tariff wars we can believe in
A certain Democratic presidential candidate supports Nancy Pelosi’s opposition to expanding free trade agreements with Asia and Latin America. As Mary Anastasia O’Grady notes, it’s more of the same:
Anyone who has read 20th-century history knows the seriousness of this policy divide. The last time Washington adopted a protectionist stance toward our southern neighbors was in 1930, when Congress passed the Smoot-Hawley tariffs. It took more than 50 years to even begin to climb out of that hole.
Many economists blame Smoot-Hawley for the depths of the U.S. depression. But Latin Americans have suffered even more over a longer period. Their leaders chose to retaliate at the time with their own protectionist tariffs, but the damage didn’t end there.
…
Protectionism made a mess out of the region, and not only because spiraling tariffs and nontariff barriers blocked imports and destroyed the export sector. They also provoked an intellectual isolation as the information and new ideas that flow with trade dried up, along with consumer choice and competition. This had a deleterious effect on politics too, as closed economies spawned powerful interests which seized not only economic but political control and grew entrenched.
In case you were wondering, here’s what Obama has to say about trade:
At 7 percent of Gross Domestic Product*, our trade deficit has never been higher. Barack Obama will fight for a trade policy that opens up foreign markets to support good American jobs. He will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement (CAFTA) that fail to live up to those important benchmarks.
Shut down foreign investment (*-the flip side of the trade deficit)? Increase the price of imported goods for the middle class? Doom developing countries to poverty and dominant-industry oligarchy? Yes we can!