*Peddling Protectionism*

The author is the excellent Douglas A. Irwin and the subtitle is Smoot-Hawley and the Great Depression.  The book's home page is here.  Excerpt:

The popular perception is that the Smoot-Hawley tariff raised import duties to record levels and helped cause the Great Depression.  In fact, the legislated tariff increase was much smaller than commonly imagined, although it still managed to erase 15 percent of America's imports of dutiable goods upon impact.  For reasons that will be explained, it was the deflation of prices that accompanied the Great Depression that pushed the tariff to near record levels, restricting trade even more…most economic historians do not believe that the Smoot-Hawley tariff played a large role in the macroeconomic contraction experienced during the Great Depression.

It is well known that Doug is hard at work on what will prove to be "the modern Taussig," a history of international trade, and protection, in the context of the rise of the American economy; one assumes that this more focused book will be feeding into the larger whole. 


5% Tariff across the board. Alexander Hamilton was for tariffs. We need to facilitate some nascent industry in the States ... otherwise we'll all be working at the dollar store. A step towards tit4tat mercantile hell? Likely. Goldman Sachs won't even let us invest in the technologies we do create, re Facebook wtf?

The actual cause of the Great Depression was a fall of nominal GDP by half. This was brought about by a decline in the money supply of about 1/3. Had the Fed prevented this collapse in GDPn, the Great Depression would not have happened in the US.

If congress today were to hit our economy with high trade restrictions, it would show up as a loss of productivity--it would not show up as a loss of labor input (unemployment) as long as the Fed maintained study growth in GDPn.

Indeed, the Great Recession of today has been caused by the Fed's failure to maintain a smooth growing GPPn.

Mistype--GPPn should be GDPn where GDPn = nominal GDP

"Starting as a Republican ploy to win the farm vote in the 1928 election by increasing duties on agricultural imports,..."

I have obsearved over the years that Republicans have a hard time saying no to screwy agriculture subsidies--so much for Republicans believing in the magic of the marketplace. What hypocrites!

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