Free Republic

The US Senate should strip a "Buy American" clause from President Barack Obama's economic stimulus plan, the chamber's top Republican said Monday amid anger at the restriction from US allies. "I don't think we ought to use a measure that is supposed to be timely, temporary, and targeted to set off trade wars when the entire world is experiencing a downturn in the economy," said Senator Mitch McConnell.

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...

With both Barack Obama's supporters and the media looking forward to the new administration's policies being similar to President Franklin D. Roosevelt's policies during the 1930s depression, it may be useful to look at just what those policies were and-- more important-- what their consequences were. The prevailing view in many quarters is that the stock market crash of 1929 was a failure of the free market that led to massive unemployment in the 1930s-- and that it was intervention of Roosevelt's New Deal policies that rescued the economy. It is such a good story that it seems a pity...

Treasury Secretary Henry Paulson cautioned on Sunday that countries that turn to protectionist policies to try to escape damage from the global financial crisis may make it worse. "Isolationism and protectionism will not offer a way out," Paulson said in a statement prepared for delivery to the World Bank's development committee.

...The U.S. expansion has been strong and steady despite the warnings of fragility, the repeated claims of a slowdown, and the fear of China (as intense as the Japan fears of the 1980s). U.S. growth has averaged a fast 3.9% pace since the initial 7.4% tax-cut-related growth celebration in the third quarter of 2003. Thanks in large part to smaller businesses, U.S. unemployment has fallen to 5.1%, with wage and salary income growing at a 10% annual rate in the revised fourth-quarter data. Beyond housing, household liquid assets have increased more than both total debt and foreign debt, helping build...

If a store is selling quality products at low prices, why would anyone want to shut it down? This rhetorical question was asked by economist Arthur Laffer last week in connection to an unprecedented attack on China trade by numerous U.S. senators. In response to the China bashing, the stock market plunged. How fitting that such a misguided approach to both the economy and national security would come on the 75th anniversary of the infamous Smoot-Hawley tariff bill. According to economist Thomas Sowell, that massive tariff helped trigger the Great Depression, with U.S. unemployment rising from 9 percent in 1930...

There is a disturbing trend under way in Washington these days where politicians threaten Draconian action as a "stick" to coerce a result they desire. They do this even while they acknowledge that swinging the stick won't solve the problem it purports to address and most likely will exacerbate it and lead to undesirable consequences. They typically justify their use of provocative and extreme threats as the only means available to rectify a situation they characterize as a pending "crisis" or a "systemic meltdown." The most recent instance that comes to mind immediately is levying huge protectionist tariffs on selected...

Myths of the Smoot-Hawley Tariff The Fifth Chapter of How Americans Can Buy American - 2nd Editionby Roger Simmermaker To be able to accurately explain the affects of the Smoot-Hawley Tariff of 1930, it is necessary first to rid ourselves of popular myths so that we can start with a clean slate and derive conclusions from fact rather than fantasy. I will list some common myths here, and then disprove them using facts according to history. The myths that prevail, even today, some 72 years after the tariff bill was signed by President Herbert Hoover, are as follows: 1. The...