}

Watch the full video here.

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}

Watch the full video here.

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What is his point? That cheap imports are causing unemployment in our current recession, and the proper solution is to raise tariffs on imported goods. From his article:

The only conceivable way to revitalize the American middle class — the little engine of consumption that pulls the global economy — is to impose labor tariffs on imported goods, making their cost comparable to those manufactured here.

Let us now quote famous men and women writing about the Smoot-Hawley Tariff, which did almost exactly what Guzy calls for, and is near-universally derided as one of the worst pieces of legislation ever passed by Congress. Here is Great Depression historian and economist Amity Shlaes:

This lack of concern resembles many Americans’ disregard for the effects of the Smoot-Hawley Tariff Act, signed into law by Hoover in June 1930. Republicans told themselves that the tariff couldn’t hurt much since trade was a small part of the U.S. economy at that point.

But that view overlooked the signal that markets were sending. Long ago Jude Wanniski noticed that the progress of the Smoot-Hawley legislation tracked declines in the stock market. More recently Scott Sumner, a professor of economics at Bentley University in Waltham, Massachusetts, has argued that the tariff reduced investment all over the world, and therefore produced deflation.

Shlaes’ great book, The Forgotten Man, goes into much more detail about the harm of the tariff.

And now we turn to Paul Krugman for his views on the Smoot-Hawley Tariff:

Just to be clear, I don’t think the Smoot-Hawley tariff was a good thing — it was a really bad thing. Nasty protectionism! Bad Smoot-Hawley! Bad! Bad! Bad!

Krugman is clear that although he doesn’t think protectionism and the tariff caused the Great Depression, it was nonetheless a terrible idea.

When legislation makes the goods that we import, and voluntarily choose to purchase, more expensive, it limits our choices and our freedoms, and increases our costs of living. It also immediately harms the enormous number of Americans who depend on trade, shipping, and related industries for their employment, and results in retaliation by other trading partners that would limit our exports. Instituting higher tariffs for protectionist purposes is always a net loss for our economy.

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As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X or, in the better case, what A, B and C shall do for X. As for A and B, who get a law to make themselves do for X what they are willing to do for him, we have nothing to say except that they might better have done it without any law, but what I want to do is to look up C. I want to show you what manner of man he is. I call him the Forgotten Man. Perhaps the appellation is not strictly correct. He is the man who never is thought of. […]

He works, he votes, generally he prays — but he always pays — yes, above all, he pays.

Don’t take this as a specific criticism of any of the officials discussed in the News-Leader article. Even more so, don’t take it as a criticism of the programs discussed in the story, especially the great people in the Missouri National Guard. The deal to lease part of the airport may well be a good deal for taxpayers.

However — and I want subtlety to be my friend here — is it really that amazing that politicians will get along at an event where they are all either spending or receiving other people’s money? State tax dollars are being used to lease local government property, and it is supposed to be noteworthy that all the politicians are happy? It does not matter that the expenditure in this example is an arguably fully legitimate use of public money. (I’ll leave aside for a moment that it could be even better if the Springfield airport were privatized, like its competitor to the south in Branson.)

Anyone who sees public officials getting along in an instance like this and thinks that it is a notable example that bears repetition lacks an understanding of public choice economics and interest group politics.

Thanks to johncombest.com and derrickjeter.com for the story links and quote.

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There are numerous reasons why the stimulus plan is unnecessary and improper, and it’s easy to find excellent criticisms of it on the web. I think my favorite line comes from one of the writers in the second link:

“Forget the ‘stimulus’ label, this is merely additional deficit spending,” wrote Dartmouth College economics professor Andrew Samwick, on his blog.

Then there is the fairly obvious disconnect between the fact that Americans don’t save enough money, with the government’s encouragement to spend this $600 giveaway as fast as you can. How about the idea that, since the government never truly knows until a few months after the fact when our economy is in or out of a recession, we could well be on our way out of the recession by the time these checks hit — making it even more of a worthless giveaway?

My primary objection, though, is with the principle that it is the government’s job to manage our economy and to take care of people going through troubles. The government often worsens economic problems when it jumps in. (With some exceptions — and I don’t mean the Federal Reserve here, I mean the government.) I recommend "The Forgotten Man," by Amity Shlaes, for a great discussion of this subject. For all the new programs and taxes and spending, the New Deal did not get us out of the Depression. I would think most people should know that by now, but alas …

As for the article in the Star, though, I think I found the only good thing the stimulus package might do. Since the depreciation schedules would shorten for businesses, state governments might lose significant income, according to the article. If this happens (emphasis added):

“It becomes all about priorities,” Icet said. “After increased funding for K-12 education and Medicaid, you’ve got a few options, but they are very, very limited. So a lot of new programs you simply might not fund.”

So the stimulus plan might prevent the funding of new state government programs? I take back everything I said. Sounds great to me!

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