OPINION – The last time the United States waged a trade war, the nation was in the throes of the Great Depression.
President Herbert Hoover is credited with the economic misfortunes of the nation that led to Black Tuesday – Oct. 29, 1929 – the day when economies big and small crumbled and fortunes were lost overnight as the Great Depression launched into a cataclysmic economic event later exacerbated by a drought that crippled America’s farmlands. At the time, Hoover was desperate for a quick fix.
The result was the Smoot-Hawley Tariff Act, which hiked tariffs on more than 20,000 products imported into the United States. The legislation triggered retaliatory moves by the industrial world that crippled the global economy.
The tariffs were so severe that nobody bought much from anybody as a policy of international protectionism put the brakes on market trade.
The global economy was gut-shot, bleeding out revenues as the effects of nationalism and singular interests took hold. Imports and exports were halved. The global community was divided sharply. There were no winners.
The results were devastating.
Unemployment in the U.S. soared by more than 600 percent.
In the first year alone, 744 banks failed. By the time the Great Depression ended, more than 9,000 banks had closed.
Bankers called in all debts, but nobody had the money to pay them off.
Construction and capital investment came to a screeching halt.
Interest rates soared.
Prices and salaries were slashed by 20-50 percent, although the debt remained constant.
Industrial production in the U.S. plummeted by 46 percent; wholesale prices dropped 32 percent; crop prices were driven down by 60 percent; and foreign trade tumbled by 70 percent. The numbers were equally severe across the world economies.
Hoover begged businesses to hold the line, keep people employed and not cut salaries, all to no avail. Capitalism, you see, does not work that way. You go for every red cent you can lay your hands on and the rest of the world be damned.
The government felt the impact as the treasury found itself with empty coffers. But, you cannot tax people on money they do not earn, so the government was strapped for cash as well.
The system failed.
For all of the faux rah-rah talk today about the economy, those with some serious gray matter between their ears realize the U.S. is diving headlong into the shallow end of the revenue pool and that a serious recession is about to hit.
Now, even with all of the safeguards in place to prop up the market, the fact is that if there’s no money coming in, the system will become overburdened again, critically so, and we could be on the threshold of economic catastrophe.
In other words, now is not the time to start putting the squeeze on the nations of the world because, as we have seen already, nobody is willing to pay the price of higher tariffs without massive retaliation.
We study history to educate ourselves with lessons from the past to protect our future.
It seems, however, that the dog ate the president’s homework as he takes his wrecking ball into dangerous quarters.
It took the United States about 10 years and World War II to emerge from the Great Depression.
Although we have a potential enemy out there right now, an all-out conflict with North Korea would do almost nothing to refill the coffers. In fact, the expense of rebuilding the damage to that region from such a witless excursion would far outweigh any short term economic recovery within our borders.
While you may like the crude, “get tough” language being put forth by the president, understand that he’s whistling in the dark.
Already his tariffs are having a negative effect on farmers, particularly those who raise soybeans, who are being punished by high tariffs China. Farmers courted China heavily for years to open up trade only to see it crumble.
Pork exports are also beginning to fall because of retaliatory tariffs slapped on by Mexico and China – who both import large amounts from the U.S. It will hurt deeply because pork has a very low profit margin. The same fate awaits those who grow apples, potatoes or make cheese.
So you will soon be able to bring home the bacon for a lot less because they have to do something with the surplus. That is if you keep your job, your salary remains stable and you can afford it.
Then there are the losses that will be suffered when South Korea, Japan and greater Europe add on their retaliatory tariffs.
The hope, all along, has been that the rest of the world would not call the president’s bluff, that it would buckle at the tough talk and bluster of an administration that, we are learning, is actually not very adept at the art of the deal.
You see, the real art of the deal is when both sides walk away from the handshake satisfied that the other hasn’t picked its pocket.
You cannot stick a gun in somebody’s ribs, lift their wallet and expect them to remain a friend, which is what is happening in the global community, particularly with good and loyal neighbors like Canada and Mexico.
An American president should have more cred, more trustworthiness than a Times Square pickpocket.
An American president must realize that to hold a position of import and influence in the business world he or she must be fair, honest, trustworthy.
An American president must realize that blackmail, bullying and arrogance are the turf of despots and tyrants who hold the remainder of the world in little regard, unless they want to build new hotels in some foreign place or use cheap, slave labor working in Third World factories to manufacture their goods.
Nothing good is going to come from these tariffs, from this trade war.
There will be no good will built, no heightening of respect, no building upon years of friendly cooperation. It’s every man for himself, except the lifeboats are filled.
Ostensibly, this president was elected because he billed himself as the epitome of good business practices, an icon of industry, a wise and clever negotiator.
The reality, however, is that there really were no good business practices employed, his industriousness came on the backs of the impoverished in his employ and his negotiation skills are unremarkable, as evidenced by his getting taken during meetings with the North Korean strongman. I shudder to think what will happen when he meets with Vladimir Putin later this month, although we will likely not see the Russian president pull the president’s strings in public.
And, as far as the economic decisions being made, all we can say is trade wars, what are they good for?
Absolutely nothing.
No bad days!
Ed Kociela is an opinion columnist for St. George News. The opinions stated in this article are his own and may not be representative of St. George News.
Email: [email protected]
Twitter: @STGnews, @EdKociela
Copyright St. George News, SaintGeorgeUtah.com LLC, 2018, all rights reserved.
Good Eddy.. Good.. let the hate flow through you.
Since we already have a name for Dumpster we’ll call you “the turd”, you’re like one of those stubborn turds that just fights being flushed down the crapper and takes multiple flushes. Poor little sad video game addicted basement-dwelling troll. Bless your heart <3
Sounds like you need some anger management much like Ed Kociela.
Whatever you gotta do to feel accomplished.. after all it’s your feelings that matter most
Why do you always blame everybody else for your failures? You need counseling! You failed at life and your’e miserable, we get that but loosen the grip on your own short hairs dude! You might break a blood vessel. Actually we don’t give a crap what you say! Comments, you are about as pleasant as an itchy rectum! hahahahahahahahahahahahaha!
A good recession would be beneficial for our area. Less materialism, more cooking at home. Fewer cars on the road. Growth would slow a bit. I’m in favor
You must be a socialist at heart.. I assume you are for open borders as well?
Scott, there is no way that you are from “our area” if that means southern Utah. You need to go back to “your area”. We don’t need self serving sore losers here. Please take your wishes for the failure of society and return to wherever you came from.
Ed, a broken record called. It says you are repeating yourself.
Hahaha… seems like he never left “the EDdge.” Maybe he might jump this time… into reality
Ed is on the edge? Maybe some one should give him a push! hahahahahahaha!
Thought I’d jump in here….
Saw that Kociela wrote an article.
Didn’t read it….
Safe to say though it’s liberal journalistic trash.
See you later.
I guess you really demonstrated your close-mindedness with that comment. So typical of you folks, your way or the highway, no room to consider some position other than your own.
Ed, I got my MBA in International biz back in 2005. I was in China consulting when HK was still a British Colony. I specifically studied Chinrse non tariff trade barriers and negotiation. With the exception that Trade Wars are bad, which most people would agree, your entire article is bull pucky. President Trump stands correct that we need to renegotiate trade agreements. China is no longer a struggling third world country that needs developmental help. And yes, you have to negotiate / renegotiate trade arrangements especially where there has been an imbalance for decades. NAFTA is ancient and outdated. There is CAFTA too. What about our technology being ripped off? Yep, it could get rough, but that is part of negotiation. I whole heartedly disagree with you. Finally we have a President that is going to bat for America. Oh gee, remember when President Clinton had to give back $1 million in campaign contributions because it came from a Chinese national? We have been sold out by previous administrations. HELLO. It is hust in the nick of time. Your watching too much CNN dude. Try CNBC. Biz news. Larry Kudlow used to be a regular. Although biased, they present factual news, as investors would tune out otherwise. And they are not Trump friendly. Do your homework.
I sure can’t agree with you on many of your points. You say T rump is going to bat for America? I say T rump goes to bat for T rump (and his family/friends-including Putin?) and not much more. Putting tariffs on Canada and Mexico based on national security? He’s got to be joking. At least Clinton had the integrity to return the contribution from some Chinese national when he found out about it. When will this guy acknowledge the contribution he got from a foreign government, especially an adversary? Investors are not T rump friendly? How, then do you explain that the stock market hasn’t tanked (yet) despite T rump and his shenanigans?
T rump? Either you can’t spell or are in third grade. All you snowflakes are the same. Pompous blowhard idiots
How is it going John? Did you forget your password for your main account? Trolling from your phone?
Okay, I apologize. It’s Donald T Rump, then.
Ed, you’d probably agree with Bill Maher:
“Comedian and talk show host Bill Maher said he hopes an economic recession will occur because ‘… it’s a way to get rid of President Trump.’ ”
https://www.snopes.com/fact-check/bill-maher-recession-get-rid-trump/
That’s a little bit scorched earth, especially since I think Pence would be as bad or worse for the country, if that’s possible. I wouldn’t look forward to some Evangelistic type telling us how to think and act as I’m afraid he would. It’s bad enough, already, with what is happening to the Supreme Court.
You mean common sense and integrity returning to the Supreme Court? That must be what you meant
You gotta be kidding me…
Maher has always been self-interested. And his “joke” is an abomination. Millions of Americans would suffer in a recession. Nobody should wish for that outcome.
But sadly the early indicators are already there. We should all be preparing for such a possibility.
Right on, Ed. Of all the ensuing comments, I don’t see one that rationally and informatively refutes your points. Sure, China is playing unfairly, we’ve known that for a long time. However, the TPP agreement that T rump deep sixed addressed that. It also included a plan to manage their aggressive trade incursions in the Asia area and solidified our interests. Can someone, based upon factual history point out to me where isolationism has worked in the modern world? The righties like to ignore these points. They also like to forget the GWB attempted to do tariffs and abandoned that plan when it was clear that it was failing. What’s so different now? I’m afraid that this bone-headed idiot will be too stubborn to admit he fornicated up and will continue to the detriment of so many segments of our system, especially us consumers-in the long run. I truly believe that he could give a damn about the majority of us Americans-and our allies, as long as he panders to his base. It’s sickening, and scary.
Here is a full fledged Ed groupy. Don’t forget to spit
Don’t know about being an “Ed groupy”, but at least the man can put together his rational thoughts and comments without the “hahahahah’s and wahwahwah’s of so many of you who criticize his comments.