Mark Jones wrote:
>Incidentally, the Godley paper lays policy emphasis on import controls. This
>looks like impish humour, since it is hard to imagine how such a policy
>could be implemented without doing even more damage. As Jim Devine says, the
>cure is worse than the disease:
>
> >>To summarize, U.S. prosperity was fragile even before late 1929, due to
>the process of over-investment relative to demand and the international
>environment. Then the Crash, restrictive fiscal and monetary policy, and
>protectionism interacted to break the unstable prosperity and to accelerate
>the downward movement. This movement involved the famous
>"multiplier/accelerator" interaction, reinforced by wage-cut induced
>underconsumption, debt deflation, and international interactions. <<
>
>[(The Causes of the 1929-33 Great Collapse: A Marxian Interpretation, by
>James Devine) ]
>
>The effects of any form of undisguised wall-to-wall US protectionism on
>world trade today would be presumably, completely catastrophic, the debacle
>even worse than 1929-31. Is the Godley view that this debacle is inevitable
>anyway, so it's a case of sauve qui peut?
As my old friend Steve Zeluck used to say, the devil can quote scripture.
Anyway, I think it's a big mistake to generalize from the 1930 Hawley-Smoot
tariff to current-day issues. (It's quite common for the "free trade
vulgaris" crowd -- e.g., Krugman -- to fall for this trap.) The GATT (now
called the WTO) is aimed specifically at preventing trade wars of the type
that H-S spurred. In any event, the world political economy has changed,
undermining the political basis for "protectionism" (as I argue later on in
the paper that Mark quotes). When the components of a car are imported for
assembly in the U.S., that makes even the direct benefits of protection
more ambiguous. Further, the power of the main political forces for
protection has faded, at least in the U.S.: these are nationally-oriented
manufacturing, narrow-minded labor unions, and domestic agriculture. As I
further argue in the paper, these days it's not protection that encourages
depression as much as a world-wide process of competitive austerity and
export promotion encouraged by the US and its IMF and World Bank and by the
competition to attract capital investment by offering low wages, pliable
work-forces, etc.
It's important to realize that in my full story of the origins of the Great
Depression (http://bellarmine.lmu.edu/Faculty/JDevine/depr/Depr.html.), the
H-S tariff plays only a small role. (It's sort of like Jar Jar's role in
Star Wars Episode I: bad but ultimately unimportant. When I see the Jar
Jar-free version of SW Ep I, I'm sure it will be just as bad as the
original.) Further, it was a _product_ of an international political
economy centering on aggressive nation-state-to-nation-state competition of
a sort we don't see in the rich capitalist world these days. It also hit a
world economy that was ready to fall. It should also remembered that the
early-1920s US tariff _promoted_ US prosperity, unlike H-S. Back then, BTW,
it was Republicans, not Democrats, who liked tariffs. Protection was the
main Republican activist economic policy.
I'm not big into protectionism: it can create jobs in one country by taking
jobs away from workers in another. Or -- in the VERY exceptional case of a
H-S tariff -- it can destroy jobs for both.
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
