The Great Depression was made “great” by government mismanagement.
Political action, first under Hoover and then under FDR, made things a whole lot worse. And it wasn’t just the Democrats’ misguided New Deal barrage of regulation, cartelization, and general anti-business central planning. The Hoover Era Smoot-Hawley Tariff, a huge Republican reassertion of high-barrier protectionism, crippled international markets and devastated the one industry it was meant, especially, to help: agriculture.
Protectionism is the idea that government should outrageously harm domestic consumers to “protect” domestic producers. And politicians, often thinking they must “do something” (i.e., “anything”) often feel the push to “save us all” by erecting barriers to trade. Since the crash of 2008, I’ve kept an eye on our Washington insiders, to see if they’d try to revive Thirties-style self-destructive nostrums.
Well, we’ve got a sighting.
Congress is gearing up for some anti-Chinese protectionism. An unfortunately bipartisan movement is festering there, saying China’s yuan is too valuable, making trade “unfair” for American producers. The Senate seems bent on passing the Currency Exchange Rate Oversight Reform Act.
But, according to Daniel Ikenson, what’s really going on is politics: Faced with “public approval ratings hovering in the low-to-mid teens, an embattled Congress is looking for plausible scapegoats for the dismal state of U.S. economic affairs.”
This is not sophisticated economic theory. It’s not conscientiously developed public policy.
It’s grasp-at-anything grandstanding.
And it could do a whole lot of harm.
This is Common Sense. I’m Paul Jacob.
4 replies on “Blame China”
Sorry, Paul you’ve got it wrong. China has been the primary driver of protectionism. Please read “Death By China,” by Peter Navarro and Greg Autry. It might change your mind a bit.
Something comes to mind about the stye in your neighbor’s eye. A major cost of production here in the United States is due to relatively new regualtions by the nanny-state government. Another major cost is the useless run up of prices driven up by the ‘sue anything that moves’ mentality that is allowed to prevail in the interest of “doing good”.
If you need a label to understand that you shouldn’t operate your hair dryer in the tub, then you probably are not competant to be operating a hair dryer without supervision anyway, let alone driving or voting.
The general public pays the cost twice. Once with the increased purchase price, then again with the decreased competitiveness of the US economy as every job that is not nailed down flees to climates more conducive to production. Were we not so bound by the catered-to legal profession and the national (NOT federal)government, we would be competitive enough to give China a run for their money. And were so before all of this arose because homegrown stuff didn’t have to ship halfway around the world before being sold here.
Joseph Miller:
Trade is not a zero-sum game. If we eliminate barriers at our end, we benefit, regardless of what China does. Also, doing so puts political pressure on China to do the same, since their barriers impose costs on their people.
Mark Read Pickens:
We have few trade barriers. There are three trade agreements being held up in Congress. But why is it incumbent on the US to ratify those agreements in order for South Korea and others to lower THEIR trade barriers? We already let their goods in duty-free. Lowering our barriers brought us nothing. And if we have to impoverish our own working class (we can’t all work in industries financed by tax revenues) then who will have the money to buy all those goods? Trade isn’t a zero-sum game. It’s lose-lose for many American workers. How is pressure put on China? China’s leaders couldn’t care less about the costs imposed on their people. An American worker needs five times what a Chinese or Indian worker requires to have a similar lifestyle. How is the American supposed to compete?