History repeats itself. It is amazing how similar the 1920s and 2000s have become. First were the unsustainable economic booms; then came the busts. Of course the easy money policies of the Federal Reserve caused both busts. Then there is the government’s response to both crises: public works programs, lots of stimulus spending, more easy money by the Fed, and tax hikes on the rich. To be sure, these policies did not cure what was ailing the economy in the late 1920s and they are not curing our economic ills today. Really, the only dreadful piece of the government’s response to the crisis in the 1920s that is missing from today’s response is trade protectionism.
Hold on one minute. The House this past week passed the president’s cap and trade legislation. Now, I know that cap and trade has nothing to do with trade between countries and protectionism. It is not legislation intended to protect domestic products against foreign competition as the Smoot-Hawley Tariff Act was intended to do in 1929. Instead, cap and trade is intended to protect the environment against foreign substances. On the surface, comparing the two measures is a stretch. However, the consequences of cap and trade, if passed by the Senate, will be very similar to those of Smoot-Hawley during the Great Depression.
In 1929, the Smoot-Hawley Tariff Act imposed duties on thousands of imported products in order to make them less competitive against domestic U.S. products. Naturally, our trading partners placed equally heavy tariffs on U.S. goods entering their countries. This had the effect of raising the costs of all goods at a time when many were losing their jobs and couldn’t afford to pay more for things. It is acknowledged by many economists that Smoot-Hawley and the wave of international trade protectionism that it brought forth was a major contributor to worsening an already sharp economic downturn.
Article comments
— go to most recent comments1 - Glenn Contrarian
Your errors:
1 - Smoot-Hawley had little overall effect on the economy. Why? Read this encyclopedia entry:
"If...Smoot-Hawley [negatively impacted the economy], was this enough to have made the tariff a significant contributor to the severity of the Great Depression? Most economists are skeptical because foreign trade made up a small part of the U.S. economy in 1929 and the magnitude of the decline in GDP between 1929 and 1933 was so large."
You see, import/export was not that great a factor to the U.S. then - not compared to Europe. Foreign trade, when compared to domestic economic issues, was but a relative drop in the bucket.
2. 'Cap-and-trade' will not greatly affect prices. The amount charged those who are not able to trade away their 'pollution credits' is (when it comes to major corporate financing) not much.
And here's my gripe - if you don't like 'cap-and-trade', then come up with a better way to try to mitigate global warming. Or are you one of those who thinks global warming is false?
If you are, I'd love to bring you to Mount Rainier in Washington state and show you the Nisqually glacier - which is less than a quarter of what it was in photos from the 1930's.
2 - Clavos
if you don't like 'cap-and-trade', then come up with a better way to try to mitigate global warming.
As long as the Indians are growing as fast as they are, and the Chinese keep building coal-fired power plants like a bunch of crazed well, Chinese, the proposed cap and trade scheme will do little to mitigate global warming, but it will make algore a whole lot richer.
3 - Joanne Huspek
Al Gore is rich enough. The idea of paying someone money to give you carbon "credits" is odious to say the least. Of course, I'm a cynic and I don't believe anything anyone tells me. That's why I pass up the so-called organic section of the produce section. The only truly organic vegetables I know come out of my yard.
I foresee winters of not turning the heat on at all. Well. Maybe just for Christmas. And I foresee others doing the same, which means they won't spend their money on goods and services. Just what Michigan needs.
4 - Glenn Contrarian
Clavos -
You complain - but you give no solution.
It's like the old military maxim - "Either lead, follow, or get the hell out of the way!"
If there's a problem, then either support a proposed solution, or (if you don't like that solution) support a WORKABLE solution of your own, or (if you don't have a solution) stop trying to hinder those who are trying to solve the problem.
5 - Glenn Contrarian
Come to think of it, that's my problem with conservatives who are opposing universal health care - they don't like UHC, but they don't have a WORKABLE solution of their own (no, tax cuts will NOT work), but all they do is complain ("UHC won't work because A, B, C....).
6 - Silas Kain
I agree, Glenn. That being said, I think TRUE conservatives, not of the Far Right Christian Taliban kind, agree that UHC is something that is inevitable. I've submitted my ideas many times about health care reform and those ideas are never addressed because it's far too complicated to untangle the lobbyist mess that is the foundation of Congressional gridlock. If UHC is to be achieved it has to begin by taking the lobbyists out of the wallets of politicians. Why is it that such a simple concept gets thrown into the trash?
7 - Bliffle
Silas,
I hate to break this to you, but the supreme court is contemplating rescinding the McCain-Feingold campaign contributions law. The Roberts court feels the it infringes too much on the free speech right of corpporate personhood.
The only hope we have is to redefine corporate charters and to specifically do away with the odious concept of Corporate Personhood, a rump policy invented in the supreme court cloakroom.
Talk about 'activist' judges!
8 - roger nowosielski
This really is deplorable. Not that the McCain-Feingold is doing a good enough job. If anything, it needs be bolstered. A move in the opposite direction can only bode no good.
Talking about Hope and Change.
9 - The Obnoxious American
Glenn,
First off, the article is completely right, cap and trade is going to be a disaster if it is effective, and a complete waste of time if it isn't.
Second, do something? Like what exactly? One belch from a volcano like Mt St Helens could negate any benefit of reducing emissions, and there are plenty of scientific options for reducing CO2 in the atmosphere that are being explored. That is, if you wanted to remove CO2, whose increase, despite Al Gore's manipulated graph in Inconv Truth, is really not all that much higher, and well below the upper limits.
In any case, aside from killing the economy, I'd like you to explain how cap and trade would do ANYTHING for the environment? Go ahead, I dare you.
Silas,
Easy with the stereotypes my friend. The taliban beheads people and stones women. There might be some Americans who take their love of god very seriously, but nothing approaching Taliban like behavior. When you equate the two, you disrespect fellow Americans of faith, along with the victims of the Taliban. Please refrain from such moral equivication especially when none exists.
But I wanted to talk about the last aspect of what you said. Why would UHC be inevitable? Let's hope, for the sake of your family and mine, that UHC never ever rears it's ugly head. I fear with the election of Obama that this might be a done deal and if so, we will all pay the price of 53% of Americans voting in ignorance.
10 - The Obnoxious American
One last thought. McCain-Fiengold should be scrapped. It IS a travesty of the first ammendment and it is rife with unintended consequences which are starting to come to light now.
I think there should be a single campaign reform, and this would be exclusive and replace every other law. A politician can raise however much money he wants, from whomever he wants, so long as he is required to disclose every last penny, including where from it came. If the American people can see who is truly backing a candidate (and unlike during the Obama campaign, pay pal tricks won't cut it), then who needs all these other rules. Voters can "consider the source."
11 - Clavos
Glenn,
I don't have a "solution." In reality, nobody, including Obama and Congress, does. It's not my job. I'll be glad to find and sell you a $4M yacht, I'm very good at that, I can give you lots of very enthusistic references.
But, as a citizen (but not a patriot), I have a right to complain about where and how the government proposes to spend my money (and they get lots of it) without having to present my own solution. As I said, it's not my job, it's the job of the clowns in the government, unfortunately.
What I have proposed is that we give the whole problem a hell of a lot more exploration and discussion before rushing headlong into a "solution" that appears to exacerbate our financial problems beyond repair, while lessening, not improving, health care for all but the 47 million currently uninsured.
That's not a "solution" in my book.
12 - roger nowosielski
Vice versa. The First Amendment is a travesty to the extent that it allows corporate interests to have the kind of hold on political power that they do. Those are the unintended consequences. The collusion between private and public interest is precisely what you don't want and the principal cause of our downfall. Yet, your interpretation of the First Amendment is precisely what perpetuates this ignominy.
13 - The Obnoxious American
Roger,
Perhaps you don't understand the first ammendment. "Corporate Interests" is a evil way of saying "people" and people have the right to free speech. It really doesn't matter whether free speech is engaged in by individuals or groups (who are bound either by profit or not), what matters is that if these individuals or groups put a lot of money behind a candidate, the public should know about it. That is ALL that is needed here. More laws = more loopholes, and won't actually fix the problem. We just need real transparancy (not the Obama version).
14 - Baronius
Outstanding, Kenn.
15 - roger nowosielski
From free speech to funding political campaigns is quite a leap. It perpetuates nothing but corruption.
The simplest way to cut this cancerous growth: equal money allowed to each candidate running for office. Not a proliferation of laws - just one!
16 - Bliffle
A corporation is NOT a person. You cannot send it to death row when it kills people. It is not taxed on income, as a person is. It does not speak with the voice of ALL it's interests: a management speaks with an opinion that is administered upon ALL it's constituents. Individually, those constituents have little or no voice in that aggregate opinion: it may represent just the opinion that benefits the executives.
A corporation is NOT a person, and the masquerade of Corporate Personhood is a ruse that creates a sort of Frankenstein monster, that by it's own proclamations is amoral and owes no allegiance to society. This insensate thing and it's numerous supporters are quite proud to announce that amorality, invulnerability and disloyalty to all.
A corporation is a man-made machine, not a person. A human cannot make a person. A person cannot even make a worm, so we cannot expect that mere man can make a human.
As it currently exists, a corporation bears none of the responsibilities of a person but does have some of the privileges of a person. Nothing could be more attractive to a criminal, and so we see that it has proven when one after another of our corps are discovered to be so venal as to potentiate the collapse of business and society while fabulously enriching a select few at the helm.
17 - handyguy
It is highly dubious to claim constitutional protection for the 'principle' that the person or interests with the most money to spend on behalf of politicians should be the person or interests with the greatest political influence.
This is fundamentally anti-democratic [small d], and that was the original impulse behind McCain-Feingold, back when John McCain used to be an innovative legislator and non-partisan truth-teller.
The fact that members of congress spend so much time and effort raising money, rather than working to improve the lives of their constituents, was surely not the intention of the authors of the constitution.
Hiding behind the first amendment on this issue is bogus.
18 - roger nowosielski
In total agreement, Handy. Welcome back.
19 - Bliffle
I fear that McCain-Feingold is the wrong solution. We cannot solve the many vices of current corporations by regulating them in the margins. The entire notion of 'incorporation' must be revised. There's no good reason not to, except for the enormous power they have to resist.
20 - Baronius
Does anyone here believe that the environmentalist lobby bought the votes for cap and trade? Probably not. Money from good guys isn't corrupting, after all.
"The fact that members of congress spend so much time and effort raising money, rather than working to improve the lives of their constituents, was surely not the intention of the authors of the constitution."
It certainly wasn't the intention of the Founders to limit political speech before an election. If free speech meant anything to them, it meant that.
21 - roger nowosielski
Fuck Founding Fathers. They haven't envisaged the whoring politicians in the pockets of corporate interests.
22 - Glenn Contrarian
Clavos -
You do indeed have the right to your opinion, and you have the right to voice your opinion. My point was that in real life it is generally NOT helpful to complain about something if you don't know how to make it better.
You also said, "What I have proposed is that we give the whole problem a hell of a lot more exploration and discussion before rushing headlong into a "solution" that appears to exacerbate our financial problems beyond repair, while lessening, not improving, health care for all but the 47 million currently uninsured."
We've been 'discussing' and 'exploring' for at least two decades - and look where it's gotten us. Must we continue on through an entire generation of uninsured before we take action with the best available plan?
We've been talking about it for at least twenty years - it's high time we DID something about it.
23 - Clavos
My point was that in real life it is generally NOT helpful to complain about something if you don't know how to make it better.
I understood your point, Glenn, but obviously don't agree with it. On the surface, at least, it seems you're saying that if one is unhappy about something, one should not express one's unhappiness unless one first can come up with a solution.
What nonsense. And oppressive to boot.
24 - Clavos
Must we continue on through an entire generation of uninsured before we take action with the best available plan?
No, but when the best is at most mediocre, we shouldn't succumb to a false sense of urgency, either. It is far more difficult to undo a bad plan than to craft a better one from the beginning, particularly where the government is concerned; once the bureaucrats put their hands on a policy it is impossible to wrest it from them.
The only reason Obama is in such a feverish rush to implement his camel of a plan is he has one eye on the polls and realizes that in just a few more months he'll have to have something much better in hand to get it passed.
I say, let's wait for that moment. Then, maybe, just maybe, with a more level playing field, we might actually be able to come up with something better.
25 - The Obnoxious American
Totally agree with Clavos. Obama ran for the privledge, he wasn't annoited, and his job is to resolve issues, not create new ones. If I have an issue with what he is doing, I can state that without providing alternative options.
That said, usually when someone trots out this bromide, that all GOP can do is complain and not offer solutions, usually there are tons of alternative options that are just not being listened to.
Remember? This same tactic was last used during the (non) debate over the stimulus. Obama routinely trotted out the strawman that the GOP was the party of "no" when in fact the GOP just didn't want to spend trillions on liberal special interest projects. Try again.
And bliffle, no, a corp is not a human and cannot be put to death. And I never said that. What I said was, it is made up of humans (and they can be put to death incidentally, such as madoff recently). The fact that so many liberal-cum-communists like to ignore is being a CEO of a corp doesn't mean your corp can do anything it wants.
At the end of the day, this is a silly point to argue. Freedom of speech applies to all and that even includes the businesses that you so love to deride. Hence why we have multinational conglomerates who own media, and those media are free to speak under the first ammendment.