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View Diary: The American System (205 comments)

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  •  Fascinating read. Ended with Smoot-Hawley? (1+ / 0-)
    Recommended by:
    mightymouse

    We now live in a world that takes it on faith that the Smoot-Hawley tariffs turned the fiscal losses of the Crash of '29 into a crushing world-wide economic depression.

    It's interesting to read a counter-factual argument on a protectionist policy.

    I don't know where the truth lies, but this is a start in my education.

    Coming Soon -- to an Internet connection near you: Armisticeproject.org

    by FischFry on Sun Dec 02, 2012 at 06:52:01 AM PST

    •  my take is this: protectionism was good (2+ / 0-)
      Recommended by:
      TheDuckManCometh, bluemeanies

      as long as we needed to develop our industries without importing things from Europe.

      The increased cost of locally made goods was worth the eventual benefits of developing our own domestic industries, which then became engines of economic growth. Since we had natural resources in abundance, we could develop our own industries without having to import raw materials from abroad.

      Then when our industries became so large that they produced more goods than we could consume domestically, we became free-traders and insisted that other countries open their markets to us so that we could sell our goods at a profit. And our economy came to depend on this.

      Smoot-Hawley caused other countries to shut their markets to us. Since our economy had come to depend on exports, this exacerbated the economic crisis.

      The domestic market couldn't absorb the surplus production that was no longer being sold abroad. And this affected industry, which in turn affected everyone else.

      Protectionism both helped build the American economy (during the 19th century), and destroy it (in the case of Smoot-Hawley).

      As with many things in life, it's all in the timing.

      "In America, the law is king." --Thomas Paine

      by limpidglass on Sun Dec 02, 2012 at 09:08:26 AM PST

      [ Parent ]

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