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Are we really back in 1929? Seems like it [1]. [1] https://en.m.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act https://en.m.wikipedia.org/wiki/Smoot–Hawley_Tariff_A

by crocal 9y ago

Are we really back in 1929? Seems like it [1]. [1] https://en.m.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act https://en.m.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act

JumpCrisscross 9y ago
The steel and aluminium tariffs were Smoot-Hawleyesque. Sanctioning emerging hostile dictatorships, on the other hand, has been standard post-War practice for the West.
- coldtea 9y ago
  >Sanctioning emerging hostile dictatorships, on the other hand, has been standard post-War practice for the West. As has been supporting emerging friendly dictatorships.
googlryas 9y ago
Some differences between the two being that Smoot-Hawley broadly applied tariffs to tens of thousands of products from most countries in the midst of a major economic depression in an attempt to help out American farmers and other related industries.
- crdoconnor 9y ago
  The preconditions to this bill sound all too familiar though: >By the late 1920s the economy of the United States had made exceptional gains in productivity due to electrification, which was a critical factor in mass production. Horses and mules had been replaced by motorcars, trucks and tractors. One-sixth to one-quarter of farmland previously devoted to feeding horses and mules was freed up, contributing to a surplus in farm produce. Although nominal and real wages had increased, they did not keep up with the productivity gains. As a result, the ability to produce exceeded market demand, a condition that was variously termed overproduction and underconsumption.
misja111 9y ago
The US has a trade deficit towards China, so China has more to lose in a trade war than the US. Therefore the US can try to impose a limited amount of trade sanctions on goods from China without getting punished for it. It seems just common sense economics to me.
- origami777 9y ago
  Do you think the limited sanctions will be effective? If I were China I don't think this is significant enough for me to stop my plan. Maybe it's intended as a warning. I don't like trump at all. But I agree with defending our country. And overall, the less we can rely on China the better.
- crdoconnor 9y ago
  >The US has a trade deficit towards Chine, so China has more to lose in a trade war than the US. The US stands to lose all of the manufactured (especially electronics) goods China makes. The supply chains for a lot of its companies (especially tech) will be severed. China stands to lose soybeans, civilian aircraft, corn and... chicken feet, I suppose? Of those, the only one that isn't easily substitutable with imports from elsewhere is civilian aircraft, and China is already pretty far ahead on making its own. I think, on balance, given the relative substitutability of US vs Chinese imports, China has the upper hand in a peaceful scenario. The US can't really replace the Chinese industrial ecosystem whereas China can get corn and soybeans from elsewhere - assuming that shipping is not blocked. ...which is why I'm worried that the US might try to escalate a trade war to blockades and from blockades to, well, you know... That said, if the US continues with a policy of unfettered trade while China continues with managed trade, China's hand grows stronger while the US's gets weaker. The US doesn't actually have a lot of good options now - it's about 15 years too late for it to safely reverse this process.
- PeterStuer 9y ago
  Is it still a "deficit" if you count all the exported social and environmental disasters?
- dnomad 9y ago
  There's nothing common sense about this. It's just stupid. But do few Americans understand economics that I can see the majority falling for it. People will happily vote to cut their own throats in order to punish some out group. For future reference the giant trade deficit has benefited the USA enormously and increased quality of of life of most Americans. The incredible thing here is not that we import so much from China but that the hyper-productive Chinese exporters and manufactures have been so willing to surrender real goods and labor for the green pieces of paper we call currency which the government can create at the push of the button. This was the trade of the century. I suspect that this will ultimately only help China and hurt America. China will be forced to develop their own internal markets and diversify their exports more -- which they've been doing already. You'll also just see more action from other low wage exporters like Vietnam. In the end Americans will just as price increases. Tariffs won't bring back jobs, reduce the extreme inequality that's killing the country nor are they real investment.
jakecrouch 9y ago
There are many other parallels that can be drawn between the 1930s and the 2010s. Ray Dalio's theory about long term debt cycles explains this in a non-ad-hoc way - every 50-75 years an economy's debt becomes too high and must be deleveraged. In a globalized economy this will happen to many countries at the same time and lead to tensions between debtor and creditor countries.
- golergka 9y ago
  I had a feeling that another World War is long overdue. At least this time we can hope to get it over with a bit quicker.
  - jakecrouch 9y ago
    This is a legitimate concern. The Revolutionary War, Civil War, and World War II are all spaced roughly 80 years apart, and all coincided with deleveragings.

by crocal 9y ago

Are we really back in 1929? Seems like it [1]. [1] https://en.m.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act https://en.m.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act

JumpCrisscross 9y ago

The steel and aluminium tariffs were Smoot-Hawleyesque. Sanctioning emerging hostile dictatorships, on the other hand, has been standard post-War practice for the West.

coldtea 9y ago
>Sanctioning emerging hostile dictatorships, on the other hand, has been standard post-War practice for the West. As has been supporting emerging friendly dictatorships.

googlryas 9y ago

Some differences between the two being that Smoot-Hawley broadly applied tariffs to tens of thousands of products from most countries in the midst of a major economic depression in an attempt to help out American farmers and other related industries.

crdoconnor 9y ago
The preconditions to this bill sound all too familiar though: >By the late 1920s the economy of the United States had made exceptional gains in productivity due to electrification, which was a critical factor in mass production. Horses and mules had been replaced by motorcars, trucks and tractors. One-sixth to one-quarter of farmland previously devoted to feeding horses and mules was freed up, contributing to a surplus in farm produce. Although nominal and real wages had increased, they did not keep up with the productivity gains. As a result, the ability to produce exceeded market demand, a condition that was variously termed overproduction and underconsumption.

misja111 9y ago

The US has a trade deficit towards China, so China has more to lose in a trade war than the US. Therefore the US can try to impose a limited amount of trade sanctions on goods from China without getting punished for it. It seems just common sense economics to me.

origami777 9y ago
Do you think the limited sanctions will be effective? If I were China I don't think this is significant enough for me to stop my plan. Maybe it's intended as a warning. I don't like trump at all. But I agree with defending our country. And overall, the less we can rely on China the better.
crdoconnor 9y ago
>The US has a trade deficit towards Chine, so China has more to lose in a trade war than the US. The US stands to lose all of the manufactured (especially electronics) goods China makes. The supply chains for a lot of its companies (especially tech) will be severed. China stands to lose soybeans, civilian aircraft, corn and... chicken feet, I suppose? Of those, the only one that isn't easily substitutable with imports from elsewhere is civilian aircraft, and China is already pretty far ahead on making its own. I think, on balance, given the relative substitutability of US vs Chinese imports, China has the upper hand in a peaceful scenario. The US can't really replace the Chinese industrial ecosystem whereas China can get corn and soybeans from elsewhere - assuming that shipping is not blocked. ...which is why I'm worried that the US might try to escalate a trade war to blockades and from blockades to, well, you know... That said, if the US continues with a policy of unfettered trade while China continues with managed trade, China's hand grows stronger while the US's gets weaker. The US doesn't actually have a lot of good options now - it's about 15 years too late for it to safely reverse this process.
PeterStuer 9y ago
Is it still a "deficit" if you count all the exported social and environmental disasters?
dnomad 9y ago
There's nothing common sense about this. It's just stupid. But do few Americans understand economics that I can see the majority falling for it. People will happily vote to cut their own throats in order to punish some out group. For future reference the giant trade deficit has benefited the USA enormously and increased quality of of life of most Americans. The incredible thing here is not that we import so much from China but that the hyper-productive Chinese exporters and manufactures have been so willing to surrender real goods and labor for the green pieces of paper we call currency which the government can create at the push of the button. This was the trade of the century. I suspect that this will ultimately only help China and hurt America. China will be forced to develop their own internal markets and diversify their exports more -- which they've been doing already. You'll also just see more action from other low wage exporters like Vietnam. In the end Americans will just as price increases. Tariffs won't bring back jobs, reduce the extreme inequality that's killing the country nor are they real investment.

jakecrouch 9y ago

There are many other parallels that can be drawn between the 1930s and the 2010s. Ray Dalio's theory about long term debt cycles explains this in a non-ad-hoc way - every 50-75 years an economy's debt becomes too high and must be deleveraged. In a globalized economy this will happen to many countries at the same time and lead to tensions between debtor and creditor countries.

golergka 9y ago
I had a feeling that another World War is long overdue. At least this time we can hope to get it over with a bit quicker.
- jakecrouch 9y ago
  This is a legitimate concern. The Revolutionary War, Civil War, and World War II are all spaced roughly 80 years apart, and all coincided with deleveragings.