The Evils of Protectionism

by Sal on February 3, 2009

in Economy,Politics

Obama has pledged throughout the campaign to “renew our image throughout the world” through foreign policy. Yet now, as part of the Economic Stimulus bill, he will be engaging in economic protectionism, requiring all goods bought as part of the stimulus projects (such as steel, iron, and manufactured goods) be U.S. based. This will both harm our reputation in the world as well as be an economic disaster.  One of the primary causes of the Great Depression was the Smoot-Hawley Tariff Act, enacted in 1930, which had a large part in taking the recession that began around 1927 and pushing it to a full-blown depression.  Once the tariffs were enacted, a trade war began with the rest of the world, and American exports were shunned by other countries because they were not allowed to fairly compete in the U.S. with certain goods and services.

Not only would a trade war likely result as part of this provision, but it would also cause inflation, as the prices for raw goods and services would be driven up as a result of the lack of competition.  The combination of the economic crisis we now face, the heavily increased money supply from the actions of the Federal Reserve as well as the TARP program, along with these new tariffs, would likely lead the U.S. to a much deeper recession than we are already in.  Even some liberals see that these trade restrictions would be a disaster.

The stimulus plan should be renamed the Economic Depression Act of 2009, as it will serve to depress our economy rather than stimulate it.  History shows this, yet the Democrats stubbornly insist that their policies will succeed.  Unfortunately, it looks like we are doomed to repeat history.  If this isn’t Great Depression II, it will certainly be Jimmy Carter Misery Index II.  Elections have consequences.  Welcome to the world of liberalism.  Enjoy the ride.

H/T: K-Lo

{ 1 comment… read it below or add one }

Southern Girl February 3, 2009 at 9:56 am

apparently the JAs that “We the People” have elected into office to make MAJOR decisions skipped out on every single American History class they ever were “required” to attend. I learned trading concepts in EIGTH grade…again in high school and again in college.

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