The Smoot-Hawley Tariff

[@bemore7410]

Before Smoot Hawley unemployment was right around 8% which was high at the time because of the market crash, a year after Smoot Hawley was implemented it jumped to 16-17% and then a year after that it was about 9 percentage points higher. The bleeding leveled off after it was repealed but didn't decrease until involvment in WW2 for 2 reasons. 1. Continual government medaling in the Economy. See government imposed maximum wages, agricultural production maximum and the new deal 2. When a significant portion of the population went off to war there were the same number of jobs for a smaller population. Government intervention in the Economy has unintended tradeoffs. FDR was responsible for ending Smoot Hawley but is also responsible for prolonging the depression. The only presidents that could have done worse than Hoover and FDR would be other presidents that cant let free markets be.

[@seppschulz]

Greetings. Just a quick question. In his paper Irwin argues that Smoot-Hawley amounted for just 4.2% of the GNP. Also the efficiency loss is related to the GNP not the GDP....That got me a bit confused :/ Is it GNP or GDP ??

[@IonSterpan]

Indeed Irwin talks about GNP throughout the paper. GDP and not GNP should be a more reasonable measure to use because the tariff applies to a domestic economy, not to permanent residents wherever they be located. Perhaps that what Tyler Cowen had in mind. However we should refer to GNP only, the referent for Irwin's figures. More importantly, Smoot Hawley does not account for 4.2 of GNP. Total imports were 4.2 of GNP. This 4.2 decreases by 41 percent, and, according to Irwin, Smooot Hawley has only caused 22 percent of this decrease. Therefore, even if we impute the 10 percent export loss of value due to later retaliation, to Smoot-Hawley, the overall efficiency loss due to Smoot Hawley cannot go higher than 0.4 % of GNP.

[@halflanding1900]

This is very interesting as we’re always told that the Smoot-Hawley Tariff is one of the major causes of the worsening of the Great Depression. But I found a video where Douglas Irwin - I’m assuming it’s the same person - seems to argue that this tariff was a really bad idea. So what should I make of this seeming discrepancy?? This is the video: kzbin.info/www/bejne/iGTdp32baLCir9k