When most Americans think of Smoot-hawley pricesThey think of an economic disaster. But if you ask why, most Americans may need a short recycling lesson. Below you will find exactly that. Appearing on Derek Thompson Simple story podcast, Douglas Irwin (An economist and historian in Dartmouth) revisits the 1930 Smoot-Hawley prices law, which raised prices on more than 20,000 products imported into the United States. The law was adopted despite the warnings of leaders such as Henry Ford (who called the law on prices “an economic stupidity”) and a petition Signed by 1,028 American economists, who argued that prices would increase prices and trigger a trade war, leaving the United States isolated. Their concerns were finally founded. The prices of Smoot-Hawley, supported by a republican president and the congress, had the involuntary consequence of the deepening, and not of the end, of the great depression.
Mark Twain would have said that “history is not repeated, but it often rhymes”. But sometimes the story can repeat itself or get closer very close, and this is where we seem to be heading right now. As in 1930, we had Republicans who implement new prices, but this time in the hope of reorganizing the world economy and bringing manufacturing to America. Meanwhile, economists (Even the Conservatives) warn that these policies may repeat the errors of Smoot-Hawley.
Below you can hear the evaluation of the economic historian Niall Fergusonwho, speakingWith Bari WeissExplain why Donald Trump's prices will not manage to reindustrialize America. The golden age of manufacturing in America is long -disappearedAnd it doesn't come back, partly thanks to automation. (Morgan Housel has More to say about this.) But worse, the chaotic implementation of these policies risks triggering a trade war, “a major financial crisis comparable to the scale in 2008”, or even a military crisis that an isolated America would be poorly equipped to manage. Speaking on Meet the press This weekend, Investor Ray Dalio has disturbed very similar concerns in a disturbing manner, To say “something worse than recession” can be on the horizon.
For another socket, you can hear the conversation of Preet Bharara with Justin WolfersWhere the Australian economist warns that Trump's prices can have few advantages and mainly costs, some quite deep. By launching a trade war, America will exchange less and will note that its global influence has decreased, leaving a void that China can fill. Echoing Niall Ferguson, Wolfers also warns that you cannot put the economic clock. He notes:
A hundred years ago, we actually had the same debate, but it is because we were passionate about land, from an agricultural predominance economy, to a manufacturing economy. And we have passed on a huge share of the population working in agriculture working in manufacturing, and this increased the American middle class.
There was a lot of nostalgia. Why are we not back on the field? And the subsequent stage of economic development is that we leave the factories, and we move and become engineers and computer scientists and software designers. And we are in a much more cognitive economy.And we do not incur black soot in our mines or in our factories during the day. And it is the future of the American economy. And he is the one who talks about the skills of Americans.We are the most educated workforce in the world. And so probably the jobs of the future are those, the jobs we want are those which are aimed at the extreme productivity and education of American workers.
How have we reached the point where we are getting the same missed experiences again, all to recover an illusory economic age? This is a difficult question to contemplate, but I ask this question again. Anyone? Anyone? Anyone?
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