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Protectionism... Here we go again
Posted by: Govt is the Problem ()
Date: March 25, 2009 04:08PM

Protectionism
While there is a fair amount of debate about the causes of the Great Depression of the 1930s, there is one lesson from that dire circumstance that pretty much everyone agrees on: that the global trade war set off by the U.S. with the Smoot-Hawley Act and its many tariffs only made things significantly worse and helped prolong the depression. Further, everyone agrees that the world, faced with an economic crisis such as that now unfolding, would never make that mistake again.

But then the U.S. government went ahead anyway and slapped our trading partners in the face by including the Buy American provision in the recently passed stimulus package.

Those trading partners are starting to slap back.

First, Mexico announced this week that they would, henceforth, be foisting tariffs on a wide array of U.S.-made products… this in retaliation to the entirely disingenuous refusal by the U.S. government to live up to the terms in the NAFTA agreement whereby Mexican trucks would be allowed to drive on U.S. highways.

“Unsafe!” say the unions and their government backers, supported, oddly, by outraged talk show hosts of a more conservative leaning, whose normal free-market instincts are apparently trumped by xenophobia.

For the record, Mexico is the United States’ third largest trading partner, behind Canada and China. Even so, we all know in our heart of hearts that the Mexicans are really just looking for an excuse to smuggle drugs and illegal aliens across the border, so the hell with them! If they want a trade war, bring it on! (please note sarcasm)

Then there are the Chinese, who this week decided to institute a new “Buy Chinese” clause, at least as far as Coca-Cola buying a controlling interest in a successful Chinese juice company is concerned.

Regardless of how this stuff gets started, once it does, it can very quickly snowball, with national sensitivities getting hurt and exporters on both sides of the disputes being the ones taking it in the neck.

Too bad no one in government is actually involved in an export or import business, or any business at all, for that matter. Because then they might understand that these actions have real consequences, today, just as they did in the 1930s.

Now, don’t get me wrong. I am not so naïve to think that our trading partners don’t try to gain the system in order to help their export companies succeed in U.S. markets. But I am not so blindly nationalistic that I think we don’t try to do exactly the same thing.

Even so, for better or worse, thanks to its past success, the U.S. serves as a role model for the rest of the world and, in that regard, is held up to a higher standard. That we are willing to overtly move toward protectionism, whether by reneging on elements of NAFTA or through the Buy American provision, risks setting off a chain reaction of protectionism. Just as did Smoot-Hawley.

But we’d never make that mistake again, right?

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Re: Protectionism... Here we go again
Posted by: Vince(1) ()
Date: March 25, 2009 05:03PM

RUNNNNNNNNNNNNNNN!!!!!!!!!!!!!!!! It's the end of days...governments sometimes do stupid things!!!!!!!!!!!!! AHHHHHHHHH..if only everything was run by businessmen...who never make mistakes! At least their motivation is the worship of the almighty dollar! Who knows what evil lurks in the heart of...of...of...dare I say it....government officials! AHHHHHHHHHHH!

You dont even vote!! Your comments dont count....you are probably Gravis in sheeps clothing!



Edited 1 time(s). Last edit at 03/25/2009 05:13PM by Vince(1).

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Re: Protectionism... Here we go again
Posted by: ZZZZZZ ()
Date: March 25, 2009 05:13PM

Original Poster,
Attachments:
FAILGetalifegraph.bmp

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