Republican's lie about Smoot Hawley

Discussion in 'Economy' started by sealybobo, Apr 9, 2009.

  1. sealybobo
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    sealybobo Diamond Member

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    When conservatives rail in the media of the dangers of "returning to Smoot Hawley, which created the Great Depression," all they do is reveal their ignorance of economics and history. The Smoot-Hawley tariff legislation, which increased taxes on some imported goods by a third to two-thirds to protect American industries, was signed into law on June 17, 1930, well into the Great Depression. In the following two years, international trade dropped from 6 percent of GNP to roughly 2 percent of GNP (between 1930 and 1932), but most of that was the result of the depression going worldwide, not Smoot-Hawley. The main result of Smoot-Hawley was that American businesses now had strong financial incentives to do business with other American companies, rather than bring in products made with cheaper foreign labor: Americans started trading with other Americans.

    Smoot-Hawley "protectionist" legislation did not cause the Great Depression, and while it may have had a slight short-term negative effect on the economy ("1.4 percent at most" according to many historians) its long-term effect was to bring American jobs back to America.
     
  2. Mad Scientist
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    Mad Scientist Deplorable Gold Supporting Member Supporting Member

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    Smoot-Hawley Tariff Act - Wikipedia, the free encyclopedia

    Since the Stock Market crash was in 1929, 1930 couldn't possibly be considered "well into the Depression". Smoot Hawley helped bring the Depression about.
    I used Wikipedia cause I know you Liberals like and trust it as a source.
     
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  3. GHook93
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  5. GHook93
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    I love how a 9/11 truther talks about lies and creditability!:cuckoo:
     
  6. Midnight Marauder
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    Midnight Marauder BANNED

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    What a smackdown for Bozo. Again. Interesting he never worries too much about Democrat lies, but instead spews regurgitated idiocy he's been spoon fed, without the slightest modicum of original thought or research of his own. Which clearly shows he's not interested in truth at all.

    One would think after his infamous "Fox lied about Dodd" gaffe, he would be more cautious about his parroting. But since he's so self-loathing, he probably doesn't care that he's a clueless oaf, a anal-dwelling butt-monkey wind-up phonograph for the left, who plays whatever record they put on his platter.

    Instead of a jack-in-the-box, he's the local hack-in-the box!

    Welcome Bozo, to another shredding of your own making. Dick head.
     
  7. DiveCon
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    DiveCon gone

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    seems several of the AOHell n00bs are just like him
    he has company now
     
  8. Toro
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    Smoot-Hawley was not the cause of The Depression but it certainly exacerbated it.
     
  9. Agnapostate
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    Agnapostate BANNED

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    Come now, we've gone over this before! :cool:

    As mentioned to you previously, it's largely a myth that the U.S. relied on fairly neoliberal trade policies before the introduction of the Smoot-Hawley tariff, a claim made by even so prominent a figure as your beloved Bhagwati. In reality, the tariff rate remained in the average range established since the Civil War period. In 1875, for instance, the average rate ranged between 40 and 50%. In 1913, the average tariff rate on manufactured products was 44%, whilst the 1931 rate was only 4 percentage points higher at 48%.

    More than that, the analysis of Smoot-Hawley itself having significantly deleterious direct effects is a dubious one. What's more insightful is to examine the role of the additional factor of deflation. Irwin's The Smoot-Hawley Tariff: A Quantitative Assessment is commendable in this regard. Consider the abstract:

    So as previously mentioned, this business about the damaging effects of Smoot-Hawley is just another element of traditional "free market" rhetoric that turned out to be false, I'm afraid. As I've mentioned to you many times now, the use of strategic trade policy (namely interventionism) to protect infant industries ultimately plays a critical role in the establishment of solid capital markets, inasmuch as such industries are given time to "grow up" and thus become competitive. Dynamic comparative advantage is thus maximized in this manner, providing greater utility benefits than immediate static comparative advantage maximization.
     
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    Last edited by a moderator: Apr 10, 2009
  10. Toro
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    This is silly.

    First, you cite a study that estimates tariffs fell by as much as 10% due to Smoot-Hawley. That is a significant amount, given that the economy contracted by about 45%. So, yes, Smoot-Hawley exacerbated the Depression. It did not cause it, but it certainly contributed to it.

    Second, most tariffs in America at that time and today were not and are not on "infant industries." They are to protect mature domestic production. So your infant industry argument regarding the Depression is irrelevant.

    Let's look at an original commentary by The Economist in 1930.

    What infant industries in agriculture was Smoot-Hawley protecting?

    To say that Smoot-Hawley didn't have an effect on the curtailment of trade and growth is bizarre.
     
    Last edited: Apr 10, 2009

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