Posted on 01/29/2009 7:22:27 PM PST by Crazieman
As if the Democratic Porkfest Bill didn’t do enough damage on its own to the long-term prospects for the American economy, the Washington Post reports that it could set off a trade war that would bring the global economy crashing, too. Democratic protectionists loaded up the bill with “Buy American” clauses that shut out foreign producers of steel and iron. Just as in the Depression, however, that will force other nations to close their markets — which will virtually recreate the Smoot-Hawley fiasco that made the Depression exponentially worse:
The stimulus bill passed by the House last night contains a controversial provision that would mostly bar foreign steel and iron from the infrastructure projects laid out by the $819 billion economic package.
A Senate version, yet to be acted upon, goes further, requiring, with few exceptions, that all stimulus-funded projects use only American-made equipment and goods.
Proponents of expanding the “Buy American” provisions enacted during the Great Depression, including steel and iron manufacturers and labor unions, argue that it is the only way to ensure that the stimulus creates jobs at home and not overseas.
Opponents, including some of the biggest blue-chip names in American industry, say it amounts to a declaration of war against free trade. That, they say, could spark retaliation from abroad against U.S. companies and exacerbate the global financial crisis.
This is the end result of the protectionist rhetoric of the Democratic campaign in 2008. And it’s not hard to see why they pursue it. Buy American is a slogan that practically guarantees popularity. What could be more patriotic than looking for the Made in the USA label, especially when taxpayer dollars are on the line?
Nothing, if you don’t mind killing the entire American export sector. We already have large trade deficits, thanks to our massive wealth transfers each year to oil-producing nations based on our unwillingness to pump our own crude. If we touch off a trade war, which this will almost certainly do as it violates all of our WTO and bilateral trade agreements, other markets will close their doors to American products, such as cars and technology. Instead of closing our trade gap, we will explode it, and even those oil imports could get retaliatory tariffs from our two closest trading partners, Canada and Mexico, our two largest foreign suppliers of crude.
We have done this before, and under worse circumstances, which is why this such sheer folly. The Smoot-Hawley tariff act turned a severe but recoverable recession and turned it into a generational depression. Instead of working cooperatively, the major trading nations had to respond to American penalties with more penalties, and the Buy American provisions of the New Deal entrenched those divisions, making recovery impossible. The rest of the world — Europe, Asia, Latin America — would likely shut out the US and trade amongst themselves, and we would lose decades of work in building American economic strength abroad.
America doesn’t need a trade war at this moment in time. We need to ensure our access to as many foreign markets as possible. Protectionism now will take us down a primrose path that we have traveled before, and the end result will be bread lines and 25% unemployment, and worldwide misery.
Actually it is the only sound argument....
Do you really think it is better for Communist China to buy our t-bills and bank accounts? That money would be better served being held by Americans.
The global reality is that the US has a multi-trillion dollar trade deficit. Even if that money is reinvested into the US...it is still held by non-Americans...our economy is at the mercy of foreigners
And Communist China isnt exactly “friendly” with the USA.
Also, Communist China keeps American exports from being sold in China...as China floats their currency to artificially lower the value of their domestic goods...and keeping US goods artifically high.
Actually....the Free Trade Globalism you espouse is the “Third Way”....you should familiarize yourself more with “Third Way” before making that accusation.
The reality is that Free Trade Globalism does not work....will not work...and will never work.
The Third Way, first articulated by the likes of Joseph Broz Tito and Juan Peron (with its roots in Mussolini’s Italy) emphasized economic nationalism (via import substitution) as a “third way” between laissez faire capitalism and communism.
The globalists love to come out with that trinket talisman every time they get a whiff of protectionism coming. If protectionism was so bad, then how did we manage to grow so powerful while it was a significant part of US economic policy? By the end of the Civil War, which was far more about tariffs than about slavery, we had achieved a level of industrial and military power that had the British trembling with fear. Little of the industrial base that enabled the protectionist Union to smash the free-trade Confederacy would've existed without the protectionism that made sure those industries could grow.
Really? Third Way politics have been around a long time. In fact the Mennonites are major proponents and advocates of Third Way politics.
Third Way has nothing to do with economic nationalism...you think Bill Clinton (probably the biggest US proponent of Third Way politics) was some sort of economic nationalist...With his wife? Uh yeah right
Excellent points...
The British were the first European power to advocate Free Trade in the 19th C....and it led to the protectionist United States and protectionist Germany surpassing the British in manufacturing and GDP by the end of the century. The British went from THE economic power to getting bypassed by relatively new nations (Germany only formed as a nation in 1871).
The “protectionist” system has historically been successful...whereas the Free Trade model has not.
Sigh....
We’d all love to be able to “Buy American” as a choice. Bill’s Khaki’s, Carhartt, Vera Bradley, etc....We can support America and Americans. But it has to be by choice!
We should instead entice American companies to come home and employ people by:
1) Drastically lowering corporate taxes
2) Passing a national right to work law
3) Addressing illegal immigration by closing the borders and kicking them OUT!
I second that.
We should replace the corporate income tax with the VAT. That would put American manufacturing on a more even field with foreign competitors.
George Soros, the billionaire investor famed for "breaking the Bank of England" has launched another assault in recent months, cashing in as Britain's currency slid.
By Edmund Conway in Davos
Last Updated: 9:09PM GMT 28 Jan 2009
The hedge fund manager, whose assault on sterling in 1992 was seen as responsible for causing the UK to leave the Exchange Rate Mechanism and forcing up interest rates to double-digit levels, said he had been selling off sterling in recent months.
It comes with experts warning that the slide in the pound over the past year has been the worst ever seen by the UK currency, and with others predicting that the UK may have to seek emergency funding from the International Monetary Fund as a result.
Speaking at the World Economic Forum in the Alpine Swiss town of Davos, Mr Soros said he had foreseen the recent fall in the pound, which has slid from over $2 against the dollar to below $1.40 in recent weeks.
However, he indicated that he did not expect it to fall much further - a comment which caused sterling to leap yesterday by more than 1 per cent to almost $1.44.
Mr Soros said: "I did actually have a short position in sterling and it was one of the trades I carried out. But sterling did fall from around $2 to about $1.40 and at that level the risk-reward balance is no longer compelling. I'm not saying won't fall any more though - it will continue to fluctuate"
Mr Soros also warned that the scale of the current economic crisis was now potentially even worse than the Great Depression in the 1930s and urged Western nations to set up "bad banks" to absorb their toxic assets.
The truth is always in style.
I’d like to see a cartoon of Obama and Pelosi stealing televisions and stereos out of a store called “Future Generations”.
That’s loopy.
bump
bump for later.
People we do not have a shortage of goods to buy, the general population is so deep in debt they cannot afford to buy.
The average American household’s credit card debt in 1990 was $2,966. In 2007 it was $9,840.
Free trade is not the reason Americans are in debt. That is a complete lie.
Americans are in debt due to materialism and the breakdown of morality.
Too many people want "things" they cannot afford or just want to keep up with friends.
THAT is why Americans are in debt.
No, the VAT is just another "behind-the-scenes" tax that consumers do not see. Governments use the VAT destructively while the corporations get the blame for high prices.
The only true answer is a sales tax that everyone sees on their bill and pays for at the time of transaction. Only then will people wake up to how much they are sending to Washington.
Would you please show where I said that it was. Thank YOU!!
Free trade and open borders brought us here.
People we do not have a shortage of goods to buy, the general population is so deep in debt they cannot afford to buy.
The average American household’s credit card debt in 1990 was $2,966. In 2007 it was $9,840.
The above is from YOUR post #28
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