Smoot-Hawley Did Not Cause Great Depression


Democrats, desperate to shovel the fact that their socialist economic policies caused the worst financial disaster in American history, often point the finger of blame toward the Smoot-Hawley Act. As American Thinker exposes, the change in import policy had little to no effect on the economy as a whole.

What really caused the Great Depression? The exact opposite of what caused the Roaring Twenties, the 80’s rebound, and the Bush Prosperity Years. That is, a combination of high taxes, welfare spending, unfunded mandates, and budget diarrhea.

If we want to recover the economy, and bring back the economic growth America experiences in the 20’s, 80’s, and late 2000’s. then we have to bring these policies into play.

  1. A cut in the overall tax rate, the more the better.
  2. A cut in the spending of federal and state governments on entitlement programs and welfare, the more the better.
  3. The liberation of our economy from harsh federal and state regulations.
  4. A promise we can believe that government will keep these policies in place for the foreseeable future.

What will happen if we implement these policies?

One, businesses and “the rich” will keep more of what they earned—the wealth they created by creating wealth for others. That’s an incentive to work hard and create even more wealth, and dump all the resources they can get their hands on into creating that wealth. (I quote “the rich” because in some ways I am now rich, even though I have little or no cash, and we are living as someone who makes $30k a year would live. See, I am a part owner in a company that is probably worth more than a million dollars, making me close to a millionaire in net assets.)

Two, those individuals who leech off the state, either as government employees or welfare recipients, but who are perfectly capable of creating wealth through productive work, will be a benefit to the economy rather than a net drain. The remainder who are incapable of supporting themselves will be cared for with private programs that are actually cost-effective and care about the individual who needs help, rather than bureaucratic machines whose purpose is to grow fat on tax revenue and keep those they “serve” even more dependent on the state.

Three, world-wide, cash will be freed up that can be used to hire workers and fund economic expansion, cash that is currently tied up in government bonds and debt and controlled by politicians and bureaucrats. This cash will be invested intelligently to create more wealth, rather than used to force people to do things they don’t want to do.

Four, businesses will stop wasting their time and money investing in politics and lobbying the bureaucrats and representatives in government. Corruption will all but disappear because there is no money in Washington DC and the state capitols from which corporations can leech off of. Instead, they will make sound plans and invest in the long-term prosperity of themselves and thus the nation.

Every time policies like these are tried, the economy grows by leaps and bounds. The last time we had policies close to these was during the presidency of Calvin Coolidge in the twenties. The second closest in recent history is the 80’s with Ronald Reagan. And the third closest is the period during President Bush’s economic recover.

Of course, we can continue soaking the rich, using the money to pay off crony corporations and Wall Street, then using the rest to keep half of America dependent on the state, and then finally suck all the money out of the private economy you can, all the while crushing businesses under mountains upon mountains of senseless regulations. I doubt, however, that those policies would create any jobs except for jobs in government aimed at destroying our economy.


2 Responses to “Smoot-Hawley Did Not Cause Great Depression”

  1. Jerry Sherwood Says:

    These guys will not, have not, and will never use all their so-called gained wealth to help create these so-called jobs. Maybe they’ll create under the table jobs with no benefits. These guys are fools.

    • Jonathan Gardner Says:

      I don’t see why you think that. Have you ever put yourself in the shoes of a rich man?

      Let’s say you had a billion dollars, today. What would you do? Buy a new house? A new set of clothes? A big-screen TV? All of these things create jobs, because someone is getting paid for their hard work. Let’s say you decide you want to be greedy and keep the money all for yourself, so you buy stocks and T-bills and otherwise invest your money. Guess what? This money ends up in the hands of businesses trying to expand, and the only way businesses can expand is by hiring people to do work.

      Ultimately, every penny spent ends up as wages. We don’t pay the earth to take her resources. We don’t pay animals to give us their fur or skin or meat. We don’t pay crops to grow. Everything you spend will eventually end up as wages.

      The rich are careful with their money. They didn’t get rich by wasting it. They always make sure they only buy things that improve themselves. This only means that they buy things more valuable than the money spent. They create more wealth, more jobs, more good things for everyone, simply by becoming rich, staying rich, and getting richer.

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