I am researching the effect on the Great Depression of the protectionist tariffs instituted with the Smoot-Hawley Act and whether or not the newly established tariffs could have the same impact on the US economy in 2018.
Could the Great Recession of 2008 be a mirror of the Depression of 1920–1921 that occurred after World War I? In October 1929, the market lost 25% over two days, and in just the last week the market fell 22% on December 21, 2018, which is significant and could be foreshadowing the possibility of economic collapse.
History has an eerie way of repeating itself. I am concerned that the last time the country imploded financially was due to policies enacted between 1919 and 1929. In those years, we implemented immigration quotas which led to a rise in illegal immigration, instituted protectionist trade practices, and preached isolationism after bailing Europe out of World War I.
With the requirement of a border wall to prevent illegal immigration, the implementation of protectionist trade policies, and the increasing isolationist tendencies of the nation in 2018, are we setting this country on the path of an economic collapse that would equal the size and scope of the Great Depression and cause a global crisis?
In a global economy, are tariffs the correct method to eliminate trade deficits or do they exacerbate already tenuous diplomatic relationships? Will building a border wall prevent illegal immigration? And, could the failure of these diplomatic relationships and increased isolationist tendencies lead us again into the chaos that resulted in both the Great Depression and World War II? I cannot answer definitively whether as a nation we are setting ourselves up for a meltdown of that magnitude, but I can see similarities that lead me to believe that without a change in course, the possibility does exist.
In the spirit of full disclosure, I firmly believed in the promises that President Trump made during his campaign for the Presidency during 2016. But, my study of history has shown that the Presidency of Herbert Hoover with its protectionist practices passed by a Republican majority in both houses of Congress (1919–1933) inadvertently sent the nation down the primrose path to economic collapse.
From 2015 through 2019, the Republican party has held the majority in both houses of Congress and have passed immigration and economic measures that are protectionist by design and only time will tell whether those policies bear the fruit of an economic collapse on the scale of the Great Depression.
Are these hypotheses flawed? And, could we also point at other periods where Democrats controlled both houses of Congress and set the nation up for an economic collapse? Yes, this thesis is reasonably flawed because other factors exacerbated by social mores, economic policies, and diplomatic alliances led the world into the total meltdown that was World War II.
What is your opinion on my premise that protectionist trade practices, isolationism, and closed borders could be setting the United States up for another catastrophic economic collapse or worse another world war? And, did the economic collapse of the Great Depression bear the fruit of World War II? I would be interested in what you think.
In the future I will examine each policy similarity in more detail with comparison/contrasting of each as it relates to history.