Protectionism and the Great Depression:
Here's a nice video about the Smoot-Hawley tariff, the Great Depression, and protectionism generally. I should note that the idea that protectionism was a substantial cause of the Great Depression is not universally shared. But watch the video anyway, which has good history and good analysis of the ill effects of protectionism. From the folks at Freedom To Trade. (h/t: Tom Palmer)
I don't share the notion that the Earth is round. I'm one of the nutty few that think it is an oblate spheroid. Fair warning.
So I'm curious, what portions of the country speak the dialect as "Hawley-Smoot" and which parts of the country call it "Smoot-Hawley"?
Sounds like a research job for an intern!
It would be like claiming that Obama's stimulus package caused the financial collapse of 2008. After all, unemployment didn't really start to get worrisome until after 2/09! But the idea that S-H caused the Depression will always attract the kind of loons who believe global warming is a Gore conspiracy, dinosaurs played with humans, and fiat currency causes the business cycle.
Under this usage, round would include oblate spheroid. I did not, you'll note, use the phrase 'perfectly round' which would imply only a sphere.
In fact, Melancton Smith, the Earth isn't even an oblate spheroid, if you must be pedantic.
"Our globe, however, is not even a perfect oblate spheroid, because mass is distributed unevenly within the planet. The greater a concentration of mass is, the stronger its gravitational pull, "creating bumps around the globe," says geologist Joe Meert at the University of Florida in Gainesville."
Scientific American
Sorry.
Ditto. I'll never forgive myself for losing my paperback copy.
I did not, you'll note, use the phrase 'perfect oblate spheroid'...
Thanks for playing.
I'm not sure what FDR called it when he went on TV in 1929, but it was an important provision to protect workers in the 57 states.
Unemployment was at 7.8% in 1930 when the Smoot-Hawley tariff was passed, but it jumped to 16.3% in 1931, 24.9% in 1932, and 25.1% in 1933.[Source: U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1957 (Washington, D.C., 1960), p.70.}
S-H passed the House in May 1929 and the Senate passed it in March 1930 (not mid-year). Retaliation from other countries started before S-H was signed into law in June, 1930.
S-H did not directly cause the stock market crash of September but most economists attribute a substantial part of the worsening world economy, the fall into depression from a recession, to the depression. Fiscal policy certainly played a major part, too, but S-H shouldn't be dismissed.
And, BTW, I think AGW is greatly overblown.
By "passed" I meant "signed into law," but that's just quibbling.As I said above unemployment is a lagging indicator. By your reasoning, Obama's stimulus will be responsible for the 11-13% unemployment we're likely to see over the next 12 months... not the financial panic that happened last fall.
S-H exacerbated the problem, but there still would have been a worldwide depression without it.
From a business point of view, does that matter? If it's what our export customers want, why not satisfy them and respond to market forces? Why not make a buck?
*^*^*
Re: the video, I love Shlaes' born-again Keynesian statement that the Depression lasted until WWII. Such a statement implies the problem with the New Deal was that it wasn't big enough, and it was only with the huge state intervention of the war that the economy did get started. Notably, her argument also ascribes the end of the Depression solely to state forces, with no private-sector input at all.
Markets anticipate economic activity, hence the market movements in the fall of 2008...
What economy activity did the crash of 1987 predict?
The Dow fell throughout 1981 and most of 1982, or the first year and a half of a different new president -- was this also predictive?
What did the run-up from 1970-1972 predict?
"Total control"? Hm. Have you considered the Will Rogers factor?
"I am not a member of any organized political party. I am a Democrat."
That was a joke, right? I can see the commercial now:
Joan to Joe Sixpack: "I thought Smoot Hawley was playing in Brandon this weekend."
just curious: I heard that both Smoot and Hawley were Republicans. And if it passed the congress in 1929 or 1930, what was the make up of congress? Who controlled the house and the senate?
</blockquote>
I don't know if Smoot and Hawley were Republicans, but I believe that Congress was cotrolled by Republicans when it was passed. However, I'm too lazy to look it up.
Neither Smoot nor Hawley was implicated.
Hal, your take on Shlaes is a hoot.
Thanks, Harry. Although, given the structure of the "not the New Deal but WWII," argument, it has the added benefit of being factually accurate.
So, yes, it is funny. But it's funny because Shlaes hasn't thought her premises through.
If that's your game, I don't think you really want to Google "Klanbake".
If you have a comment about spelling, typos, or format errors, please e-mail the poster directly rather than posting a comment.
Comment Policy: We reserve the right to edit or delete comments, and in extreme cases to ban commenters, at our discretion. Comments must be relevant and civil (and, especially, free of name-calling). We think of comment threads like dinner parties at our homes. If you make the party unpleasant for us or for others, we'd rather you went elsewhere. We're happy to see a wide range of viewpoints, but we want all of them to be expressed as politely as possible.
We realize that such a comment policy can never be evenly enforced, because we can't possibly monitor every comment equally well. Hundreds of comments are posted every day here, and we don't read them all. Those we read, we read with different degrees of attention, and in different moods. We try to be fair, but we make no promises.
And remember, it's a big Internet. If you think we were mistaken in removing your post (or, in extreme cases, in removing you) -- or if you prefer a more free-for-all approach -- there are surely plenty of ways you can still get your views out.