Five Ways to Wreck a Recovery
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:
ยท 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 ... Read More...
