Obama Repeating Mistakes of the Great Depression

The Obama Administration is repeating some of the same policy errors that were made during the Great Depression that served to lengthen the economic doldrums. One of these is setting tariffs on imports in the misguided fantasy that this will save jobs.

President Barack Obama’s decision to place tariffs on tires from China may be the opening move in a campaign for fewer trade barriers, based on the strategy used by his four predecessors.

Obama announced duties Sept. 11 of 35 percent on $1.8 billion of automobile tires from China, acting on a complaint by the United Steelworkers union that surging imports were pushing U.S. factory workers out of their jobs.

Former Presidents Ronald Reagan, George H.W. Bush, Bill Clinton and George W. Bush each took action to protect domestic industries early in their terms before making free trade a focus. Obama, like Clinton, has the added challenge of trying to satisfy trade-wary Democratic lawmakers and the unions that helped them win election.

This only works if you are the only country that can set tariffs. But what quickly happens is other countries retaliate, put tariffs on your goods, and trade slows to a crawl, thus shrinking economic production. So why is Obama doing this?

Pure politics.

“It does buy him some credibility with Congress,” said William Reinsch, president of the National Foreign Trade Council, which represents exporters such as Boeing Co. and Microsoft Corp. The decision to impose tariffs may improve the prospects for congressional acceptance of new trade accords sought by the administration, he said.

That's correct. Obama is doing this just to pander to his left-wing base, to heck with the actual impact on the economy.

Now Obama wants to jack up the cost of fossil fuels through Cap and Trade specifically to make such fuel so expensive that we have to go to "green" alternatives. He admits that openly. But now he is trying to also get us to think that doing the same thing to goods like tires will be a good thing.

Amazing.

And yet, you will see economic illiterates everywhere talking about how they think the economy is improving.

Hang on folks, it's going to be a very bumpy ride, and look for the market to pull back.