Posted 5 March 2016 AD
One Republican candidate says we can “make America great again” by imposing tariffs on imported goods. Question: What was the Smoot-Hawley Tariff Act and how did it make America great again?
Once upon a time, there was a president who saw the way forward to make America great again in the wake of global economic collapse that followed World War One. Initially, that president promised to impose import tariffs on agricultural goods from European farmers in order to protect American farmers who were over producing. American farmers defied common sense of free-market principles, expecting to get more money for producing more agricultural products than consumers wished to buy. I leave to you the obvious.
Preceding Smoot-Hawley, Congress enacted the punitive Fordney-McCumber Act that jacked import tariffs up to 40%. Predictably, European governments retaliated in kind. Well, Fordney-McCumber worked so well (said with sarcasm dripping from my lips), Smoot-Hawley was passed to makes thing even better for America.
It was ‘protection’ of American production through imposition of punitive taxes on imported goods that triggered the Great Depression. It was the Great Depression that paved the way for a little mustachioed Austrian student of acting to rearm Germany for world conquest.
What is that definition of insanity? Is it not doing the same thing over and over, expecting different results?
Arguably the greatest economist in our history was Milton Friedman who wisely said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”
As someone once said, the road to hell is paved with good intentions.
Free-market capitalism is very simple. It is socialism and communism that are complicated. Capitalism is the natural exchange of goods and services among a free people. Under free-market capitalism, both parties win because they each agree on the value of the exchange.
Presidents Harding and Hoover had nothing but the best intentions. As president, Mr. Trump would have the best intentions. However, misguided and uninformed intentions lead to undesirable outcomes.
This 2016 general election will be probably the most crucial of all American history.
The wise choice for president is the man who stands on the principles that truly made American the land of the free and the home of the brave. Choose wisely, my friends.