July 1, 2011
Douglas Irwin's Peddling Protectionism
This is going to mark me as a real finance geek, but I just finished reading Peddling Protectionism: Smoot-Hawley and the Great Depression, by Douglas A. Irwin. Irwin is an economics professor at Dartmouth who has authored a number of books and articles on trade, tariffs, and the Great Depression.
Peddling Protectionism is both a history of the Smoot-Hawley Tariff Act and an examination of its consequences. The best part of the book, in my opinion, is the political history in the first chapter. Irwin really brings the debate to life, providing a close look at the involvement of Congressman Hawley, Senator Smoot, President Hoover, and the many other players in the political process. It's amazing how close the tariff bill came to failure; I wonder how U.S. economic history would have changed if we had no Smoot-Hawley
Irwin’s analysis of the economic consequences of the bill is also interesting, and convincing. Some of it might be a little difficult for readers without at least some background in macroeconomics, but most of the discussion is accessible to general readers. Marshaling a variety of statistics, Irwin concludes that Smoot-Hawley was not responsible for the Depression, but certainly exacerbated it. He also finds that, “although . . . [Smoot-Hawley] . . . was not the principal reason for the general outbreak of protectionism that so damaged world trade in the early 1930s, it was a contributing factor.” And it most certainly was a major factor in diverting international trade away from the United States.
It’s almost impossible to have a debate about international trade without Smoot-Harley coming up; it is the bête noire of free trade advocates. (Irwin begins the book with Al Gore's invocation of Smoot-Hawley in his 1993 debate with Ross Perot on Larry King Live.) That makes this book required reading for anyone interested in international trade.