Wednesday, March 22, 2006

Graham-Schumer…The new Smoot-Hawley?

Those who fail to read history are doomed to repeat it, so the saying goes.

If there is one way to derail the current stellar U.S. economy with its 4% GDP growth and less than 5% unemployment, it’s to make sure that we try and make things as expensive as possible and deter entrepreneurs from selling their products here in the states by creating price floors.

This is exactly what two of our senators Lindsey Graham (R-S.C.) and Chuck Schumer (D-N.Y.) are trying to do by threatening to slap 27.5% tariffs on goods imported in from China. History has shown that tariffs never work and only end up costing the consumer and slowing down the economy as the higher prices limit the amount of goods that can be consumed, as was the case during the Great Depression.

It’s amazing how every so many years we are faced with people in government trying to become protectionist. I know the 1930’s were a long time ago but the 1980’s with our hysteria over Japan imports is close enough for us to remember. That hysteria proved nonsense as since then our economy has continued to grow while Japan, despite their big trade surplus that everyone here thinks is necessary for a strong economy, has continued to struggle.

At least when our economy tumbles we’ll know who to blame.

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