Jack "Smoot-Hawley" Davis

Yesterday, Jack Davis of the “Save American Jobs” Party was Professor Hardwick’s guest on WBEN. In the past, my main complaint has been twofold with Davis’ argument against free trade. The first is that GM’s problem isn’t cheap Chinese labor. It’s subpar, unrefined, designed-by-committee GM products. They’re getting better, but the Aztek was still on sale as recently as last year.

Secondly, to prop up the Federal Government through the use of tariffs would so devastate our economy that it would become unrecognizeable. Inflation would skyrocket. The American consumer would be punished, and last time I checked, even factory workers bought things.

If Davis limited his objection to more aggressively fighting violations of WTO or NAFTA rules, or stricter enforcement of employment and environmental protections in other countries, or other problems we face viz. free trade, then that’d be fine. But a wholesale withdrawal from the world marketplace is simply idiotic.

Think of it this way: American companies do actually export goods every once in a while. If we were to slap tariffs on everything, so would other countries. There go 190-or-so potential markets for your product.

Here’s Craig from Northcoast on Jack Davis:

That’s the part of history that Jack Davis ignores. It isn’t all due to the unions of course, government played a role as did bad management. In New York State though, government wins that contest hands-down. Our income taxes, property taxes, sales taxes,Workmen’s Comp laws, and insurance requirements work hard every day to ensure that very few will attempt to do business here.

In Buffalo we’re not so much at war against Mexico and China as we’re losing out to Charlotte and Las Vegas; and Mr. Davis can’t legislate against them. Just as in the American heyday that Jack Davis touts, the US had no competition abroad, neither did it have any competition at home.

We had developed an economy fitted to its time and place and we now have to change and compete with rest of the world. Insisting that the United States return to our preferred and protected state of affairs probably won’t work. The keyword in free-trade is “free.” Arguing against that is ultimately a loser. I’d have to believe that, despite his ability to keep himself in the news, so is Mr. Davis.

You have to check out this comment to that post:

Mr. Davis talks a mean game, but his actions may speak louder than his words.

I2R certainly doesn’t buy their hydraulic components locally. In fact, the fittings on his machines are bought from a company that manufactures them in China. The reason they buy from them (according to their buyer)…price!

But when you are busy writing letters to the News, well, maybe your message doesn’t get down to your purchasing agents.

Mr. Davis’ entire crusade against free trade smacks to me of self-interest. Which is fine, but I wish he’d just say so. Because tariffs are decidedly not the answer to the question Davis raises.

Besides, we tried this in the 30s in response to the Depression. It not only didn’t help, it hurt. A little history lesson:

The Smoot-Hawley Tariff was more a consequence of the onset of the Great Depression than an initial cause. But while the tariff might not have caused the Depression, it certainly did not make it any better. It provoked a storm of foreign retaliatory measures and came to stand as a symbol of the ‘beggar-thy-neighbor’ policies (policies designed to improve one’s own lot at the expense of that of others) of the 1930s. Such policies contributed to a drastic decline in international trade. For example, U.S. imports from Europe declined from a 1929 high of $1,334 million to just $390 million in 1932, while U.S. exports to Europe fell from $2,341 million in 1929 to $784 million in 1932. Overall, world trade declined by some 66% between 1929 and 1934. More generally, Smoot-Hawley did nothing to foster trust and cooperation among nations in either the political or economic realm during a perilous era in international relations.