"Did it work? Anyone...anyone..."
So the destruction of Comparative Advantage was a GOOD thing.
Got it.
"Did it work? Anyone...anyone..."
Nice chart.
;-)
My chart did not take on the FR editor...
This will be my errata to explain the figures
Each Year-—example (1929)...then each figure (from first to last)
I Gross domestic product
II Personal consumption expenditures
III Gross private domestic investment
IV Exports
V Imports
VI Government consumption expenditures and gross investment
Hopefully this will make i easier to read
I, as a citizen, have the inalienable right to buy whatever I want, from whomever I want at whatever price I can negotiate. It's as simple as that. Smoot-Hawley encumbers that decision making process and therefor infringes on my civil rights.
The core data for the argument:
“in most years that Smoot-Hawley was in effect (1930-1945)”
takes into account huge productivity increases caused by WWII, which it is generally agreed helped solve the Depression. This is data cherry picking, something for which people in my industry are quickly chastized and earn a black mark.
I know of nobody who argues that Smoot Hawley CAUSED the Depression, so the author is attacking a staw man that does not exist. Economists argue that Smoot Hawley EXTENDED the Depression, which when the Depression continued for an additional decade after Smoot Hawley (rather than self-correcting withing 18-24 months) indicts Smoot Hawley by coincidence at least.
It didn’t cause it but it didn’t help.
That said, those that scream Smoot Hawley at the first mention of any import tariff aren’t being honest. After all, Ronald Reagan imposed import tariffs on a number of products and it didn’t cause the economy to collapse.
Imposing import tariffs on all products would be disasterous under any administration.
Dumbell.
Why did GDP rise while trade didn't? BECAUSE SMOOT HAWLEY CONSTRAINED TRADE. Jeez. Idiot flag is up.
Scanned the article for the word “War”. Failure to find World War II in the article keeps the wind flapping the “Idiot” flag.
“The answer to that is “no””
Thanks for clearing that up
Smoot-Hawley didn’t cause the Depression. The question is whether it impeded or discouraged recovery. That’s probably true.
Nor are those things that are happening today by way of Government intervention
"The Smoot-Hawley tariffs came in June 1930. There is wide academic consensus that these prolonged the Great Depression, they certainly reduced global trade"
"Unemployment was at 7.8% in 1930 when the Smoot-Hawley tariff was passed, but it jumped to 16.3% in 1931, 24.9% in 1932, and 25.1% in 1933.[12]" http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act
I think the last depression was brought about by a number of factors that occured well before Smoot-Hawley. The fact is, free trade and globlization have led to this economic hell we find ourselves in. I think you would be hard pressed to convince me that we should create a trillion dollars in US debt so we can create jobs in Europe and canada and mexico.
Larry Arn: You don’t think the Smoot-Hawley tariff caused the Depression?
Milton Friedman: No. I think the Smoot-Hawley tariff was a bad law. I think it did harm. But the Smoot-Hawley tariff by itself would not have made one quarter of the labor force unemployed. However, reducing the quantity of money by one third did make a quarter of the labor force unemployed. When I graduated from undergraduate college in 1932, I was baffled by the fact that there were idle machines and idle men and you couldn’t get them together. Those men wanted to cooperate; they wanted to work; they wanted to produce what they wore; and they wanted to produce the food they ate. Yet something had gone wrong: The government was mismanaging the money supply.
Smoot-Hawley, high taxes, rise in union membership, gov’t entering the market - all contributed into making what should have been a severe recession into the Great Depression.
Nice table.
ROFLMAO
Beware, you have entered the Freedman reality distortion field, here.
The problem we have is the owners of business's both foreign and domestic have no conscience, they would sell the rope to hang us with, and if our own business' won't then someone else will. The other problem is a good portion of our industry is owned buy foreign investors.
Any country that cannot 100% manufacture its own defense materials is in deep dodo. We let China come here and establish a ship building company, they bid on our Aegis Class destroyers....wala they have them too.
Doug Irwin and Mario Crucini, in separate book-length manuscripts, have concluded that the S-H Tariff smashed the U.S. economy to the tune of a 5% HIT on GNP. Put in perspective, that's 2.5 times the impact of 9/11; 1.5 times the impact of the 1973 oil shock; 5x the impact of Katrina; and 5x the impact of the Navigation Acts that caused our revolution.
Exports accounted for ~5% of GDP.
Consequences from SH (trade war) eliminated 66% of exports.
There was no domestic demand to take up the slack.
There is a multiplier of 1.2 to 1.8 for every dollar of GDP added to / removed form the economy.
5% of GDP x 66% eliminated = 3.5% GDP destroyed in year 1.
3.5% GPD x 1.2 to 1.8 = 4.2% to 6.3% GDP destroyed by year 3.
Or put another way...
US was a net exporter with collapsing domestic demand, and SH led to the rest of the world refusing to buy American.