The 2009 Version of Smoot-Hawley
It’s real stupid, and contagious.
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.
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.
I can guarantee you that the automakers will be exempt, but the suppliers will not be. The suppliers will need to purchase their materials domestically, but the Big Three will still buy parts and services from Canada, Mexico, etc…After all, nothing says Made In The USA, like and automobile.
Linked with:
- Oh, this’ll work! « blog648dashtwo
- Smells like Smoot-Hawley — But As For Me
- Ed Driscoll.com
- Trade Wars « Justbkuz
- [VIDEO] Fiscal Suicide: Democrat Talking Points « JoHNBRoDiGaNDoTCoM
- Obama Stokes Trade War Fires With ‘Buy American’ Provision In Massive Spending Bill | Right Soup
January 29, 2009 - 05:57 PM on January 29th, 2009
Just as we all said during the election: Obama doesn’t have any new ideas. Behind his rhetoric are the same tired, failed old policies. The only “change” is the extremes they are being taken to.
Change you can believe in? SUCKER!!!