Now, now, remember Smoot-Hawley
Posted on 03/09/2018 11:21:50 AM PST by TBP
President Trump may have lost his chief economic adviser over the trade war he’s hatching with China. It looks, though, like he gained one recruit — Charles “Smoot” Schumer.
Schumer was nicknamed “Smoot Schumer” some years ago for Utah’s Reed Smoot, a notorious protectionist. The Smoot-Hawley tariff act, passed in 1930, helped precipitate the Great Depression.
America spent decades overcoming the consequences of the error. Not until Trump, though, did a president win office on such a pointedly protectionist platform.
Trump announced last week he was going to start with tariffs on steel and aluminum. It humiliated National Economic Council director Gary Cohn, a free trader. So the ex-No. 2 at Goldman Sachs announced he’s quitting.
Cohn, a Democrat, wasn’t the only one opposing the tariffs. Some of the savviest Republicans in Trump’s informal brain trust, like economist Lawrence Kudlow, have long been warning against tariffs.
(Excerpt) Read more at nypost.com ...
I don’t believe the BS about DJT raising taxes with this when in fact it’s simply a part of his multi-part plan to cause a balanced, and fair trading field. Wait, and see.
If you wish to buy into the establishment/globalist rhetoric of woe to America, higher taxes, and failure as the establishment is pushing in front of every television camera they can run to go ahead. I’m not buying it.
Everything negative is ultimately coming from WTO, globalist, establishment sources. They have a lot to lose if DJT succeeds.
But a stock market crash isn't a 12 year depression.
The U.S. had a stock market crash, but the policies of Hoover, then FDR prolonged a short term event into a much worse long term event.
Why do you think that FDR was so desperate to get into a war in Europe? His policies weren't working in getting us out of depression.
FDR was a big-time progressive. He may have run against Smoot-Hawley, but he never intended to do anything about it, and his alphabet soup of Big Government agencies just made the Great Depression longer and deeper.
Totally incorrect! NAFTA started in 1979 when Ronald Reagan proposed it as part of his campaign to run for president. Bush attacked Reagan for his economic ideas.
The original part of NAFTA, the FTA, was signed with Canada in January 1988 when Reagan was president. The U.S. was then negotiating a separate agreement with Mexico, and Canadian Prime Minister Brian Mulroney asked to join and make it a three country deal.
George H.W. Bush had always been against it, but after eight years of being Reagan's VP, he went along with agenda.
Its a good thing to have No Capability to produce Iron and Steel in a time of War, a very good thing. signed the 000001% bloodsuckers that couldn’t give a rat’s ass about American workers.
Yes, FDR was a "progressive" and a globalist. His commitment free trade agreements was part and parcel of that agenda.
So, why didn't other large tariff increases lead to great depressions?
From the Wiki article on Smoot-Hawley.
The average tariff rate on dutiable imports [26][27] increased from 40.1% in 1929 to 59.1% in 1932 (+19%). However, it was already consistently at high level between 1865 and 1913 (from 38% to 52%). Moreover, It has also risen sharply in 1861 (from 18.61% to 36.2%; +17.6), between 1863 and 1866 (from 32.62% to 48.33%; +15.7%), between 1920 and 1922 (from 16.4% to 38.1%; +21.7%), without producing global depressions
The Great Depression was caused by the Fed allowing the money supply to shrink by 30% in the three years after the stock market crash of 1929. Smoot-Hawley probably exacerbated the economic decline some, but did not "lead to it".
Bush was attacking Reagan’s proposed tax cuts, not the proposed trade agreements. Specifically, he referred to the Laffer Curves (theory that tax cuts lead to more Federal revenue because of economic growth) as “voodoo economics.” Bush was an internationalist, so NAFTA-style trade deals along with liberal immigration policies were at the core of his agenda.
NAFTA wasn't even from some adviser. Reagan personally came up with the idea.
Sure, I'll look it up. If NAFTA really began as Reagan's project, it simply shows that he wasn't exactly infallible. Reagan also granted amnesty to millions of illegals and picked GHW Bush as his VP, after all.
The so-called Smoot-Hawley Tariff Bill did not cause the Great Depression, but for sure, it exacerbated the effects, and most notably, it was NOT repealed by the FDR New Deal regime that assumed power in the US in March 1933, mostly on the promise to “end Prohibition”. FDR did get authority to regulate the tariff rates independent of action by Congress, but he did not, ever, abolish the tariffs altogether.
And FDR had the power.
The Great Depression According to Milton Friedman
Thus the Fed’s failure in the early ’30s shows the dangers of excessive centralization of important market functions that were previously dispersed among multiple private institutions. Friedman’s bottom line remains intact: The Fed caused the Great Depression.
The above refers to the fact that, prior to the Fed, large banks teamed together to provide the liquidity necessary to avoid a monetary crisis.
Milton Friedman said it was a bad law and did harm, but was not solely responsible fore the lingering depression.
Friedman says precisely what caused the GD - inaction by the Fed - and Smoot-Hawley is seldom mentioned in articles about Friedman’s analysis of the depression. It was Friedman’s work on monetary policy that moved most away from the explanations for the GD that existed for several decades.
Yes, but he also said Smoot Hawley was a bad law and did harm to the U.S. economy.
We're at the point now where facts don't matter. People will twist and spin facts and outright lie depending on what side of the issue they are on. Those that want tariffs will claim it was a canard and opponents of tariffs will claim it was involved in extending the Great Depression. I just come here for the articles anyway. :-)
It’s not like I am morally opposed to tariffs. I’ve just seen way to much evidence that tariffs don’t work, and backfire. I felt that way when Obama did them, and I still do. Apparently, enough of the country like it when Obama did it, so we are going to get more. That’s just the way it is.
Once we get our steel industry up and rolling again, I think domestic competition will keep prices competitive.
Who knows, as what happened with automobiles, maybe we can get foreign steel producers to build plants in the U.S.
I think selective tariffs in key industries are useful for keeping industrial production within the U.S. But I am opposed to wide scale tariffs of consumer goods and clothes for example.
Just getting the trade balance on an even keel makes sense to me.
The GOP doesn't just exist as a playpen anymore for business interests. Trump cares about country as a whole, including workers. That is a good thing because it will cement Republicans as a majority party.
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