Month: May 2016

Myths of free trade and protectionism

Criton Crisis in Economic Thought

In October 1913, the United States broke with a solid 124-year-old protectionist tradition and enacted the Underwood-Simmons Tariff Reduction Act, lowering import tariffs by an average 5.1 percentage points.  Eight months later, in June 1914, World War One was triggered; but nobody ever thought of blaming America’s flirtation with “free trade” for the Great War.

In June 1930, the United States enacted the Smoot-Hawley Act that raised import tariffs by an average 3.6 percentage points.  The stock market had already crashed eight months earlier, in October 1929, triggering the Great Depression.  Yet there are people who to this day blame the Great Depression on the “protectionism” of the supposedly protectionist Smoot-Hawley Act that took effect long after the Great Depression had begun.

Raising tariffs does not cause depressions, any more than lowering tariffs causes war. Continue reading →

Debt, Trade and the Trump Insurgency

Image Criton Political upheaval

May 4, 2016

Donald Trump was propelled to the GOP nomination by the soaring tide of voter opposition to our national bipartisan policies on trade and immigration. Most likely he will be propelled to the presidency of the United States by the same relentless, popular (both Republican and Democratic) opposition to those same policies.

These bipartisan policies, in force without interruption since the 1989 inauguration of President George H.W. Bush, unleashed unilateral free access to US markets for foreign goods, services and workers, while simultaneously permitting our trading partners to preserve and augment their protectionism against US goods and services and to engage in wholesale theft of intellectual property and industrial espionage. Continue reading →