Donald J “Smoot-Hawley” Trump – It’s Déjà Vu All Over Again

by: Brent Smith at the Common Constitutionalist

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Here we are again – our government doing what they do best – picking winners and losers. President Trump has done a lot of good things for this nation thus far, but protectionist tariffs aren’t one of them.

The first protectionist tariff, the “Dallas” tariff, was enacted in 1816. It happened again in 1824, in 1828, the infamous “Tariff of Abominations,” in 1832 to fix the problem in 1828 (which it didn’t), and in 1842, the “Black” tariff.

All these were passed to benefit the Northern States at the expense of the South, and all were major contributing factors in the run-up to the Civil War. No, the Civil War was not just about slavery.

And then there was the infamous “Smoot-Hawley” tariff of 1930. It was named after its authors, Utah Senator Reed Smoot and Oregon Congressman Willis Hawley. The purpose was to support U.S. farmers who had been ravaged by the Dust Bowl.

By the time 1930 rolled around, practically every legislator had added protections to Smoot-Hawley for their states’ industries. The bill ended up with proposed tariffs on 20,000 individual imported goods. Does this sound eerily familiar to anyone? It’s why bills are thousands of pages long – to attempt to hide such things.

This time, instead of agriculture, our government has chosen the American Aluminum and Steel industries to be the temporary winners. Yay! read more

The Greater Depression

**Note** What have we always said, A Big Government Progressive is a Big Government Progressive. Sides of the aisle do not matter.

 

You can’t say we haven’t been warned. Despite the high debt price tag  resulting from the government intervention and arbitrary price controls designed  to “spur the economy” during the American Great Depression, modern politicians  on both sides of the aisle are more than willing to repeat the same mistakes.  Interestingly, just as Herbert Hoover is blamed by leftist historians (but I  repeat myself) for leading us into the Depression with his so-called free-market  policies, so is George W. Bush blamed for his “capitalistic” tendencies. This is  nonsense of course, both Hoover and Bush implemented interventionist economic  policies that were exactly the antithesis of free-market capitalism. And both  were succeeded by men who took their economic strategies (i.e. political  compromises) and opened them up to full-throttle. What Hoover and Bush began,  FDR and Obama have respectively finished.

In his book, America’s Great Depression, Murray Rothbard sets the  record on Hoover in proper perspective:

Hoover’s role as founder of a revolutionary program of government planning to  combat depression has been unjustly neglected by historians. Franklin D.  Roosevelt, in large part, merely elaborated the policies laid down by his  predecessor. To scoff at Hoover’s tragic failure to cure the depression as a  typical example of laissez-faire [meaning “allow to act,” or  free-enterprise] is drastically to misread the historical record. The Hoover  rout must be set down as a failure of government planning and not of the free  market.

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We’re Hummin Now

By Ed Carson, INVESTOR’S BUSINESS DAILY:

The U.S. economy added 227,000 jobs in February vs. expectations for 206,000, continuing a recent trend of decent hiring activity. The unemployment rate held at 8.3%.

But America remains mired in the longest jobs recession since the Great Depression. It’s been 49 months since the U.S. hit peak employment in January 2008. And with nonfarm payrolls still 5.33 million below their old high, the jobs slump will continue for several more years.

The previous jobs recession record — 47 months — came during and after the comparatively mild 2001 recession, which saw unemployment climb to only 6.3%. The average job recovery time since 1980 is 29 months, not including the current slump.

The labor market won’t truly return to health until some 10 million positions are created to rehire all those who lost their jobs and to absorb new workers.

The longest jobs recession in decades coincides, not coincidentally, with the longest stretch of anemic economic performance on record.

U.S. gross domestic profit hasn’t risen 4% or more in any quarter since the first quarter of 2006. That’s by far the longest such stretch on record going back to 1950. The only other sizable sub-par stretch was a three-year span from late 2000 to mid-2003 during the prior recession and sluggish recovery.

The current expansion, which began in mid-2009, is particularly disappointing, given the deep recession that preceded it. The best growth was a three-quarter run of 3.8%-3.9% gains.

After the severe 1981-82 recession, the U.S. economy enjoyed a five-quarter stretch of 7% or more — following a 5.1% annualized gain.

The U.S. economy is up just 6.2% above the level at the end of the recession vs. 14.9% in the 10 quarters after the 1981-82 slump.

President Obama may take hope that the U.S. economy has picked up from near-stall speed to a modest pace in recent months. But after the mild 1990-1991 downturn, the U.S. economy rose tepidly for a few quarters before growing more than 4% in every quarter of 1992. That still wasn’t enough to keep the first President Bush from losing to Bill Clinton.

And nobody is predicting 4% growth in 2012.

 
 
 

Can’t Find a Job?… Join the Club

The True Unemployment Rate: 36%

By: John Hayward

How would you define “Unemployment?” Statistics on unemployment are bandied around in the media all the time. Changes in these statistics are hailed as good or bad news for the President, with varying degrees of emphasis from the news networks, depending on which party the President belongs to. But what do these statistics truly measure?

Would you define “unemployment” as measuring “people who want a job, but can’t get one?” This is, broadly speaking, the definition embraced by the Bureau of Labor Statistics. The trick to making those numbers dance lies in measuring “people who want a job.”

The widely reported U-3 unemployment metric, currently standing at 8.3 percent, is very aggressive in shaving off people who have not made recent efforts to find work. It is further distorted by massive “seasonal adjustments,” which made over a million people vanish into thin air last month.

This is why the official unemployment rate gets lower when the American workforce contracts. Workforce contraction is a very bad thing. People who simply cannot find work, and languish on unemployment insurance for years, are the last thing a prosperous country needs… but those people don’t count in the official unemployment rate.

For example, if everyone under the age of 25 abruptly stopped looking for work, it would be an economic disaster, but the official unemployment rate would go down, because the pool of people looking for work would get smaller.

(That’s not quite as far-fetched an example as it might sound, incidentally. Even the heavily-massaged U-3 unemployment rate currently sits at 23.2 percent for ages 16-19, and 13.3 percent for ages 20-24… and it’s about two percent higher for young men. Policies that increase the cost of labor, such as minimum-wage increases and mandated benefits, have a particularly punishing effect on young entry-level workers, since their labor has less intrinsic value than experienced older employees.)

This is precisely what has been happening under Barack Obama. The workforce is contracting with horrible speed, but it has the beneficial side effect of making the official unemployment rate go down a little, although 8.3 percent is still pathetic.

The Administration bounces happily before the cameras and announces its policies are “working,” and job creation is now “on the right track,” even as their best months post job creation only slightly in excess of population growth – and they’ve only had a few such months.

Pundits begin wondering if the old political rules that say re-election is impossible with unemployment over 6 or 7 percent might not apply to this President, if he can campaign on a slowly declining unemployment rate.

Another side effect of the way our unemployment statistics are prepared, and reported, comes when America’s employment picture is compared to the figures from other nations. Are the unemployment statistics reported from, say, Greece or Italy calculated in precisely the same manner as the American U-3 rate? If not, then how can we make valid comparisons between them?

Since the concept of people who aren’t looking for work is so fluid, and some of those people have clearly been persuaded not to look for work because of job-destroying government policies, it might be more logical to measure unemployment using the standard incorrectly offered by the Bureau of Labor Statistics for the U-3 rate: “total unemployed, as a percent of the civilian labor force.” That’s what the U-3 rate claims to measure, but it doesn’t, not by a long shot.

What is the current percentage of working-age Americans, eligible to participate in the civilian labor force, but not currently working? Answer: 36.3 percent.

That’s the worst labor participation rate in three decades, and it’s part of the worst employment picture we’ve seen since the Great Depression. Labor force participation is the number we should really be looking at, even more than the unemployment figures cooked up on the monthly basis by the Bureau of Labor Statistics.

Those figures have their uses as well, but it seems reasonable to measure the overall health of the economy by the number of people who simply are not participating in the labor force.

This would always be a much higher number than the BLS unemployment statistic, even when the economy was humming along at maximum power.

There are always going to be working-age people who drop out of the labor force, for reasons that have nothing to do with the nation’s overall economic health.

The labor force participation rate hasn’t exceeded 67 percent in the past decade, so we would be looking at a true “unemployment” number that bounces between roughly thirty and forty percent.

The difference between good and bad percentages is relatively small, which makes the true “unemployment” figure less sexy for news coverage, and therefore less useful to politicians… but it’s more logical to measure small changes in a large, accurate number than big changes in a small, largely fantastic number.

Writing at Red State, Rep. Jim Jordan (R-OH), who chairs the House Subcommittee on Regulatory Affairs, Stimulus Oversight, and Government Spending, offers an eye-popping chart measuring the effect of President Obama’s “stimulus” policies on workforce participation:

Jordan writes in support of the Jobs Through Growth Act, a package of dramatic reforms that includes a flat tax with two low rates, reduced corporate taxes, regulatory relief, and increased domestic energy production.  Those are the sort of changes America needs to make, if we want to do more than fiddle with imaginary unemployment numbers, whose very definition is subject to “adjustment” on a massive scale.  Those who define “unemployment” as “the number of working-age Americans who aren’t working” should waste no time on small reforms.