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Thursday, April 03, 2008

Hoover's Heirs

Wall Street Journal editorial on what not to do facing a possible recession, i.e. follow the lead of Herbert Hoover:

In 1930, he signed the Smoot-Hawley Tariff Act, setting off a wave of protectionist retaliation that undid the globalization of the preceding decades and did far more harm to the world economy than the stock-market crash ever did. Two years later, amid a bad recession, he undid the Calvin Coolidge-Andrew Mellon tax cuts, raising the top marginal income-tax rate to 63% from 25%. The recession became a Depression.
I have to admit I wasn't aware of either Hoover's tax increases or tariffs, either, but I will pass the blame onto my high school, college, and graduate schools. Here is what Wikipedia says on Smoot-Hawley:

Economists have now generally regarded this Tariff Act (i.e., tax increase on imported goods) as the greatest policy blunder in American economic history ...
{sarcasm}What? A greater blunder than NAFTA? {end sarcasm}

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