When most AmerÂiÂcans think of the Smoot-HawÂley TarÂiffs, they think of ecoÂnomÂic disÂasÂter. But if you ask why, most AmerÂiÂcans may need a short refreshÂer course. Below, you will find just that. AppearÂing on Derek ThompÂson’s Plain HisÂtoÂry podÂcast, DouÂglas Irwin (an econÂoÂmist and hisÂtoÂriÂan at DartÂmouth) revisÂits the 1930 Smoot-HawÂley TarÂiff Act, which raised tarÂiffs on over 20,000 prodÂucts importÂed into the UnitÂed States. The law was passed despite warnÂings from execÂuÂtives like HenÂry Ford (who called the tarÂiff act “an ecoÂnomÂic stuÂpidÂiÂty”) and a petiÂtion signed by 1,028 AmerÂiÂcan econÂoÂmists, who argued that the tarÂiffs would raise prices and spark a trade war, leavÂing the UnitÂed States isoÂlatÂed. Their conÂcerns were ultiÂmateÂly well-foundÂed. The Smoot-HawÂley TarÂiffs, supÂportÂed by a RepubÂliÂcan presÂiÂdent and ConÂgress, had the uninÂtendÂed conÂseÂquence of deepÂenÂing, not endÂing, the Great DepresÂsion.
Mark Twain allegedÂly said that “HisÂtoÂry doesn’t repeat itself, but it often rhymes.” But someÂtimes hisÂtoÂry may well repeat itself or come very close, and that’s where we seem to be headÂed right now. As in 1930, we have RepubÂliÂcans impleÂmentÂing new tarÂiffs, but this time with the hope of re-engiÂneerÂing the world econÂoÂmy and bringÂing manÂuÂfacÂturÂing back to AmerÂiÂca. MeanÂwhile, econÂoÂmists (even conÂserÂvÂaÂtive ones) warn that these poliÂcies risk repeatÂing the misÂtakes of Smoot-HawÂley.
Below you can hear the assessÂment of the ecoÂnomÂic hisÂtoÂriÂan Niall FerÂguÂson, who, in speakÂing with Bari Weiss, explains why DonÂald Trump’s tarÂiffs will fail to re-indusÂtriÂalÂize AmerÂiÂca. The goldÂen age of manÂuÂfacÂturÂing in AmerÂiÂca is long gone, and it’s not comÂing back, partÂly thanks to automaÂtion. (MorÂgan Housel has more to say on that.) But even worse, the chaotÂic impleÂmenÂtaÂtion of these poliÂcies risks trigÂgerÂing a trade war, “a major finanÂcial criÂsis comÂpaÂraÂble in scale to 2008,” or even a milÂiÂtary criÂsis that an isoÂlatÂed AmerÂiÂca would be ill-equipped to hanÂdle. SpeakÂing on Meet the Press this weekÂend, investor Ray Dalio omiÂnousÂly voiced very simÂiÂlar conÂcerns, sayÂing “someÂthing worse than recesÂsion” may be on the horiÂzon.
For anothÂer take, you can hear Preet Bharara’s conÂverÂsaÂtion with Justin Wolfers, where the AusÂtralian econÂoÂmist warns that Trump’s tarÂiffs may have few benÂeÂfits and mostÂly costs, some quite proÂfound. By launchÂing a trade war, AmerÂiÂca will trade less and find its globÂal influÂence diminÂished, leavÂing a void that ChiÂna can fill. EchoÂing Niall FerÂguÂson, Wolfers also cauÂtions that you can’t turn back the ecoÂnomÂic clock. He notes:
A hunÂdred years ago, we had actuÂalÂly the same debate, but it was because we were movÂing from the land, from a preÂdomÂiÂnantÂly agriÂculÂturÂal econÂoÂmy, to a manÂuÂfacÂturÂing-based econÂoÂmy. And we moved from an enorÂmous share of the popÂuÂlaÂtion workÂing in agriÂculÂture to workÂing in manÂuÂfacÂturÂing, and that raised the AmerÂiÂcan midÂdle class.
There was a lot of nosÂtalÂgia. Why aren’t we back on the land? And the subÂseÂquent stage of ecoÂnomÂic develÂopÂment is we move out of the facÂtoÂries, and we move and become engiÂneers and comÂputÂer sciÂenÂtists and softÂware designÂers. And we’re in a much more cogÂniÂtive econÂoÂmy.And we are not inhalÂing black soot in our mines or in our facÂtoÂries durÂing the day. And that’s the future of the AmerÂiÂcan econÂoÂmy. And it’s one that speaks well to the skills that AmerÂiÂcans have.We’re the most eduÂcatÂed workÂforce in the world. And so preÂsumÂably the jobs of the future are those, the jobs we want are those that cater to the extreme proÂducÂtivÂiÂty and eduÂcaÂtion of AmerÂiÂcan workÂers.
How have we reached the point where we’re runÂning the same failed experÂiÂments again, all to reclaim an illuÂsoÂry bygone ecoÂnomÂic age? It’s a hard quesÂtion to conÂtemÂplate, but I ask that quesÂtion again. AnyÂone? AnyÂone? AnyÂone?
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Does Trump know about the Smoot-HawÂley Act?
Yes, tarÂiffs are terÂriÂble; always have been. Caused the North/South War, rip off conÂsumers, engenÂder corruption/bribery from govÂ’t offiÂcials, take monÂey from indiÂvidÂuÂals to be spent by govÂernÂments wasteÂfulÂly and self-servedÂly. GovÂernÂment interÂferÂence in economies is immoral and counÂterÂproÂducÂtive (see: comÂmuÂnism, nationÂal socialÂism (Nazism), fasÂcism, the Fed, socialÂized medÂiÂcine, FanÂnie, FredÂdie, etc.). AmazÂing that that OC just now disÂcovÂers this when the ParÂty They Don’t Like does it, but govÂ’t medÂdling is A‑OK when “their” side driÂves the econÂoÂmy into the ground and jacks up costs of colÂlege, gasoÂline, health care, etc. with guarÂanÂteed stuÂdent loans ($2 trilÂlion + in debt now), ObaÂmacare, reckÂless regÂuÂlaÂtions, spendÂing, taxÂaÂtion, fascisÂtic poliÂcies, etc.
There’s no need for the “Whataboutism”, everyÂone here (espeÂcialÂly OCA) know that both parÂties are bad and two sides of the same coin. There is a marked difÂferÂence in ecoÂnomÂic growth under the parÂties this CenÂtuÂry, and that disÂparÂiÂty does not reflect well for the curÂrent parÂty in powÂer, though that has a lot more to do with who conÂtrols ConÂgress rather than who conÂtrols the White House.
As for your examÂples, at least one of them (skyÂrockÂetÂing colÂlege costs) startÂed under a RepubÂliÂcan PresÂiÂdent (Nixon) and Health Care realÂly startÂed to skyÂrockÂet (adjustÂed for inflaÂtion) under ReaÂgan.
I haven’t looked up all of the othÂers, but would susÂpect that gasoÂline is highÂer under Dem leadÂerÂship and that your examÂples probÂaÂbly even out between the two parÂties of the elite (I didÂn’t look closeÂly at “reckÂless regÂuÂlaÂtions”, because that is such a subÂjecÂtive term, but if you mean things like the Clean Air Act, that was signed into law by Nixon).
OC is an endÂless preÂtend-parÂty that fasÂcism startÂed with Trump, in a simÂplisÂtic faux moral high ground/ersatz reliÂgion. We have a UniÂparÂty in the U.S.; have had for many decades. The only excepÂtions are those like Ron Paul, Rand Paul, Thomas Massie, and a few othÂers. OC has no prinÂciÂpled oppoÂsiÂtion to govÂ’ts plunÂderÂing citÂiÂzens and givÂing that plunÂder to those who didÂn’t earn it (themÂselves, their conÂstituents, their bribe-givÂing corÂpoÂraÂtions), or fasÂcism itself–which is corÂpoÂratism, as defined by Mr. FasÂcist himÂself, MusÂsoliÂni. LaughÂable that OC starts comÂplainÂing now about unconÂstiÂtuÂtionÂal and powÂer grabs by govÂ’t offiÂcials. Those like OC *supÂport* great, invaÂsive powÂers for governments…then are shocked–SHOCKED–when they use them to oppress othÂers and enrich themÂselves. (EasÂes the conÂscience, though, to stand up and denounce Trump.) And Republican/Reschmublican; Nixon and ReaÂgan disÂplayed litÂtle traits of prinÂciÂpled oppoÂsiÂtion to fascisÂtic govÂernÂment, just a lot of wind. EPA, takÂing the U.S. off the gold stanÂdard in ’71, the “Drug War” are all govÂ’t overÂreachÂes, and blaÂtantÂly unconÂstiÂtuÂtionÂal as well.