2. U.S. will engage in multiple foreign policy blunders based on GOPs love of Unilateral Action. (ie: blow off UN, blow off Global Court, blow off NATO, blow off WTO, blow off IMF (wow, this one is going to PISS the world off), blow off ANY environmental concerns PREEMPTIVELY(ouch!)
3. The Justices that held out from retiring because they hoped they could last through till this election will probably be REMOVED because they are so old and decrepit(I'm just being sarcastic, they will prob. just resign soon, as expected). This means Roe v Wade WILL be overturned, esp. considering the mentality that this new "healthcare for the unborn" has created. Abortion will be made illegal as a logical extention of the recent law, and the recent law will be upheld as a valid expression of the current social will of the people.
4. There will be permanent tax cuts, which will, regardless of how far down the ****hole of the economy we plunge, will be there throwing more money at people afraid to spend it(what, did you think the entire population has recently been somehow mass brainwashed to believe that its rational for them to trust in spending their hard-earned or pinched-saved money during economic crisis where they see depression all around them? uh, NO, people will STILL psychologically behave the ways they always have in emergencies that, surprise surprise, AFFECT THEM!) since they're worried about the economy that happens to need them so badly. (Keyns would TURN over and over more times in his grave than Doug J says the business cycle does)
5.Homeland security will not only be NOT unionized, it will completely unaccountable to anyone but the executive((YES, NO GOA requests, NO congressional oversight hearings, NO anything)(as Bush has stated he wishes it to be, for purposes of its "unimpaired execution")) which means private KGB for W.
6. MORE economic scandal from the administration that now has NO sectors of the government challenging it on the very things its having HIGH LEVEL CABINET MEMBERS RESIGN FOR. (OMFG, does anyone but me realize that there was NO WAY IN HELL that Pitt was just acting on his own judgments?!) Its like releasing all the criminals in all our prisons and telling them the Justice system is not there to check them anymore.
7. crap, I am so tired and am studying for test in a few hours, I'm sure I'll think of more later. lord knows there sure are countless more and each equally horrifying.
I mean hell, can't you just look up at that list and see how just one of those can so easily destroy our whole country?!?!?!?!?!?!?!?!?!?!
[This message has been edited by Cedrios (edited November 06, 2002).]
Or completely non-existent. You think Saddam doesn't know if we go to war he's TOAST? You think he doesn't understand the consequences of us waiting for the U.N. to act? If we wait for the U.N. to make sure things get done he'll just be able to do whatever he wants. On the other hand, if we move alone . . . well, we move alone.
What's the OBVIOUS solution? We make a REALLY big stink about wanting to be able to go to war on our own, then sit and give Saddam evil glares while the U.N. does their thing.
So . . . what does it have to take to make that work?
Saddam has to think we'll actually do it. You think Bush CARES that he's seen as a war-monger. OF COURSE HE DOES! IT'S ESSENTIAL. If Saddam for EVEN A MOMENT thinks this is just a show, he'll go right back to his old tricks. To make a long story short, we might go as far as deploying in readiness for a "war" will Iraq . . . but I don't think we're ever going to attack.
Think about it . . . why the hell would Bush go to the U.N. in the FIRST place if ALL ALONG he intended to actually move unilaterally anyway.
I don't think this has to do with Iraq at all. I think he's trying to make the U.N. something OTHER than completely useless. So . . . he'll use his "warmonger" image to ACTUALLY keep the peace, while letting the U.N. ACT like they're reining him in. When Saddam finally allows the inspections . . . or gets invaded with approval of the U.N. it looks like the U.N. just effectively forced the U.S. into submission as well as Iraq.
But throughout all of this . . . it CANNOT EVER look like a show.
And if any of you out there ACTUALLY think Colin Powell has EVER had ANYTHING less than the full support of good ol' G.W. in ANY MATTER AT ALL, I think y'all are underestimating just how sly our current president really is. You just watch how the . . . difference of opinion between Powell and the white house always seems to play into G.W.'s hands. It always leaves him a variety of options . . . leaves that bit of uncertainty open as to what's REALLY going on. The man is a master at keeping his opponents off balance. You think it's an ACCIDENT that with all the 'unpopular' decisions he's been supposedly making, the Republicans have managed to WIN seats in congress? You know why that happened? The Democrats couldn't figure out which way was up!
Perhaps I'm giving G.W. too much credit. But I certainly won't underestimate the man.
Ced, even IF I conceeded that any and/or all of those points you raise are so disastrous, I STILL would theorize that NOT A SINGLE ONE will actually happen.
But time will tell. And once again . . . I could be wrong.
The oldest Justice is John Paul Stephens at 82 or so. Appointed by Ford( a Republican) and considered one of the most liberal judges on the bench. The next two in age are Rheinquist(SP) at 78 and O'Connor at 72. Then you get Ginsberg at 69 who was appointed by Clinton. I can easily see the Chief Justice bowing out, maybe to be replace by the youngest member of the court, Clarence Thomas. How would that be? The first black Chief Justice of the Supreme Court will be named by a Republican.
I think you are blowing it out of proportion. Why are you bothered that the President will get to name justices that will interpret the law and not make new law. Maybe Roe V.Wade was bad law. Just like Dredd Scott was bad law, it should be overturned.
Er ... who is calling Cedrios a "liberal"?
Posts: 44193 | Registered: Jun 2001
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Falken, the problem with war in Iraq is that Saddam knows we want him dead or jailed now. He is the most wanted man, in effect behind UBL, on the planet. when we star war, do you think he'd SURRENDER?!
[This message has been edited by Cedrios (edited November 06, 2002).]
1) This is a maybe, although I do think it likely
2) No idea on this one
3) While the Justices may retire, I think they might well hold out for two more years in the hopes of a regime change. Even if they retire, it would not be in the best interest of the Republicans to have the Supreme Court overturn Roe v. Wade because it is the one issue that could massively mobilize Democratic voters.
4) I think a tax cut is almost a certainty, and am concerned over the long term effects.
5) I don't mind HLS being non-union. There seems no compelling reason for it to be so. The potential for lack of oversight does concern me, and I think will concern many Republicans as well.
6) I am concerned over scandals being swept under the rug, however, this seems likely to happen anyway.
quote:when we star war, do you think he'd SURRENDER?!
Hell no. And we know it, and he knows we know it, and we know he knows we know it.
Basically, we all know that if war starts, REGARGLESS of the rest of the world's opinion, Saddam is a dead man.
So . . . as long as Saddam can weasel out of war, do you think he might? Maybe even if it means he loses his precious WMD? I think he'd go that far. And I think Bush is hoping so too. In fact, I'd bet Bush is banking on it. I think he's ALSO banking on the fact that the UN will take the credit when all turns out well. Just a thought.
quote:Falken, the problem with war in Iraq is that Saddam knows we want him dead or jailed now.
I think Bush is less concerned with that than you might think.
I have to laugh at the tax cut issue. No democrat has come out to repeal the tax cut during the election cycle. I am assuming when you say the tax cut will be permanent you are saying that based on what?
1-Democrats have a secret agenda that after they fool the people into voting for them on straw man issues they will repeal the tax cut?
2-The tax cut would remain permanent anyway since no democrat up for re-election has said they would repeal it?
Baldar, are you even aware of GOP platforms?! The Republicans want to make the tax cut legislation (which would have further reaching effects) permanent. ITS NOT PERMANENT YET. The current tax cut called for a money back move, they want to make permanent, self-renewing cuts.
[This message has been edited by Cedrios (edited November 06, 2002).]
Ced, I thought we were talking about democratic positions? You seem to be saying they will roll back a tax cut and now can't while no democrat has said it and refuses to.
I want the tax cut to be permanent, I like it. I have seen now democratic speak about pulling away from the tax cut at all. Besides if it really becomes onerous, you pass legislation stopping it. If things fall apart as you fervently (and hoplessly) pray for then a dem house and senate with a dem pres will undo it.
My point is, what part of the democrat agenda is true and what part of it is false. You seem to be indicating their position is somewhat duplicitious at best because dems are either too gutless to admit to wanting to repeal the tax cut (something everyone from Brit Hume to Tim Russert has asked dem leaders if they want to do that) or the dem's think they can pull a fast one. Which is it?
Baldar, the only reason they appear duplicitous is because the Republicans have used cheap media tricks to fork them into unworkable situations. The average voter does NOT understand complex economic theory, or why the government should spend money when the economy goes bad. The democrats appear "gutless" because if they did spoke up, the Republicans would be "right" that those "crazy" democrats want to "steal" your money.
The GOP wants to make the ever so popular tax cut permanent. do you realize that that kind of permanent fiscal policy, once entrenched, would be nearly impossible to revoke because the people would want it and wouldn;t care about the longterm good of their economy?!
[This message has been edited by Cedrios (edited November 06, 2002).]
There's a happy medium between high and low taxes where the economy does the best. As far as I'm concerned, though, it does better when the lions share is burdened by those at the top.
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Sometime next year, after I finish reading my aristotle, I think I'm going to write a blurb about how he's taking over the world again. That happy medium thing he thought up applies to everything!
Animist: It's not so bad being a liberal... every once in a while.
Y'know, I hadn't really thought about what these elections meant, not as of yet. But in response to that very first post... Oh sh*t.
1. We're going to war, Johnny get your gun. Bush has made too much bluster about war to back down, and I don't credit anyone in politics with the character to nobly commit political suicide. He went to the UN first so that he could say, "Well, we only acted unilaterally because nobody else was brave enough to stand up to Saddam. It's not like we just all of a sudden decided to start blowing stuff up w/out consulting ANYone." 2. Oh yeah. That's for sure. 3. I don't know if Bush'll risk inspiring Democratic holy wrath like that, but if he does, then the oh sh*t holds. 4. I don't know if they dare to make more tax cuts, god knows they've screwed the budget over enough anyway. 5. There's that secret police for ya. Gotta love 'em. I don't think he's extreme enough to get a KGB yet, or at least not stupid enough. But in the future, that's what'll end up happening. 6. There's always scandal, but I actually prefer the Republicans in the scandal department because they do a better job of keeping their scandal in one category: that of economics. Dems go all over the place. 7. Actually, if you flunk the test, then you'll have more time to post, so I'll have more posts to read, so it really benefits me for you to flunk that test.
Now we just need a witty song about hell in a handbasket...
Money has more weight when it is spent by individuals than government. So as an economist I can tell you it is better for more people to have money in their pockets than in government coffers. Hence the tax cut.
Posts: 3834 | Registered: Apr 2002
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The great depression was caused by the great panic, poor investment by many individuals, but more than anything else an overly protective government that passed Smoot Hawley and effectively shut down international trade.
Posts: 3834 | Registered: Apr 2002
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You need to stop getting your history from light reading in the national enquirerer. It is not so simple as "the gilded age" question (which is a straw man actually).
Lets look at what you say:
quote:They tried to sustain this boom by issuing impossible amounts of credit, ignoring Hoover's attempts to shut down the laissez-faire economics. The economy wasn't developed enough to handle the artificial circulation, and collapsed under its own weight.
then you on to say..
quote:Depression's a fairly good argument against supply-side economics as well as elitism, if you don't consider them as one and the same. No demand for the extensive product.
You contradict yourself first by stating it was not a laissez faire issue with Hoover interfering with markets, and then you turn around and say conservative economists (and I assume that you know the difference between conservative economics and political conservatives). I find your position to be little more than that of an intellectual gadfly, not sure where you want to light, but then you end up not taking any stand, just complaining.
In 1922, the United States Congress, fearing a flood of European imports after the war, passed the Fordney-McCumber Tariff Act. It was carried out to protect domestic business, much of which was agriculture. In 1930 working with President Herbert Hoover, Congress passed the Smoot-Hawley Tariff. The legislation increased duty imports as high as 50% on goods. A thousand economists did something historical, they agreed on something, and in a petition begged congress not to pass the Smoot Hawley act. Well, industry was protected (seems politicians felt invincible, not business). The effects predicted by 1000 economists came about accurately.
Other nations responded, raised their own tariffs to similar draconian levels. US exports dried up, US imports dried up, no one was spending money to export autos, or to import products, money in essence was hoarded by countries. It was too expensive to buy a vehicle from the US, we could not buy materials and textiles from other nations (paying 50% more). Other countries, still weakened by earlier war reparations, debts had their ability to export destroyed and soon began to disintergrate. Without foreign markets, consumer products created a huge surplus and debt for companies that had planned to export could not be paid, people were laid off.
When people were laid off, money to buy dried up, surplus goods were being sold at below original cost, but no one had money to spend on it. Unemployment then jumped from 8% to 16% the following year.
During the entire "Gilded Age" as you call it Eddie, nothing like this happened. What stopped it then? What was the causality that turned an economic downturn into a great world wide depression? It can be placed squarely on Smoot Hawley, Hoover (personally a great humanitarian in the Jimmy Carter sense, you should look up his history), was lead by some short thinking politicians to go against the "invisible hand" of the market and interfere with the domestic economies of business.
The Crash of 1929 gave us 8% unemployment. Smoot Hawley gave us 1931 16% percent unemployment. And it destroyed world trade for 10 years.
I suggest you do some research before you put your foot in economic waters Eddie.
you seem to be overstating the case, the National Center for Policy Analysis has a good discussion, please note
quote: Even taking the largest reasonable estimate of the impact of Smoot-Hawley, however, it could not by itself be responsible for the length or depth of the Great Depression. After all, the Fordney-McCumber Tariff of 1922 was as large as Smoot-Hawley without having any significant impact on economic growth. Also, Smoot-Hawley was substantially undercut by the Reciprocal Trade Agreements Act of 1934. The length and severity of the Great Depression, I believe, primarily resulted from a disastrous monetary policy by the Federal Reserve.
No I am not overstating the case, but you seem to be reading more into what I said. We had an economic depression, we might very well have rebounded from that economic depression, we did not based on Smoot Hawley. I did not say it was "the only cause" but it was the primary cause for the worsening of an economic depression into a world wide ten year depression.
From your source:
quote:The reason why the market crashed well in advance of the tariff becoming law is because markets are forward-looking, and quickly capitalize any policy that will impact on future profits. Fred Kent, Director of the Bankers' Trust Company, confirms that this is what happened in 1929. In a speech on November 11, 1929, Kent said, "As soon as dealers in securities, who were constantly on the watch for indications as to business conditions, realized that this feeling of uneasiness (on account of the tariff bill) was spreading throughout industry, they began selling stocks."
The market crash in 1929 resulted in 8% unemployment. After Smoot Hawley it doubled, how do you explain it?
quote:After all, the Fordney-McCumber Tariff of 1922 was as large as Smoot-Hawley without having any significant impact on economic growth.
Bruce Bartlet did not do his homework here. If he did he would have told you that Fordney-McCumber Tarriff Act of 1922 established a tariff commission to raise tariffs by as much as 50% and was not as direct as Smoot Hawley Tariff which directly raised tariff's by 50% on 20,000 items. The difference between announcing you are buying a gun and announcing you are firing a gun. I would also like to point out that in 1922 the growth of the economy was not as shakey, there were no real economic crisis in 1922. Smoot Hawley magnified to an incredible extent a small economic depression to a much larger world wide depression.
In conclusion two things disqualify your points.
1-Fordney-McCumber Tarriff Act of 1922 was a commission with authority to raise tariffs.
2-1922 was not 1930 and the economy of 1922 was still growing and vibrant. That vibrance could diminish bad legislation. 1930 was an economic depression (though not yet the "Great Depression" of world wide status), the poor economy, going through such a cycle was effectively killed by bad legislation.
So I believe you are under a misunderstanding of the two acts, as was Bartlett. I will add that your source raises some additional impacts that also enhanced the depth of the depression, specifically:
quote:Of course, there are many other factors that contributed to the length and severity of the Great Depression. Taxes were sharply raised in 1932 and 1935, for example, and the New Deal also bred a maze of government regulations that impacted heavily on business confidence. But in the end, I am convinced that a protectionist trade policy in conjunction with mistaken Federal Reserve policies were the main factors that caused the U.S. economy to shrink by 27 percent between 1929 and 1933. The lesson of history, therefore, may be that we should be especially careful about making policy mistakes in these key areas.
I believe he raises some excellent points here. I would like to note that none of these issues speak to Eddies diatribe.
quote: No I am not overstating the case, but you seem to be reading more into what I said.
quote: We had an economic depression, we might very well have rebounded from that economic depression, we did not based on Smoot Hawley.
The author gave clear reasons as to why he believes Smoot-Hawley was not a significant factor in why we failed to recover, he suggested it was due based on improper money management by the Fed. Given the circumstances surrounding the Great Depression, I believe the depth and length of the depression may largely have been inevitable even without Smoot-Hawley.
quote: I did not say it was "the only cause" but it was the primary cause for the worsening of an economic depression into a world wide ten year depression.
Whereas I disagree. A world wide economic depression was already in effect. Smoot-Hawley almost certainly steepened the rate of drop off (just as the terrorism steepened the rate of drop off for our current recession.) However, there is little evidence to suggest that it was causal in the length or depth of the depression, nor is there reason to believe that the depression might not have happened anyway. It you wish to argue that the Smoot-Hawley affected the timing of the start of the depression, I agree, but if you wish to claim it responsible for the depth and length of the depression, I must disagree.
quote: The difference between announcing you are buying a gun and announcing you are firing a gun.
Bad analogy, closer would be, the difference between giving a gun to someone else and they announce they will fire it (and do so), versus you announcing you will fire a gun (and do so).
Here is a comparison of Tariffs under Fordney-McCumber versus under Smoot-Hawley
quote: Equivalent ad valorem rates Product Fordney-McCumber Smoot-Hawley Chemicals 29.72% 36.09% Earthenware, and Glass 48.71 53.73 Metals 33.95 35.08 Wood 24.78 11.73 Sugar 67.85 77.21 Tobacco 63.09 64.78 Agricultural Products 22.71 35.07 Spirits and Wines 38.83 47.44 Cotton Manufactures 40.27 46.42 Flax, Hemp, and Jute 18.16 19.14 Wool and Manufactures 49.54 59.83 Silk Manufactures 56.56 59.13 Rayon Manufactures 52.33 53.62 Paper and Books 24.74 26.06 Sundries 36.97 28.45 Total 38.48 41.14
Thus a total increase of 2.66% for Smoot_Hawley from the previous tariffs. Please note that these numbers are a bit dated, modern research suggests that the effective rates were quite a bit lower (ie see Archibald, Feldman, Hayford, and Pasurka "Effective Rates of Protection and the Fordney-McCumber and Smoot-Hawley Tariff Acts: Comment and Revised Estimates").
Are you arguing that if Smoot-Hawley had been slightly less direct and used a commission that then raised rates by exactly the same amount, then there would have been no depression?
quote: I would also like to point out that in 1922 the growth of the economy was not as shakey, there were no real economic crisis in 1922.
Agreed. A raise in tariff is known to have a slightly greater impact during a depression than during a non-depression. However, that is dependent upon the economys percentage of economic activity from foreign trade.
quote: If we focus on the decline in exports, we can construct an upper bound for the negative impact of Smoot-Hawley. Between 1929 and 1931, real exports declined by an amount equal to about 1.7% of 1929 real GDP. Declines in aggregate expenditures are usually thought to have a multiplied effect on equilibrium GDP. The best estimates are that the multiplier is roughly two. In that case, real GDP would have declined by about 3.4% between 1929 and 1931 as a result of the decline in real exports. Real GDP actually declined by about 16.5% between 1929 and 1931, so the decline in real exports can account for about 21% of the total decline in real GDP. The decline in real exports, then, may well have played an important, but not crucial, role in the decline in GDP during the first two years of the Depression. Bear in mind, though, that not all -- perhaps not even most -- of the decline in exports can be attributed to retaliation for Smoot-Hawley. Even if Smoot-Hawley had not been passed, U.S. exports would have fallen as incomes declined in Canada, the United Kingdom, and in other U.S. trading partners and as tariff rates in some of these countries increased for reasons unconnected to Smoot-Hawley.
quote: Smoot Hawley magnified to an incredible extent a small economic depression to a much larger world wide depression.
From what I've read, that is inconsistent with the economics literature, it more probably just hastened the decline.
quote: That vibrance could diminish bad legislation. 1930 was an economic depression (though not yet the "Great Depression" of world wide status), the poor economy, going through such a cycle was effectively killed by bad legislation.
There was some impact from Smoot-Hawley, but it does not account for the majority of the length or depth of the depression. (As shown above.)
There are a number of other factors that weren't touched on by Bartlett, such as the stock market being massively overvalued, the huge extent of trading on margin, the lack of diversification in the economy with heavy reliance on construction and automobiles for much of the economic growth (which had already began to decline prior to the crash), the fact that productivity had greatly outstripped wages, the already stagnating demand for textiles, mining, lumber, and railroads, the fact that the depression was already world wide, with europe already staggering under the huge debts of recovering from WWI, the fact that Europe had planned to raise tariffs and that the Eurpoean raises were not a result of Smoot-Hawley (as opposed to the Canadian tariff changes, which were a direct result. An act in 1934 (I think?) essentially nullified the tariff between Canada and US), the Revenue Act of 1932, the fact that 80% of families had no savings, the growth of credit debt, the rise in the size of the labor force (due to working women), the drought and dust bowl of 1931 (further impacting agriculture).
While Smoot-Hawley certainly had some impact, there is little to support your claim of extent or causality. The circumstances were such that the Great Depression may have been inevitable. Smoot-Hawley probably made the transition at the start of the depression sharper, but it is not clear that the Great Depression would not have happened anyway, nor is it clear the Smoot-Hawley had significant impact on the length or depth of the depression.
That is what I meant by 'overstating' the case for Smoot-Hawley.
quote: I would like to note that none of these issues speak to Eddies diatribe.
Agreed. However, simply because I disagree with you (in part, not completely) does not mean I agree with Eddie.
[This message has been edited by LetterRip (edited November 10, 2002).]
I think you are missing a few points here. Fordney-McCumber affected certain sectors while Smoot Hawley affected others.
You see Fordney-McCumber was a commission to establish a flexible tariff system in which tariffs could be raised or lowered based on political social issues. Smoot Hawley did away with such flexibility (sending a clear message that there would be no negotiation except through a protectionist congress) and set in stone even higher rates. No it was not a simple, someone else shoot the gun analogy either, as a matter of fact many countries held out the hope after the 1922 commission that they could still negotiate to a certain level (ie to the point where some equilibrium was established for both US industry and imports). Again Smoot Hawley destroyed the idea. While Hoover hoped it would be reflected in a closer international alignment international tariff agreements, congress used it as a cudgel.
quote: This note corrects the earlier estimates by Hayford and Pasurka (1991) of how the Fordney-McCumber and Smoot-Hawley tariffs changed effective rates of protection (ERPs) in a 39-sector disaggregation of the United States economy. With several significant exceptions, our corrections dampen the impact of Smoot-Hawley and Fordney-McCumber on effective rates of protection. The new estimates should be of use to anyone doing empirical work on U.S. tariff history or on the early years of the Depression. With our revised estimates we also compare winners and losers from the two major tariff revisions. A substantial set of industries are beneficiaries in both episodes. These include most processed foods, metal manufacturing (I-O 13, 17-18), other wood products (I-O 28), shoes and textiles (I-O 32-33, 36), and chemicals (I-O 26). In contrast, the auto industry is a large loser from both tariff revisions, presumably due to increases in input costs. Other industries benefitted from one tariff act but not the other. Agriculture's (I-O 1) ERP rose in the earlier tariff process, but declined due to Smoot-Hawley. The practical impact of this difference is likely minor since U.S. agricultural imports were quite small. Lastly, energy-related sectors were clear losers from Fordney-McCumber but not in Smoot-Hawley. Comparing the post-Fordney McCumber ERPs for energy-related industries to the pre-Smoot-Hawley ERPs shows that ERPs had drifted back roughly to their 1920 levels. The evidence is broadly consistent with a political economy story in which interest groups that influenced the tariff changes of the early 1920s were again active at the end of the decade.
So on an “aggregate basis” changes are not so large. And those original impacts are further diminished by a 1922 economy that still had a great deal of excess capacity to meet demand. But what happens when an economy is tight with little reduced demand and excess surplus? I believe the multipliers at that time have a much higher effect in 1930 then they would have had in 1922. Farmers don’t hire as many people as auto manufacturers do, and that was one of the major impacts. We know that steel mills were heavily protected under Smoot Hawley, at the time of the act there were roughly 30 automobile manufacturers in the US. The increased protection of steel mills suddenly lead to massive layoffs because those companies could no longer afford to higher and build, excess production by the way eventually is siphoned off. The assets of excess production still remain as assets of a sort and can be sold or discounted. At the time, the US’s largest trading partner was Canada and per you information source, Smoot Hawley had the largest impact . Canada retaliated impacting 18% of our exports and 11% of the imports. While the article you quoted that the impact of exports effected 21% of the total decline of GDP (one fifth of our countries total decline in industry is huge by any comparison). It seems to gloss over the export driven areas, especially where Canada is concerned. Exports were not mentioned, but if we assume that exports only accounted for half the impacts imports did we would have the impact on our GDP going up an additional 10% meaning a 30% shrinkage in total decline of GDP, this is especially bad given the excess that could have been sent abroad. Say the impact is a third and its still huge driving taking up a portion of the weakening GDP by 26%.
As to overvalued stock markets, these cycles had occurred before, even loose credit had occurred before. What was different, in my opinion, was that for the first time international trade was approaching the cusp of where we are today. More than one continent had industrialized, Japan was moving forward and industrializing at an incredible pace (something we would regret later).
quote: While Smoot-Hawley certainly had some impact, there is little to support your claim of extent or causality. The circumstances were such that the Great Depression may have been inevitable.
I think I will agree with you that Smoot Hawley may not have had as large an impact as my original statement, however you seem to be falling into the same trap. You can see that as much as 30% of the decline (in the very least 21% of the decline based on your own documentation) was caused by Smoot Hawley and wished away by the assumption that trade would have been reduced anyway regardless of the act. I say that in 1922 the surplus was not there but in 1930 the surplus in manufactured goods did exist and Smoot Hawley did not allow for it to be sent abroad at a cheaper price range. We know that a major portion of the Depression was caused by surplus in the US economy. Cheaper exports would have moved those items much more quickly (something no study presented thus far has taken into account) and perhaps gleaned off much of the excess.
Would the great World Wide Depression have occurred without Smoot Hawley? The answer is still perhaps.
From your source:
quote: Bear in mind, though, that not all -- perhaps not even most -- of the decline in exports can be attributed to retaliation for Smoot-Hawley. Even if Smoot-Hawley had not been passed, U.S. exports would have fallen as incomes declined in Canada, the United Kingdom, and in other U.S. trading partners and as tariff rates in some of these countries increased for reasons unconnected to Smoot-Hawley.
This takes into account a “static price” situation in which surplus is not treated at a cheaper level. As incomes fell, so would the prices of our exporting manufacturers. But in the end even your source states “not all, perhaps even not most” hence he is not sure. My point is that much can be attributed to it and the impact had between an impact of contributing between 21% and 30% of the overall decline in the Global Depression of that era. No terrorist activity in the US has ever been attributed to that level of impact and the comparison is weak.
Just as an add on, you raised some good points which has made me rethink the idea that the entire fault lies at the feet of Smoot Hawley, I still think much if not most does though.
Posts: 3834 | Registered: Apr 2002
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I think we might be closer on this issue than it appears, you've definitely made me consider the possible impact of Smoot-Hawley more so than I have in the past.
quote: Fordney-McCumber affected certain sectors while Smoot Hawley affected others.
quote: You see Fordney-McCumber was a commission to establish a flexible tariff system in which tariffs could be raised or lowered based on political social issues. Smoot Hawley did away with such flexibility (sending a clear message that there would be no negotiation except through a protectionist congress) and set in stone even higher rates.
Good point, I'm curious how flexible it was in practice (I've no idea on this particular point...).
quote: No it was not a simple, someone else shoot the gun analogy either, as a matter of fact many countries held out the hope after the 1922 commission that they could still negotiate to a certain level (ie to the point where some equilibrium was established for both US industry and imports).
Another good point.
quote: While Hoover hoped it would be reflected in a closer international alignment international tariff agreements, congress used it as a cudgel.
quote: I believe the multipliers at that time have a much higher effect in 1930 then they would have had in 1922.
I believe you are correct. I meant to add a note that I thought the original author I was quoting was understating the multiplier effect, but was unsure how much. Alas, forgot to put the note in as I was writing...
quote: Farmers don’t hire as many people as auto manufacturers do, and that was one of the major impacts.
quote: We know that steel mills were heavily protected under Smoot Hawley, at the time of the act there were roughly 30 automobile manufacturers in the US. The increased protection of steel mills suddenly lead to massive layoffs because those companies could no longer afford to higher and build, excess production by the way eventually is siphoned off.
This would be interesting to explore a bit more. I think the excess capacity in auto manufacture and construction that just the effects of the regular depression might explain most of the layoffs, (It'd be interesting to see the cost distributions for building cars and buildings at that time and what sort of margins they were recieving) but it is possible that the tariff protection of the steel industry played a larger role than I suspect.
quote: It seems to gloss over the export driven areas, especially where Canada is concerned. Exports were not mentioned, but if we assume that exports only accounted for half the impacts imports did we would have the impact on our GDP going up an additional 10% meaning a 30% shrinkage in total decline of GDP, this is especially bad given the excess that could have been sent abroad. Say the impact is a third and its still huge driving taking up a portion of the weakening GDP by 26%.
Actually I think the author was talking about net imports and exports and was applying his analysis to the net impact.
quote: As to overvalued stock markets, these cycles had occurred before, even loose credit had occurred before.
I don't think margin buying was nearly as extensive in prior time periods, thus the individuals of 1929, so the sharp downturn led to a much larger real loss than had happened in previous times.
quote: What was different, in my opinion, was that for the first time international trade was approaching the cusp of where we are today. More than one continent had industrialized, Japan was moving forward and industrializing at an incredible pace (something we would regret later).
Agreed that was a factor.
quote: [H]owever you seem to be falling into the same trap.
quote: Would the great World Wide Depression have occurred without Smoot Hawley? The answer is still perhaps.
Yep, I just wanted to make the point that it was possible that the Great Depression might have been inevitable. I do think Smoot-Hawley almost certainly made the GD sooner, and without it the excess capacity could have been reduced more smoothly and then the GD might have been less severe.
quote: My point is that much can be attributed to it and the impact had between an impact of contributing between 21% and 30% of the overall decline in the Global Depression of that era.
quote: No terrorist activity in the US has ever been attributed to that level of impact and the comparison is weak.
Agreed, I was trying to think of an sitatuion that a sharp decline in economic activity was caused by a shock, but that the economy was already in decline, and may have reached the same level of decline in the abscence of the shock.
Anyway, this has been a profitable discussion for the both of us.
You (and others) have made the same charges time and again: the tax cuts will primarily benefit the top 2% of this country. Above you quantifed this: 40-60% of the tax cut to them, the top 2%.
You wouldn't happen to know what percentage of the total amount of taxes taken in they pay, would you?
I'm no economist, but if I've paid $1,000,000 in taxes and you've paid $1000, and if there is to be 10% refund on the taxes, then I will be getting the lion's share, no? My $100,000 refund looks a sight better than your $100.
You could claim that out of a net rebate of $100,100, I would be getting 99% of the money, while you were only getting 1%. Put that way, it certainly sounds unfair.
"This tax cut will give 99% percent of the rebate to him, no me!"
Now, of course, that is not taking into account tax-breaks, tax-shelters, and all the other tricks the top 2% use to keep as much as possible.
But I wonder if someone could tell me what percentage of the governments tax income actually comes from the top 2% as opposed to the rest of us shmoes.
ms, Ian, do you mean total tax revenue, or total revenue from personal income taxes; the latter being a much smaller number, with a much higher percent (80%?) being paid by the top 20% income earners.
Bravo, Baldar & LetterRip for a fine discussion. But I think you both overlooked an extremely important structural change in the industrializing world's economies -- the % of total labor employed on farms. I recall it being about 25% "before" WW I (1900?), and already down to about 8% by 1930. A huge new mass of mostly unskilled menial laborers, like in "The Grapes of Wrath". (And even less glamor for the really really poor, desperate schmoes who were the "scabs".)
There's also the unknown significance of the wealth effect bubble; since the 20s were, in hindsight (like the late 90s), clearly a bubble. And a huge amount of wealth disappeared.
I'd rate the Fed's policies almost as bad as Smoot Hawley, and because they, plus the structural changes, plus the wealth bubble, ALL were aligned in the same direction, there was some significant negative "synergy" not seen before, nor since.
And I truly believe it's unlikely that we'll see such terrible multi-factor alignment. But Bush's lousy steel tarrif deal, pretty well supported by the Dems, is not pretty.
To Falken and Cedrios on War with Iraq: I believe G.W. really wants to win a war against Iraq. But he's barely willing to wait for the UN to have one more chance, and thus Saddam one more chance, to be relevant. And he's willing to wait longer, if the WMD inspectors really do look everywhere and find nothing -- GW's prolly sure they WILL find something or else be STOPPED.
And then he can win his war. But this is my own guestimate. I strongly agree he learned from Reagan's trick: make the liberal elitists think they can call you stupid while the common folk understand what you're saying. And say simple things that make simple sense. So ... I'll try not to underestimate him.
And what about 2004 -- if he wins his war in Iraq, he's a shoo-in for reelection? I think he thinks so. And how about Colin Powell in 2008 (regardless of 2004)? Wouldn't THAT break up the huge black block vote of Dem boot lickers?
At "conservative best", Roe v. Wade would get sent back to the states; where it prolly always belonged. But I find this highly unlikely.
The top 25% payed 86% of total personal income taxes in 1999. (So possibly paid 80% of all income taxes...) The top 5% payed 55.5% The top 1% payed 36.2%.
So the top 2% definitely payed less than 60%, but may have payed more than 40%.
quote: the % of total labor employed on farms. I recall it being about 25% "before" WW I (1900?), and already down to about 8% by 1930.
Eh, thought I'd mentioned it in my laundry list of stuff, but maybe not.
quote: There's also the unknown significance of the wealth effect bubble; since the 20s were, in hindsight (like the late 90s), clearly a bubble. And a huge amount of wealth disappeared.
I would include that in the margin trading I mentioned earlier. The overinflation of stock in the 90s was pretty clear for a long time.
quote: I'd rate the Fed's policies almost as bad as Smoot Hawley, and because they, plus the structural changes, plus the wealth bubble, ALL were aligned in the same direction, there was some significant negative "synergy" not seen before, nor since.
Yep, that was the point I was trying to make, that with all of the bad policy and underlying weaknesses together the combined effect was horrid, whereas any of the particular policies or weaknesses in isolation (or with minimal other weaknesses) would have had much less severe effect.
quote: And I truly believe it's unlikely that we'll see such terrible multi-factor alignment.
I doubt so as well. Although the lack of savings, amount of credit extended and indebtedness (both personal such as credit cards and borrowing against assets such as home, as well as governmental deficiets and borrowing for both the US and world wide - both real debts as well as pensions and other promised debts), and dependence upon the US economy for world economic health concern me. The dependence on foreign energy is also a concern, along with the large withdrawals of wealth from pensions that will come along with the baby boomers. I think it is possible that those factors could hit at the same time and lead to a deep and long depression.
quote: And what about 2004 -- if he wins his war in Iraq, he's a shoo-in for reelection?
It depends on the timing. If the economy recovers (which I'm not sure of), then yes. If the economy hasn't recovered, it might be an adequate distraction. (There might be other ways as well, ie a false economic recovery, which can generally be faked via war or tax cuts, or the confirmed capture/killing of Osama Bin Laden.)
Colin Power 2008 - that would be great. I'd vote for him, although I would like the house or senate to be Democrats. All three of one political party makes me uneasy.
Are you predicting something bad happening to Cheney? I see you used the word appointed instead of selected, hinting that for some reason Cheney was there and then he wasn't and that a replacement needed to be appointed. This is about the only way I can see it happening. Bush is too loyal to get rid of Cheney, unless Cheney wants to get out. Do you think it will happen before or after the election?