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U. S. Repeats mistakes of The Great Depression.

Posted on | April 1, 2009 |

One of the commonly agreed upon facets of the Great Depression of the 1930’s is that protectionist policies enacted by governments around the world - including the United States of America (Smoot - Hawley Tariff) - made a bad situation worse.

Don’t look now, but it’s happening again.

I wrote a while back about why I thought the recession of 2008-2009 would be more like the great recession than the great depression. Implicit in that belief was that the U.S. government would act sensibly. I mistakenly thought we had learned some lessons from the Great Depression.

Apparently I was wrong, because back in February Congress passed what could be the 2009 incarnation of the Smoot - Hawley Tariff Act. This one has a much more patriotic sounding name, The Buy American Act, but make no mistake - it’s protectionism. Protectionism is bad policy any time, but at this point it could be disastrous.

Don’t believe me? It’s already started. Mexico has put retaliatory tariffs on U.S. goods into action:

“Economy Secretary Gerardo Ruiz Mateos said the U.S. decision violates a provision of the North American Free Trade Agreement that was supposed to have opened cross-border trucking by January 2000.”

And this is from USA Today:

“… if there’s one thing economists agree on, it’s that high tariffs and protectionist policies made the Great Depression far worse.”

As the article states, this is indeed unfortunate because it is entirely avoidable. It’s Congress playing politics with the economy, trying to appear sympathetic to Unions but if they truly had what’s best for the workers, they wouldn’t engage in activity that will ultimately hurt those workers.

“Predictably and completely legally, Mexico retaliated - by slapping tariffs on $2.4 billion worth of strawberries, grapes, dishwashers, pencils, cordless telephones, pet food and more than 80 other U.S. export products. Targets include California wine makers, Oregon potato producers and a Wisconsin soy sauce maker. Mexico has threatened to escalate the tariffs if the U.S. doesn’t restore the trucking program.”

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Comments

2 Responses to “U. S. Repeats mistakes of The Great Depression.”

  1. Macbook Dreamer
    April 2nd, 2009 @ 3:43 am

    The thing is, not one country in the world has people in power who can resist playing politics no matter how bad the time might be, it’s just the way politics roll, congressmen don’t control the congress anymore, politics does.

  2. Mickey
    April 5th, 2009 @ 10:19 pm

    Then add to it the intrusive government wanting to provide a new New Deal. Government action took a bad situation in the 1930’s and turned it into a 12 year ordeal. We can also add that we are in the process of turning this economy into more of a European Socialistic model, which will not prove successful as shown in Europe. Our politicians seldom learn from the past and it is probably due to they are more incented to buy a vote than make a right decision.

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