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.