Trump gets hit with Smoot-Hawley

A recent article (8/27/15) by the conservative economist and columnist Larry Kudlow and his associate Stephen Moore in National Review expresses concern over what the authors see as the “protectionism” of presidential candidate Donald Trump.  They raise the time-worn specter of Smoot-Hawley/Herbert Hoover and the Great Depression.  It is axiomatic that Herbert Hoover’s protectionist policies and Smoot-Hawley brought on The Great Depression.  That is the clincher in the free trade arsenal of weapons against protectionism.

According to Kudlow and Moore, free trade is all sunshine and roses.  But even President Obama acknowledges the other side of the coin:

I moved to Chicago to work with churches that were dealing with the devastation of steel plants that had closed all throughout the region. Tens of thousands of people had been laid off. There was never a federal effort to come in after those closings and to figure out how can we retrain workers for the jobs of the future, how can we invest and make sure capital is available to create new businesses in those communities. And so not only do we have to deal with our trade agreements, not only do we have to eliminate tax breaks for companies that are moving overseas, not only do we have to work on our education system, but we also have to have an intentional strategy on the part of the federal government to make sure that we are reinvesting in those communities that are being burdened by globalization and not benefiting from it.

The joker in this deck is the presumption that our dear leaders know what the jobs of the future will be and that displaced workers can be miraculously re-educated to be “world-class” competitors for such jobs:

… retrain workers for the jobs of the future, how can we invest and make sure capital is available to create new businesses in those communities.

Steel workers in their 40s and 50s are going to be “retrained” to work for Google and Facebook?  And Solyndra is the company of the future?  Mahoning Valley will become the new Silicon Valley?  This would be hilarious if weren’t so obtusely disastrous.  Add to that the additional taxes needed for additional welfare and other social services support, and the “obvious” net gain of cheaper goods is neither obvious nor even coherent as a measure of the net benefit to the economic/cultural life of a nation.

But the real point is that Kudlow and Moore treat free trade vs. protectionism as an all-or-nothing proposition.  As is generally the case, for politicians and analysts alike, the free trade argument seems to be mired in the false alternative of having to be full-blown good or bad one way or the other.  But they both have potential costs and benefits.  Navigating through Scylla (free trade) and Charybdis (protectionism) in developing economic policy is no mean feat.  Cleaving too close to one or the other can bring disaster.

To his credit, Trump’s approach is unfettered by the bipolar free-trade vs. protectionism fixation.  He is just looking for the smart trade.  That is progress, and his policies should be evaluated on that basis without bed-wetting over the ghost of Smoot-Hawley.

A recent article (8/27/15) by the conservative economist and columnist Larry Kudlow and his associate Stephen Moore in National Review expresses concern over what the authors see as the “protectionism” of presidential candidate Donald Trump.  They raise the time-worn specter of Smoot-Hawley/Herbert Hoover and the Great Depression.  It is axiomatic that Herbert Hoover’s protectionist policies and Smoot-Hawley brought on The Great Depression.  That is the clincher in the free trade arsenal of weapons against protectionism.

According to Kudlow and Moore, free trade is all sunshine and roses.  But even President Obama acknowledges the other side of the coin:

I moved to Chicago to work with churches that were dealing with the devastation of steel plants that had closed all throughout the region. Tens of thousands of people had been laid off. There was never a federal effort to come in after those closings and to figure out how can we retrain workers for the jobs of the future, how can we invest and make sure capital is available to create new businesses in those communities. And so not only do we have to deal with our trade agreements, not only do we have to eliminate tax breaks for companies that are moving overseas, not only do we have to work on our education system, but we also have to have an intentional strategy on the part of the federal government to make sure that we are reinvesting in those communities that are being burdened by globalization and not benefiting from it.

The joker in this deck is the presumption that our dear leaders know what the jobs of the future will be and that displaced workers can be miraculously re-educated to be “world-class” competitors for such jobs:

… retrain workers for the jobs of the future, how can we invest and make sure capital is available to create new businesses in those communities.

Steel workers in their 40s and 50s are going to be “retrained” to work for Google and Facebook?  And Solyndra is the company of the future?  Mahoning Valley will become the new Silicon Valley?  This would be hilarious if weren’t so obtusely disastrous.  Add to that the additional taxes needed for additional welfare and other social services support, and the “obvious” net gain of cheaper goods is neither obvious nor even coherent as a measure of the net benefit to the economic/cultural life of a nation.

But the real point is that Kudlow and Moore treat free trade vs. protectionism as an all-or-nothing proposition.  As is generally the case, for politicians and analysts alike, the free trade argument seems to be mired in the false alternative of having to be full-blown good or bad one way or the other.  But they both have potential costs and benefits.  Navigating through Scylla (free trade) and Charybdis (protectionism) in developing economic policy is no mean feat.  Cleaving too close to one or the other can bring disaster.

To his credit, Trump’s approach is unfettered by the bipolar free-trade vs. protectionism fixation.  He is just looking for the smart trade.  That is progress, and his policies should be evaluated on that basis without bed-wetting over the ghost of Smoot-Hawley.