The Economist's Cookbook

Recipes For A More Free Society

  • "The curious task of economics is to demonstrate to men how little they know about what they imagine they can design."

    - F.A. Hayek

I saw this over at Vulcan's Hammer and started giving it some thought.

How to piss off our friends

Europeans are not very happy about the "Buy American" clause in the current stimulus bill:

The EU and Canadian ambassadors to Washington have already warned that the clause could promote protectionism and trigger retaliatory moves.
So I hopped over to read the BBC article.
What do I find? This:
The clause seeks to ensure that only US iron, steel and manufactured goods are used in projects funded by the bill.

A European Commission spokesman said it was the "worst possible signal".

However, German Chancellor Angela Merkel said President Obama had assured her the US would not follow protectionist policies.

Hmmm well right before the Great Depression there was this bill called the Smoot-Hawley Tariff Act. It "raised U.S. tariffs on over 20,000 imported goods to record levels. In the United States 1,028 economists signed a petition against this legislation, and after it was passed, many countries retaliated with their own increased tariffs on U.S. goods, and American exports and imports plunged by more than half. In the opinion of some economists, the Smoot-Hawley Act was a catalyst for the severe reduction in U.S.-European trade from its high in 1929 to its depressed levels of 1932 that accompanied the start of the Great Depression."(Via Wiki)

So ... we're going to try this again? Or at the least we are going to try a version of this again. This is completely asinine. It is completely out of bounds. Hell even Greenspan thinks Protectionism is a bad policy:
Protectionism will do little to create jobs and if foreigners retaliate, we will surely lose jobs.
- Alan Greenspan
When will the political parasites in DC wake up? Will they wake up if we stir them from their complacency?


3 Response for the "Shooting Ourselves in the Foot ... Again"

  1. VH says:

    It seems as we are set on repeating mistakes from the past and the current wave of populism may indeed push our economy into a terrific slump. Russell Roberts over at Econ-Talk had Robert Higgs on the show several weeks ago--Higgs argued that New Deal policies "created a climate of uncertainty that prolonged the Great Depression." I believe that Higgs comments on the Smoot-Hawley act. Oddly, Americans believe that the very same entity (government)that brought us this financial mess is going to save their hide. But at the same time I find it funny that just at a time when people have a high distrust of government they want government to provide more regulation of the economy? Unbelievable.

  2. Anonymous says:

    "When will the political parasites in DC wake up?" This, is the question of the ages..... "Will they wake up if we stir them from their complacency?" What is your proposal?

    Thanks for cranking out brain food again.

  3. Anonymous says: