Posted on 12/23/2016 5:08:47 PM PST by Crucial
Few areas of historical research have provoked such intensive study as the origins of America’s Great Depression. From 1929 to 1933 America suffered the worst economic decline in its history. Real national income fell by 36 percent; unemployment increased from 3 percent to over 25 percent; more than 40 percent of all banks were permanently closed; and international investment and trade declined dramatically.
The dimensions of the economic catastrophe in America and the rest of the world from 1929 to 1933 cannot be captured fully by quantitative data alone. Tens of millions of humans suffered intense misery and despair. Because of this trauma the Great Depression has dominated much of the macroeconomic debate since the mid-twentieth century.
“A nation like the US who had a huge trade surplus was going to get pounded “
I hope the Chinese see their situation is much like that of the US back then. Trade wars would be disastrous for them, and could be avoided by small cooperation now.
Duly noted. So what do you think? It seems to me that tarrifs would decrease our exports which are lagging behind already. That means American manufacturing loses market share and so has to downsize to stay profitable.
Actually the stock market crash of 1932 was much waitress than 1929.
“I just think tarrifs are overkill.”
Don’t believe everything you think.
THAT has got to be a classic FR response!
The crash of 1932 was much worse than 1929.
Trade wars always hurt the country with the trade surplus. That is why China is trembling right now in anticipation of Trump. They are lobbying every media and junk think tank to propound “free trade” that is actually one-sided rather than free. They are subsidizing their producers via VAT credits and penalizing our producers by adding VAT taxes. That is on top of any duties and tariffs they have on specific goods.
China can avoid Trump’s resorting to tariffs by just leveling the playing field — stop issuing VAT credits on their exports and stop adding VAT and duties onto our goods, and stop manipulating their currency. If they are not going to do that, then tariffs are the only tool we have to compensate for the unfairness of those policies. Collecting those tariffs and using the revenue to offset the VAT on our exports would level the playing field and balance what China and the EU are doing to us.
It’s a classic response without intellectual depth, more a child’s response to a playground taunt.
Macroeconomic Thought and Smoot-HawleyModern macroeconomics falls into three broad schools of thought: Keynesian, monetarist (including New Classical), and Austrian. While great differences exist among the different theories of the business cycle, all seem to agree that the tariff had little causal relevance to the severity of the Great Depression. For example, Keynesian Peter Temin never cites the tariff once in his Did Monetary Forces Cause the Great Depression? Likewise Milton Friedman and Anna Schwartz delegate a mere footnote to Smoot-Hawley in their massive treatise, A Monetary History of the United States, 1867–1960. To his credit Austrian economist Murray Rothbard at least devotes one and a half pages to the tariff in America’s Great Depression.
They just give Sen. Smoot a hard time because of his name.
The ignorant liberal response has always been the speculation of greedy capitalists. Now populists want to take up the same argument, just from a different angle.
Good points. We are NOT engaged in reciprocal free trade.
It is imperative to national security to have a robust manufacturing sector-the rapid conversion of our various industries during World War II helped to win that war.
Our enemies domestic and foreign have been successfully waging economic warfare against America, and using their profits to build up their military might.
I am always amazed when politicians pretend to be for workers and demand that minimum wage be raised to $15.00, and yet other countries have much cheaper wages. Then they want to save the planet, but are ok with letting China and others pollute the environment which keeps their cost of production lower than ours.
Reciprocal free trade with all the same rules is what is needed to have a level playing field, and we don’t have that with China for sure.
GORE “This is, this is a picture of Mr. Smoot and Mr. Hawley. They look like pretty good fellows. They sounded reasonable at the time; a lot of people believed them. The Congress passed the Smoot-Hawley Protection Bill. He wants to raise tariffs on Mexico. They raised tariffs, and it was one of the principal causes, many economists say the principal cause, of the Great Depression in this country and around the world. Now, I framed this so you can put it on your wall if you want to.”
ManBearPig’s in your head, man.
As an economist, I call myself a member of the Austrian School, but I like to use natural disasters to explain downward movements too. So I side with the RBC (Real Business Cycles - Real Shocks) School as well. Monetarists say the initial crash was due to Fed tightening of the Money Supply....
Hope that helps.
He was one of the best cornerbacks the Redskins ever had...No one made fun of his name...
1931 taxes raised from 25% to 63% I suspect that didn’t help.
What about Sen. Hawley?
MLB Career Stats: Won:167 Lost:179 ERA:3.96
This is why he ended up doing tariffs...
A little. How did the money supply get cut? And what effect did that have?
The Federal Reserve.
Borrowing.
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