NYT Editorial: Those Who Ignore History ...
... The beggar-thy-neighbor policy-making that spread in late 1920s and early 1930s should provide a bleak warning. The United States first sparked depression across the world when it started raising interest rates in 1928 to curb stock-market speculation, forcing other countries, whose currencies were fixed under the gold standard, to do the same to stem an exodus of reserves. But it spread and deepened as the United States and other countries responded to slower growth and falling exports by erecting trade barriers.
World trade contracted 60 percent between 1929 and 1932. Industrial production in the United States and European countries fell by more than 35 percent. Unemployment topped 30 percent in Germany. The price of Malaysian rubber fell 84 percent, and that of Argentine wool tumbled 72 percent. Beginning in 1931, all big Latin American countries defaulted on their debt. Japan invaded Manchuria in 1931. Hitler came to power in 1933.
The world is different today. Economic links have deepened as companies have set up worldwide production networks. Multilateral institutions, including the World Trade Organization and the International Monetary Fund, police an open economic order. We have learned some of history’s lessons. But not enough.
Russia and India are already raising tariffs on cars and steel. Anti-dumping tariffs are on the rise around the world. The European Union is reintroducing trade distorting subsidies. And the “Buy America” clauses in both the House and Senate versions of the fiscal rescue package are disturbingly reminiscent of the Smoot-Hawley tariffs levied by the United States in 1930....
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World trade contracted 60 percent between 1929 and 1932. Industrial production in the United States and European countries fell by more than 35 percent. Unemployment topped 30 percent in Germany. The price of Malaysian rubber fell 84 percent, and that of Argentine wool tumbled 72 percent. Beginning in 1931, all big Latin American countries defaulted on their debt. Japan invaded Manchuria in 1931. Hitler came to power in 1933.
The world is different today. Economic links have deepened as companies have set up worldwide production networks. Multilateral institutions, including the World Trade Organization and the International Monetary Fund, police an open economic order. We have learned some of history’s lessons. But not enough.
Russia and India are already raising tariffs on cars and steel. Anti-dumping tariffs are on the rise around the world. The European Union is reintroducing trade distorting subsidies. And the “Buy America” clauses in both the House and Senate versions of the fiscal rescue package are disturbingly reminiscent of the Smoot-Hawley tariffs levied by the United States in 1930....