Lessons of Smoot-Hawley
In Peddling Protectionism: Smoot-Hawley and the Great Depression, Douglas A. Irwin writes on p. 99-100:
In terms of political strategy, the Smoot-Hawley tariff represented a huge miscalculation by progressive Republican insurgents…to address the farm situation through a tariff revision. The progressives believed that Congress would alter import duties in a way that would benefit their agrarian constituents…The insurgents underestimated the resistance to reducing duties on manufactured goods…They came to regret the consequences.
In fact, Irwin argues, the legislative process unleashed a special-interest orgy, resulting in a bill which harmed the agricultural sector (among others). The Midwestern progressives ended up voting in opposition, but by that point it was too late.
One moral is to be careful of what you wish for, given the legislative process. In that regard, perhaps the stimulus bill turned out to be more reminiscent of Smoot-Hawley than the New Deal. And as the Administration tees up housing finance reform, I worry that however well-intentioned the reformers may be, there are few industries in which the rent-seeking drive is more powerfull.
I received a review copy of Irwin’s book. Although I cannot get enough of this historical period and although I found his analysis persuasive, I think that for a broad audience it would have been better as a Kindle single.