Posted on 09/24/2010 6:39:21 PM PDT by Kaslin
No one familiar with the Smoot-Hawley tariff of 1930 should relish the prospect of a trade war with China — but that seems to be where we're headed and is probably where we should be headed.
Although the Smoot-Hawley tariff did not cause the Great Depression, it contributed to its severity by provoking widespread retaliation. Confronting China's export subsidies risks a similar tit-for-tat cycle at a time when the global economic recovery is weak. This is a risk, unfortunately, we need to take.
In a decade, China has gone from a huge, poor nation to an economic colossus. Although its per capita income ($6,600 in 2009) is only one-seventh that of the U.S. ($46,400), the sheer size of its economy gives it a growing global influence. China passed Japan this year as the second-largest national economy. In 2009, it displaced Germany as the biggest exporter and also became the world's largest energy user.
The trouble is that China has never genuinely accepted the basic rules governing the world economy. China follows those rules when they suit its interests and rejects, modifies or ignores them when they don't. Every nation, including the U.S., would like to do the same, and most have tried. What's different is that most other countries support the legitimacy of the rules — often requiring the sacrifice of immediate economic self-interest — and none is as big as China. Their departures from norms don't threaten the entire system.
Lost American Jobs
China's worst abuse involves its undervalued currency and its promotion of export-led economic growth. The U.S. isn't the only victim. China's underpricing of exports and overpricing of imports hurt most trading nations, from Brazil to India. From 2006 to 2010, China's share of world exports jumped from 7% to 10%.
(Excerpt) Read more at investors.com ...
"Those who don't learn from history are condemned to repeat it."
Obama is going to take a hard left after the election and embrace this.
Since it is in law, congress only hope is to impeach him and that is a long process.
I wonder if congress will even try.
Wow. A balanced view on tariffs. Usually its one extreme or the other.
wake up people. china has already instigated a trade war. the only thing worse than a trade war is sticking your head in the sand when someone instigates a trade war with you.
Amen. I'm tired of us playing by Marquess of Queensberry rules while getting repeatedly kicked in the groin by the chinese.
wake up people. china has already instigated a trade war. the only thing worse than a trade war is sticking your head in the sand when someone instigates a trade war with you.
People do need to wake up. Communist China has been in a trade war with the US ever since we opened Free Trade with them.
But, as long as history-flunking idiots keep pushing the myth that Smoot-Hawley caused the Great Depression...or even contributed to it....those same people will continue to hide from the fact that the ChiComs have been in a trade war all along.
The Liberal Free Trader Globalist, UN-loving, WTO-loving nutjobs are going to kill this great nation. If an economic idea is supported by Al Gore, Jimmy Carter, George Soros, et al...as Free Trade Globalism is....it is not a good idea to begin with
The problem with Free Trade Globalism is that you eventually run out of America’s money
Baloney.
Smoot-Hawley hurt America because at the time, America was an exporting powerhouse.
We held the weaker negotiating hand. So everyone else, called our bluff.
We now don’t make anything, for other countries (not) to buy.
America is in a no-lose position. What - are we going to lose exports?
We already gave them all away.
COMMENCE THE TRADE WAR.
It’s long, past time.
And that’s going to happen how?
With “our side” constantly pleading for us, not to act?
“The Smoot-Hawley tariff of 1930 had a lot to do with the subsequent Great Depression.”
I’m not so sure. It’s a cause and effect thing. When there is a depression, there *has* to be a contraction in international trade. But does the contraction come first, or the protectionism?
Remember that protectionism is a long process, but a trade contraction can happen rapidly. And if the contraction has already happened, it becomes *easier* to pass protectionism, because it is a moot point.
I am, like Milton Friedman was, an economic libertarian. Historically, tariffs as a penalty have been a miserable failure, hurting mostly the consumer and the country that imposes the tariff. Amazingly, most that discuss economic have a real tough time with historical fact because history is clearly on the side of laissez-faire free-market economics.
If tariffs are such a failure;
Why is China now rich and powerful?
That's my thinking. We don't buy their cheap crap - they don't buy our cheap food. Who's the real loser?
Maybe, but we'll definitely pay more for less imports and the consumer will have less to choose from. And stupid government will once again screw up free market competition, the only economic engine that, as historical fact shows, has ever worked.
Exactly.
Just this week, I paid $15 for a Zippo lighter. I like everything about it, but especially the bottom where it says:
“BRADFORD, PA MADE IN U.S.A.”
I don’t even smoke. But one needs a lighter. I could have purchased 3 cheap chinese butane lighters for a dollar down at the 99 cent store...
But there’s something special about that Zippo. That “click” then you flip the top open.
The flawless worksmanship.
It’s like a Buck knife. Nothing better. Anywhere.
American quality. American pride.
I believe that tariffs can and should be used on a case-by-case basis as an efficient means to get our trading partners to follow agreed upon rules of trade.
I believe that a laissez-faire free-market economy as proposed by some purists is a logical impossibility, so trying to create an economy, for instance, that has no tariffs is a goal that is not worth trying to attain.
Samuelson makes a great point that China is not abiding by its international trading agreements, and that one method for encouraging them to do so would be targeted tariffs.
He also makes the good point that this would not amount to the same level or breadth of tariffs that were imposed leading up to and during the Great Depression so we would not be repeating history.
There is some elbow room for well crafted tariffs.
The per capita income is only $6,600 (2009 est.), so I wouldn't call them rich. They have such a large economy because they have 1.3 billion people.
Unlike the US they are pro-business and reaping the rewards. Much lower corporate tax rate (25% vs 40%), few of the regulations, unions, and other red tape we have here. The way to compete with China is to unleash our own businesses, not to get into a trade war.
Glad we can still make lighters and knives - too bad it isn’t the 18th Century. How about we manufacture a decent car or computer?
Make no mistake.
Chinese markets are closed. It goes (far) beyond currency issues.
We’re being played. Worst of all, we’re being played by our own side as well.
RINO globalists are in bed with the enemy. Quite a few of them in fact.
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