Look on the bright side of America’s current perilous state of the economy. Things can always be worse – I know that’s an uplifting thought. I mean, sure, the dollar sucks compared to the Euro (the Euro, seriously… the people who brought you the speed-o swimsuit for men, schnitzel, and socialism), no one actually spent their economic stimulus rebate checks (except perhaps for the people trying to forestall foreclosure), and the housing crisis continues, with various speculations on when the market will actually bottom out and no sign of it doing so.
But there is an up side. Although I respect the economic stimulus idea of giving us back our own money (citizens keeping their own cash, how novel), our government’s attempts to correct current U.S. economic woes have been, well, borderline stupid. However – they could have done more! So be happy – there’s a chance we’ll make it out of this without lines of Americans queuing up soup, a la 1934. Which is a good thing - I don't even like soup.
In 1930, Hoover signed into law the Smoot-Hawley tariff. Smoot-Hawley was an attempt to increase domestic market share and aide farmers, who were in financial straits due to dropping commodities prices. Of course, farmers are always in trouble; now in 2008 the government is still alternately regulating and bolstering the farming economies, which is why people in farming should probably consider more stable and lucrative careers, like becoming medical transcriptionists or selling Avon products. But I digress.
Not only did it have a ridiculous name – sounding like an STD you would get as a character in an adult Dr Seuss book – but it was a ridiculously bad idea. While the bill wasn’t signed into law until after the stock market crash in 1929, some economists believe it played a part in the crash. One of GM’s directors sent a telegram that briefly predicted the disastrous effects of the bill: PASSAGE BILL WOULD SPELL ECONOMIC ISOLATION UNITED STATES AND MOST SEVERE DEPRESSION EVER EXPERIENCED.
The international market, with their sending of goods to the U.S. discouraged by the severe penalties (13-20%), struck back with tariffs against the U.S. (surprise, surprise), and the Swiss boycotted U.S. imports entirely. Strangely enough, reducing international trade with the U.S. did not aid in our economic recovery. The Smoot-Hawley tariffs were not the only factor, but were probably a substantial factor in the U.S. experiencing a depression rather than a brief recession and a correction of inflated stock market prices.
The point of this brief history lesson is that, well, at least we haven’t been quite that stupid lately. The weak U.S. dollar may work in our favor in encouraging trade of U.S. goods on the international market and encouraging businesses to stay or return to the United States. It’s encouraged tourism and retail shopping in the U.S. from abroad. Painful as the current fiscal situation is, there is a strong possibility of it correcting itself in the near future – as long as we don’t get in the way.
After all, that’s probably not such a bad thing to hope for with our economic and foreign policy: Less Stupid Than In the Past. I’d vote for government officials with a catchy slogan like that, wouldn’t you?
Recommended reading: How to Smite Smoot. (March 27th, 2008). The Economist. Retrieved from http://www.economist.com/finance/displaystory.cfm?story_id=10926569
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