It’s uncanny how some voters and politicians during the Great Recession have reacted the same as during the Great Depression — and just may make things worse.
Just like Roosevelt in ‘36, Obama and Congress are being forced into budget cutting before the private sector is ready to start spending again. It pushed the country back into recession in ‘37 and ‘38. One of the obstacles to recovery today is the tens of thousands of state and local employees who were cut in ‘09 and will be cut this year and next (not so much in Kansas, but more so on the coasts).
And the same seems to be happening with trade. Congress and Hoover in the infamous Smoot-Hawley Act of 1930 (both Smooth and Hawley were Republican) wanted to keep other countries from undercutting American business in tough economic times — and caused a huge contraction in world trade and greatly deepened the Depression. And now, we’re seeing a popular revival of the same feeling. Trade relations aren’t ideal, by any stretch of the imagination, and they certainly have contributed to the depletion of the nation’s manufacturing sector, but seriously cutting the level of trade would be hugely disruptive.
The difference, today, is that I’m guessing the pro-trade business lobby is far more powerful than it was during the 30s.