Five Ways to Wreck a Recovery

Five Ways to Wreck a Recovery

By Amity Shlaes
Monday, August 18, 2008; Page A11

Perverse monetary policy was the greatest cause of the Great Depression. But five non-monetary missteps were important in making the Depression great, and the same missteps damaged the global economy as well. While many are thinking about the Depression, few seem concerned about replicating these Foolish Five today:


· Giving in to protectionism. In Herbert Hoover's time, Sen. Reed Smoot and Rep. W.C. Hawley proposed a tariff that was to raise effective duties by as much as half. More than a thousand economists signed an open letter warning that the duties would "raise the cost of living and injure the great majority of our citizens."

But Hoover's Republican Party didn't much care. In its 1928 platform, the GOP had pledged to "reaffirm our belief in the protective tariff." Ambivalent, Hoover signed the bill. An irate Canada and many other nations retaliated. At a time when the United States was begging for foreign markets, it lost them. The selfish signal discouraged an already unstable Europe.

Today, international trade claims a sizable share of our economy. Bilateral free-trade agreements with Colombia or Panama are good insurance -- cheap steps that might prevent an expensive loss, that of the Western Hemisphere to Venezuela's Hugo Chávez.


Yet again, one party -- the Democrats, this time -- is cavalier. House Speaker Nancy Pelosi is blocking passage of these bilateral agreements. And another ambivalent politician -- Sen. Barack Obama -- has sent mixed messages to Canada about just how much he wants to roll back the North American Free Trade Agreement.



and more at the link [two pages]...

enjoy... [yeah, i know.. you don't believe it.. :)]
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