Tariffs are on the scene in many ways and that is being discussed in many places — factual reports and opinion pieces and such. The world is affected, United States product costs are affected. Farming is affected. The Trump administration continues the plan, with the remedy being everything will be internally produced… or so it seems.
All of this made me think of the pop culture classic comedy film “Ferris Bueller’s Day Off”. One scene, one class, it shows how society reacts to learning about tariff effects on society and states clearly the historical relevance of tariffs on the United States economy.
Below is the quote. In a fitting coincidence, the unnamed economics teacher is played by Ben Stein who was Chairman of the Council of Economic Advisors in the Richard Nixon administration in the 1970’s. An appropriate casting to mix politics with pop culture: [Source]
In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the… Anyone? Anyone? …the Great Depression, passed the… Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act? Which, anyone? Raised or lowered? …raised tariffs, in an effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression. Today we have a similar debate over this. Anyone know what this is? Class? Anyone? Anyone? Anyone seen this before? The Laffer Curve. Anyone know what this says? It says that at this point on the revenue curve, you will get exactly the same amount of revenue as at this point. This is very controversial. Does anyone know what Vice President Bush called this in 1980? Anyone? Something-d-o-o economics. ‘Voodoo’ economics.
Now watch the scene. This is the general public to a T on this — or at least those who accept it or don’t give a shit about what’s going on:
Going serious, that’s economics and history Stein is delivering. It’s not a joke, it’s not “fake news”. This happened. And the nation was already in a state of depression. What happens now with the economy steady but being put to grief because of trade being stifled? If your answer is “just give it time, it’ll correct itself”, I’ll just point to Kansas and the long-term failure of adhering to the trickle-down economic policy.
I’ll also say to just force this, all at once, on major trade partners (as well as continental brethren Canada and Mexico) is not wisely planning out how to make things work. An impulsive act is not a long-term plan nor a sound way to lead or to be diplomatic on a political or economic level.
Economics and economic theories are complex issues. Anyone can tell me aspects that make tariff practice work. What I can’t be told is how a trade war is a “good thing”. The current occupant of 1600 Pennsylvania Avenue has made that decree in his constant socially detached manner without giving a care toward issues the action raises for the working class and businesses who rely on export.