What Else Can Government do to Extend the Recession
How about protectionism. It worked so well during the Great Depression after all.
At the last such gathering, in Washington in November, former President George W. Bush persuaded the Group of 20 members to commit to protecting free trade — whatever the pressures caused by faltering economies and lost jobs. The members include industrialized and developing nations, and the European Union.
“No sooner was the G-20 statement issued than it was breached,” said Daniel M. Price, an official in the Bush administration who helped negotiate the agreement. “Instead of just talking about trade liberalization, countries need to take immediate steps to show they mean it.”
What? You mean actually do something that might make the recession shorter? Is this man crazy?
The World Bank, in a report last week, said that since the Washington meeting, 17 members of the Group of 20 had adopted 47 measures aimed at restricting trade.
Russia has raised tariffs on used cars. China has tightened import standards on food, banning Irish pork, among other things. India has banned Chinese toys. Argentina has tightened licensing requirements on auto parts, textiles and leather goods. And a dozen countries, from the United States to Australia, are subsidizing embattled automakers or car dealers.
The most vivid example of that policy is the “Buy America” provision in the stimulus package, intended to ensure that only American manufacturers benefited from public-spending projects. The Obama administration persuaded Congress to water it down, and Mr. Obama has taken up Mr. Bush’s warnings about the dangers of protectionism.
But pressures are building on other fronts. Last week, the energy secretary, Steven Chu, said he favored tariffs on Chinese goods if China did not sign on to mandatory reductions in greenhouse gas emissions — underscoring how the “green economy” could be the next trade battleground.
Mr. Obama signed a $40 billion spending bill that scrapped a program enabling Mexican trucks to haul cargo over long distances on American roads. Mexico retaliated by imposing duties on $2.4 billion worth of American goods — everything from pencils to toilet paper.
Frankly I think this policy should be implemented at the State level. California, to try and deal with its budget mess and low unemployment can slap tariffs and taxes on all goods made out of state. Neighboring states can retaliate and thus reduce the over all total production of goods and services nationwide. After all, last quarters decline in GDP wasn’t nearly large enough.