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The Spectacle Blog
Looking up from their particular circle of Hell, Senator Reed Smoot (R-Utah) and Representative Willis C. Hawley (R-Oregon) must be laughing.
They must realize that President Obama and congressional Democrats are infinitely clever Alinsky students, saying one thing in front of the TV cameras and then doing the opposite behind the scenes. Together, the Obama administration and liberal lawmakers have in a sense revived by stealth the disastrous Smoot-Hawley tariff that exacerbated the Great Depression by encouraging other countries to erect trade barriers.
During the election campaign, after some policy fine-tuning and unexpected drama that took the campaign off-message, Obama begrudgingly conditionally endorsed free trade. Or so it seemed.
His statement came a few months after that bit of intrigue with economic advisor Austan Goolsbee, who now serves Obama in the White House. Goolsbee caused a furor on both sides of the 49th Parallel by telling the Canadian consul general in Chicago that Obama’s anti-free trade rhetoric was just the candidate playing up to his left-wing base. Goolsbee said Obama’s words were “more reflective of political maneuvering than policy,” Fortune reported.
Then, after blasting NAFTA (North American Free Trade Agreement) as “devastating” and “a big mistake,” Obama backtracked. “Sometimes during campaigns the rhetoric gets overheated and amplified,” he conceded to a Fortune reporter last summer. “Politicians are always guilty of that, and I don’t exempt myself,” he said.
Of course Obama also needed to genuflect before Big Labor and Big Green so he added the potentially critical proviso that he favors “opening up a dialogue” with trading partners Mexico and Canada “and figuring out how we can make this work for all people.”
It was enough to get most of his trade policy critics to back off.
And it was all for show.
Now we learn, courtesy of the Washington Post no less, that buried deep in the must-pass-right-now-or-the-Apocalypse-will-come stimulus package from February there was a hidden trade bill. (The stimulus legislation also erased the Clinton era welfare reforms, but that’s another story.)
The stimulus package’s “buy American” provisions applying to funding recipients have been denounced even by the loathsome Toronto Star (known in Canadian conservative circles as the Red Star) as part of “a plague of protectionist measures in the U.S.”
Too bad, Toronto Star. Perhaps you shouldn’t have endorsed Obama. The November 2, 2008 editorial lauded Obama’s “fairer tax structure [that] helps working families and small business,” and his tax hikes in some areas “to fund health care, education, infrastructure, green initiatives and the military.”
Meanwhile, protectionism has come to America, and only now have we begun to notice.
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More Blog Posts by Matthew Vadum
http://spectator.org/blog/2009/05/15/smoot-hawley-by-stealth
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Pingback| 5.15.09 @ 3:20PM
Smoot-Hawley by Stealth | But As For Me links to this page. Here’s an excerpt:
jj| 5.15.09 @ 3:57PM
The history of free trade was written by advocates of free trade more interested in promoting free trade than telling us what happened.
Nowhere is the difference between reality and the myth of free trade greater than the Smoot-Hawley tariffs. According to free traders all of a sudden these two men, Smoot and Hawley, imposed tariffs on a free trading economy and caused a worldwide calamity. At the time of its passage the US had been a trade protected economy for more than a hundred years. Tariffs were already high. Smoot-Hawley lasted about two years. By 1937 tariffs were back to pre Smoot-Hawley levels and the Depression got worse. Smoot-Hawley did not make trade go to zero. Trade was only 6 percent of the GNP before Smoot-Hawley and 2 percent after. The Great Depression resulted in a 31 percent drop in GNP and 25 percent unemployment. Far too much to have been caused by a 4 percent of GNP drop in trade even if that 4 percent was 66 percent of the actual trade
I challenge Mr.Vadum to produce one shred of hard evidence that Smoot-Hawley did not do exactly what its authors intended it to do. Protect American jobs from cheap imports. The same thing “buy American” is intended to do. Just because two things happen at the same time it does not follow that one caused the other. The United States remained a net exporter throughout the Depression.
The free trade myth is wrong. The promise of free trade is a fraudulent as a Bernie Madoff account statement! The last time protection came to America, America, and Americans, prospered. The great wealth creation of the US did not happen until we became a tariff protected economy in 1828 and lasted until we became a trade dependent economy.
Bill Bailey| 5.15.09 @ 4:01PM
Pat Buchanan, is that you?
Tim| 5.15.09 @ 4:07PM
You realize that you and Eric Peters are going in the opposite direction from each other today?
DocJ | 5.15.09 @ 4:28PM
jj - what a strawman. Are you seriously comparing the economy of the 19th century to today?
jr| 5.15.09 @ 5:40PM
I do not know the correct answer to this dilemma. We have had 32 years of trade deficit. That gets us back to about 1977. NAFTA came upon us in 1994. So pick a spot, a weapon, a law, etc.,. The arguments are futile and most cannot be proved. The bottom line is that when production goes overseas, there also goes our technology, its advantages, and sunk cost of its R&D. The years of our great productivity gains helped keep us above water. Most of that is gone. In comparison, we are left with social jobs and others where we furnish service to each other. When there is a trade imbalance, money goes elsewhere - that is a clear irrefutable fact. Before we transferred our wealth, jobs, and technology to China, it was a motor-bike country. Who is to blame? In part, both political parties because neither care if your job is lost or given to someone who has not earned it. The CFR, IMF, Bilderbergs and Trilateral Commission are living proof that our politics are first, free trade, and no borders follow. All of these groups are polluted with politicians and the CEOs from around the world -- all care little whether the US gets screwed or not.
Bill Bailey| 5.16.09 @ 1:04PM
jj| 5.15.09 @ 3:57PM
I challenge Mr.Vadum to produce one shred of hard evidence that Smoot-Hawley did not do exactly what its authors intended it to do.
Either you miss the point, jj, or are engaging in misdirection. It exacerbated the Great Depression.
althusius| 5.16.09 @ 1:32PM
Smoot-Hawley did not cause the Great Depression. This is a canard that was foisted on the American people to promote a one-world view. Germany oversaw one of its greatest economic expansions in 1934 after it repudiated free trade and passed its own version of Smoot-Hawley. According to Milton Friedman and confirmed recently by Ben Bernanke, the Federal Reserve created the Great Depression by raising interest rates in 1931. The Federal Reserve raised interest rates in order to defend the dollar and stanch the flow of gold out of the United States.
Bill Bailey| 5.16.09 @ 8:36PM
Althusius, who here has argued Smoot Hawley "caused" the Depression? Nobody from what I can see. It made it worse. Stop with your bulls**t misdirection.
And are you a Fascist like jharp, Dave Mathews, and the other idiot trolls who visit here?
Nazi Germany's economy expanded because it stole Jews' wealth and the wealth of other people, invaded and plundered other countries, outlawed trade unions and banned strikes (I am not condoning this), massive military spending that was unsustainable and would have eventually hurt the country, and for other reasons.
Althusius, you are a liar who does not deserve to live in America. Fascist pig.
jj| 5.17.09 @ 12:59PM
Other than Smoot-Hawley and the Depression happening at the same time what is the evidence that Smoot-Hawley made the Depression worse? The Depression got worse in 1937 after tariffs had returned to pre Depression levels. The US had been a tariff protected nation for more than a hundred years before Smoot-Hawley without any thing near as bad happening. Why was doing the same thing we had been doing for a hundred years suddenly such a problem?
Give me facts not opinions. Remember Aristotle told us that heavy objects fall faster than light objects. That was accepted truth for more than a millennium until that heretic Galileo dropped a cannonball and a musketball simultaneously from the Leaning Tower of Pisa and observed that they hit the ground at nearly the same time.
Pingback| 5.19.09 @ 2:00PM
Smoot Hawley | Hot Web Trends links to this page. Here’s an excerpt:
David Minnich| 9.22.09 @ 2:34PM
I have a Master's in Economics and Accounting, and can tell you that the current incarnation of "free trade" is nothing more than propaganda by the elites to fatten corporate profits by using cheap foreign labor. It has nothing to do with comparative advantage. As for Smoot-Hawley? Mostly irrelevant - at worst, accounted for a 1% drop in GNP (the measurement at the time) out of a total of 30%+ drop in output. Even Milton Friedman admitted it had little effect on the Great Depression.
All of this praise of "free trade" just shows how the economics profession has largely sold out to the plutocracy.