Colman: The ghost of Herbert Hoover lives on.

In politics and policy the past IS the present.  What happened 500 years ago in Europe—how Italy and Germany became todays modern day States, the difference, from generations ago that caused the First and Second World Wars—still with us today.  The legacy of the Viet Nam War is with us in both military and foreign policy.  And, of course, is campus riots, bullying and hatred.  Economically, no one wants another Depression—we think we remember what caused it—tariffs and bad economic policy.

 In 1930, Congress passed and President Hoover signed the Smoot-Hawley tariff.  The tariff imposed protectionist policies. 

 The Great Depression, which began in 1929 and lasted for 10 years, was a time of massive unemployment in the U.S.  The Smoot-Hawley tariffs, which imposed tariffs on more than 20,000 imported goods, was supposed to help save American jobs.  As the Great Depression deepened, unemployment kept rising right through 1932.

 Foreign countries retaliated against Smoot-Hawley, making American exports more expensive overseas.  Jobs in America were lost.

 In 1930, American unemployment was at eight percent.  By 1931, the rate doubled to 16 percent.  By 1931-32, unemployment reached 25 percent.

 Smoot-Hawley was only one element aggravating the Great Depression.  During the Hoover years, the Federal Reserve raised interest rates, making the purchase of homes and cars more expensive.  As demand declined, American jobs were lost.

This is what we were taught and what guides current political/economic policy.  We need a better understanding of caused the Great Depression, not just look at the headlines.

The ghost of Herbert Hoover lives on. 

Richard Colman, Exckusive to California Political News and Views  5/20/19 

Mr. Hoover, president of the United States from 1929 to 1933, died in 1964.  However, Mr. Hoover’s ghost continues to influence both the Republican and Democratic Parties.

 On May 17, 2019, President Donald Trump announced that he would, for 180 days, delay any decision to impose tariffs on vehicles imported into the U.S.

America imports vehicles mostly from Japan, South Korea, and Europe.  Some of these so-called imported vehicles are made in such American states as Tennessee, South Carolina, and Alabama.

 Nissan has a plant in Tennessee.  BMW has one in South Carolina.  Mercedes-Benz manufactures vehicles in Alabama.

 If America imposes tariffs on imported vehicles, foreign nations could retaliate by imposing tariffs on such American exports as agricultural products, technological devices (like smartphones), petroleum, natural gas, and many other products.

 International trade often involves complex supply chains.  With some General Motors vehicles, the transmissions are made in South Korea and the engines in Japan.

 If one were to examine the supply chain of an iPhone, one would find that many nations  contribute to this must-have item. 

 According to a December 2018 report by CNBC, the financial news network, Apple, the company responsible for the iPhone, works with suppliers in 43 different countries on six continents to produce the iPhone.  The supply chain becomes even more complex when raw materials are factored into the iPhone’s production.

 When tariffs are imposed, prices of imports rise, creating inflation.  Also, restrictions on imports will produce a decline in product quality and prop up inefficient American manufacturers.  Many Americans can remember the 1970’s when Americans began to see a perceived decline in cars made domestically by such companies as General Motors, Ford, and Chrysler.

 Americans should ask themselves how many Chevrolet Volts they see on the road compared with the number of Toyota Priuses.

 In 1930, Congress passed and President Hoover signed the Smoot-Hawley tariff.  The tariff imposed protectionist policies. 

 The Great Depression, which began in 1929 and lasted for 10 years, was a time of massive unemployment in the U.S.  The Smoot-Hawley tariffs, which imposed tariffs on more than 20,000 imported goods, was supposed to help save American jobs.  As the Great Depression deepened, unemployment kept rising right through 1932.

 Foreign countries retaliated against Smoot-Hawley, making American exports more expensive overseas.  Jobs in America were lost.

 In 1930, American unemployment was at eight percent.  By 1931, the rate doubled to 16 percent.  By 1931-32, unemployment reached 25 percent.

 Smoot-Hawley was only one element aggravating the Great Depression.  During the Hoover years, the Federal Reserve raised interest rates, making the purchase of homes and cars more expensive.  As demand declined, American jobs were lost.

 In 1932, Franklin Roosevelt, the Democratic candidate for president, campaigned against Smoot-Hawley.

 Perhaps President Trump is bluffing.  His threat to impose tariffs may be a way of negotiating better international trade agreements.

 But if Mr. Trump is not bluffing, the U.S. could be headed for a severe recession or even a depression.

 Moreover, the Democratic Party is no help.  Democrats are, like Mr. Trump, also protectionist-minded.  Didn’t Democrats learn anything from Franklin Roosevelt and his internationalist successors like Harry Truman, John Kennedy, Lyndon Johnson, and Bill Clinton?

 Mr. Trump graduated from the prestigious Wharton School of Finance at the University of Pennsylvania.  The big question is:  Did he learn anything about international economics?

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.