This month, next Sunday actually, will mark an anniversary of sorts that only the most nerdy of economists might note. If economics truly is the dismal science, and it is, then it doesn't get much more dismal than sitting around remembering the birth of the Smoot-Hawley Act of 1930. It was signed into law by the unfortunate Herbert Hoover on June 17 of that year.
Smoot-Hawley was a tariff act, proposed by Sen. Reed Smoot and Rep. Willis Hawley after the stock market crash of 1929. The idea was to put tariffs on imports to this country to "protect" American jobs. The effect, however, was to make the depression a Great one, and one that would last many more years as other countries retaliated with their own tariffs.
The president at the time was warned again and again by economists that the law would do much damage, but President Hoover went with his gut and politicial instincts. (Sound familiar?) Both proved disastrous for the American economy and Americans. Mr. Hoover, it should be noted, was a one-term president who lost the next election from Seattle to Miami, from New York to Los Angeles. So much for his political instincts.
As for current events, we must have missed one bit of news when it came out several weeks ago, but somebody brought it to our attention this week. Did the current occupant of the Oval Office, Donald J. Trump, really say that farmers would take tariff retaliation on the chin because they're good Americans?
We don't want to be accused of being fake news, so we went to the video. Here are his remarks at the White House on the subject, and they're easily found with Google:
"If we do a deal with China, if during the course of a negotiation, they want to hit the farmers because they think that hits me, I wouldn't say that's nice, but I tell you, our farmers are great patriots. These are great patriots. They understand that they are doing this for their country. And we'll make it up to them. And in the end they're going to be much stronger than they are right now. Don't forget that farmers have been trending downward over an eight-year period. Their numbers have trended downward. And in some cases, significantly. So between NAFTA and China and all the things we're doing, we're going to make them much better than they've ever been . . . . Like I say, it's not nice when they hit the farmers specifically because they think that hits me."
Where to start?
Farmers apparently will just take the short-term damage to their bank accounts because they're good Americans, or at least Trump supporters. Besides, there aren't many of them left anyway, and their numbers are trending down. But the ones that are left are still kinda important, so in exchange for being hurt this year, we'll make it up to them, somehow, in the future.
One-third of the soybean crop in the U.S. goes to China. Along with soybeans, Arkansas produces a lot of pork. Both are on China's hit-list in response to President Trump's tariff threats, and in some cases, actions.
Candidate Trump once said he could shoot somebody and not lose votes. He even picked fights with Gold Star families and the NFL. He hasn't paid a political price for any of that. But if American farmers don't object to decreasing revenues this fall, President Trump might earn the sobriquet "Teflon Don."
Editorial on 06/08/2018