedings.
Germany was hit by the great depression and enacted even more draconian trade restrictions but also discharged everyone’s debts and put an end to usury. Germany came out of the great depression in under a year.
Debt bubbles and depressions have been observed as far back as the Sumerians who invented compounding interest. The solution they found was discharge all debts when a new king came to power. We’re fortunate to have a Constitution that enshrined bankruptcy as a normal part of life which has made the resolution of depressions quite simple until we started trying to stop debt bubbles from popping in the 1930s.
https://fee.org/articles/the-smoot-hawley-tariff-and-the-great-depression/
“We believe many modern economists are wrong because flawed modeling leads to two systematic understatements of the tariff’s negative effects. The first reason for this is that reliance on macro aggregates can sometimes mask serious underlying problems by dissipating their apparent impact over a broad area. For example, U.S. national income declined 36 percent in real terms from 1929 to 1933, and the view held by prominent economists, ranging from University of Chicago Nobel laureate Robert Lucas and Yale economist Robert Shiller to MIT economists Rudiger Dornbush and Stanley Fischer, is that since the foreign-trade sector was only about 7 percent of gross national product (GNP), the tariff (though misguided) could not explain much of this decline.
“Viewed at the level of “macro magnitudes,” critical micro connections suffer from a “dissipation effect” and always look small. But size does not equal significance. While it is true that foreign trade represented only a small percentage of the overall domestic and international economy, it does not follow that the tariff was insignificant in its effects. The Panama Canal contains but a small fraction of the world’s ocean water, but if it were closed the effects would be quite devastating to world trade. A focus on aggregates risks missing the trees for the forest, and not all trees are created equal.
“Here’s a second way Smoot-Hawley is underestimated: If regulations or tariffs are studied in partitioned models, their interrelationships are missed and their true impacts are trivialized. For example, recent attempts have been made to quantify price distortions caused by the tariff. Mario Crucini and James Kahn have tried to correct systematic underestimates of the harm of Smoot-Hawley found in a variety of macro studies that ignored the effect of tariff retaliation on the rate of capital accumulation. Using a general-equilibrium model, they calculate that the microeconomic distortion effects reduced U.S. GNP by only 2 percent in the early 1930s. Likewise economist Douglas Irwin computed the general-equilibrium inefficiencies caused by the tariff at nearly 2 percent of GNP.
“For instance, the secondary financial markets, such as the New York Stock Exchange, crashed twice during the last eight months of Smoot-Hawley’s legislative history. Jude Wanniski and Scott Sumner have linked concern over the impending tariff to the October 1929 crash and the June 1930 crash. The Dow Jones Industrial Average fell 23 percent in the first two weeks of June 1930 leading up to President Herbert Hoover’s signing the bill into law. On June 16 Hoover claimed, “I shall approve the tariff bill,” and stocks lost $1 billion in value that day—a huge sum at the time.
“Furthermore, if losses of GNP were not evenly distributed across the economy but were concentrated (say, in export-oriented states), the tariff most likely distorted monetary conditions significantly. Two percent of GNP does not sound like a big change, but if it’s concentrated in one-fifth to one-third of the states, it’s very large indeed. The tariff dramatically lowered U.S. exports, from $7 billion in 1929 to $2.4 billion in 1932, and a large portion of U.S. exports were agricultural; therefore it cannot be assumed that the microeconomic inefficiencies were evenly distributed. Many individual states suffered severe drops in farm incomes due to collapsing export markets arising from foreign retaliation, and it’s no coincidence that rural farm banks in the Midwest and southern states began failing by the thousands.
“Agriculture was not the only export sector destroyed by the tariff. The worldwide retaliation against U.S. minerals greatly depressed income in mining states and can be partially blamed for the collapse of the Wingfield chain of banks (about one-third of the banks in Nevada, with 65 percent of all deposits and 75 percent of commercial loans). U.S. iron and steel exports decreased 85.5 percent by 1932 due to retaliation by Canada. The cumulative decrease in those exports below their pre-tariff levels totaled $369 million. Is it any wonder that Pittsburgh saw 11 of its largest banks, with $67 million in deposits, close in September 1931? How about U.S.-made automobiles? European retaliation raised tariffs so high that U.S. exports declined from $541 million per year to $97 million by 1933, an 82 percent drop! Thus there was a cumulative export decline of $1.57 billion from the pre-tariff volume to 1933. Is it any wonder that the Detroit banking system (tied to the auto industry) was in complete collapse by early 1933?”
https://www.cato.org/blog/smoot-hawley-tariff-great-depression
“Today we know that market participants do not wait for a major law to pass, but instead try to anticipate whether or not it will pass and what its effects will be.
Consider the following sequence of events:
The Smoot-Hawley tariff passes the House on May 28, 1929. Stock prices in New York (1926=100) drop from 196 in March to 191 in June. On June 19, Republicans on the Senate Finance Committee meet to rewrite the bill. Hoping for improvement, the market rallies, but industrial production ( 1967 = 100) peaks in July, and dips very slightly through September. Stocks rise to 216 by September, hitting their peak on the third of the month. The full Senate Finance Committee goes to work on the tariff the following day, moving it to the Senate floor later in the month.
On October 21, the Senate rejects, 64 to 10, a move to limit tariff increases to agriculture. “A weakening of the Democratic-Progressive Coalition was evidenced on October 23,” notes the Commercial and Financial Chronicle. In this first test vote, 16 members of the anti-tariff coalition switch sides and vote to double the tariff on calcium carbide from Canada. Stocks collapse in the last hour of trading; the following morning is christened Black Thursday. On October 28, a delegation of senators appeals to President Hoover to help push a tariff bill through quickly (which he does on the 31st). The Chronicle headlines news about broker loans on the same day: “Recall of Foreign Money Grows Heavier-All Europe Withdrawing Capital.” The following day is stalemate. Stocks begin to rally after November 14, rising steadily from 145 in November to 171 in April. Industrial production stops falling and hovers around the December level through March.
On March 24, 1930, the Senate passes the Smoot-Hawley tariff, 222 to 153. Debate now centers on whether or not President Hoover will veto. Still, stocks drop 11 points, to 160, in May. On June 17, 1930, despite the vigorous protests of a thousand economists, Hoover signs the bill into law, noting that it fulfills a campaign promise he had made, and stocks drop to 140 in July.
The Commercial and Financial Chronicle dated June 21, 1930 led off with the major events of the week –”the signing by the President of the Smoot-Hawley tariff bill” and “a renewed violent collapse of the stock market.” Without ever quite linking the two events, the Chronicle did observe that “if the foreigner cannot sell his goods to us he cannot obtain the wherewithal to buy our goods.” Other sections noted that international stocks were particularly hard hit, that 35 nations had vigorously protested the tariff and threatened retaliation, and that Canada and other nations had already hiked their own tariffs “in view of the likelihood of such legislation in the United States.”
It may be hard to realize how international trade could have so much impact on the domestic economy. For years, in explaining income movements in the Thirties, attention has instead been focused on federal spending and deficits. Yet on the face of it, trade was far more important: exports fell from $7 billion in 1929 to $2.5 billion in 1932; federal spending was only $2.6 billion in 1929 and $3.2 billion in 1932. In 1929, exports accounted for nearly seven percent of our national production, and a much larger share of the production of goods (as opposed to services). Trade also accounted for 15 to 17 percent of farm income in 1926-29, and farm exports were slashed to a third of their 1929 level by 1933.
Even these numbers, however, understate the significance of trade. Critical portions of the U.S. production process can be crippled by a high tax on imported materials. Other key industries are heavily dependent on exports. Disruptions in trade patterns then ripple throughout the economy. A tariff on linseed oil hurt the U.S. paint industry, a tariff on tungsten hurt steel, a tariff on casein hurt paper, a tariff on mica hurt electrical equipment, and so on. Over eight hundred things used in making automobiles were taxed by Smoot-Hawley. There were five hundred U.S. plants employing sixty thousand people to make cheap clothing out of imported wool rags; the tariff on wool rags rose by 140 per cent.
Foreign countries were flattened by higher U.S. tariffs on things like olive oil (Italy), sugar and cigars (Cuba), silk (Japan), wheat and butter (Canada). The impoverishment of foreign producers reduced their purchases of, say, U.S. cotton, thus bankrupting both farmers and the farmers’ banks.
It should be obvious that an effective limit on imports also reduces exports. Without the dollars obtained by selling here, foreign countries could not afford to buy our goods (or to repay their debts). From 1929 to 1932, U.S. imports from Germany fell by $181 million; U.S. exports to Germany fell by $277 million. Americans also had little use for foreign currency, since foreign goods were subject to prohibitive tariffs, so the dollar was artificially costly in terms of other currencies. That too depressed our exports, which turned out to be particularly devastating to farmers-the group that was supposed to benefit from the tariffs.
There had already been some damage done (particularly to farm exports) by the tariff legislation of 1921 and 1922. “
I’m not going to bother reading your stuff because I’ve read it all before in my many years as a free trader. The problem with cato and the rest of the free traders isn’t their cleaver explanation of the past as anyone can interpret past events to fit their theories, it’s the 35+ years that’s we’ve had free trade that’s proven that predictions flowing from their theories are incorrect.
You like most free traders produce lots of words talking up how bad tariffs are but little spend no time showing that past free trader predictions have come true in the future. If free trades wasn’t garbage then you should be showing us all how NAFTA free trade predictions all came true. On the other hand free trade skeptics like Ross Perot predictions did come true. Thus I couldn’t care less what you or others write because the empirical data is in and you and your free trader buddies are frauds who consigned a good chunk of the middle class into the poor house while enriching the Chinese and the American elites.
Is Levin so stupid as to think that Trump was exalting Sanders? Or actually praising Sanders? He can’t be.
Trump and Bernie are right.
Why?
A truly free market economy cannot mount the same government-system gifts to its domestic industries as is bestowed on the Chinese mainland businesses in China by the mecantilist nationalist system run by the dictatorship there. Additionally, a much larger percentage of mainland China companies than most people understand are NOT “private” companies in a United States sense, but are state owned, private-share selling (NOT for any voting control, merely for raising capital) companies and subsidiaries of companies that are state owned, or fully controlled by the state as far as its board and/or principle officers or “shareholders”, or controlled by the Communist Party of China through the party members in control of the company and/or its “shares”. The STATE marshals everything in favor of its companies, including the funds given to its companies to go acquire assets and businesses around the world. If either the Dims or the GOP sought to conduct “business” in the nationalist manner as China does, there would be a revolution here again. So, why do we think “free trade” applies to trade with China? It doesn’t.
Sorry Mark Levin, Trump and Sanders are right.
Rather than targeting China merely because it is China, we could adopt trade rules that say we do not conduct business in the U.S. with any foreign “state enterprise” and in that law define “state enterprise” down to all the ways the dictatorship in China puts the state control into enterprises there.
Carried to its logical end is is one world globalism
excellent quote
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