Thursday, February 12, 2009

The anti-protectionist liars

In yesterday's Daily Mail, Peter Oborne cottoned on to something I've been banging on about for some time now - the similarities between the Great Depression and our current economic crisis.

The Great Depression arrived in precisely the same way. Here is the account given by the great historian AJP Taylor in his classic history of Britain between the wars.

'The great economic depression broke over the world in October 1929. The causes of this lay outside Great Britain, principally in the general reliance on American loans and American prosperity.

On October 24, 1929, the speculative bubble burst in the United States, and American money ceased to flow.'

I completely agree with that. American prosperity and money was the motivation behind the "globalisation" that took place in the first decades of the 20th century aided, as was this crisis, by the development of new communications technologies - principally the telephone and wireless.

I'm delighted that Oborne has seen the light and is now acknowledging that we are indeed facing a very serious economic disaster, but it infuriates me that he not only refuses to put the blame where it lies - corporatism and globalisation - but then seeks to criticise the one thing that turned the Great Depression around.

In the United States Barack Obama has already signalled that he is ready to support protectionism - the disastrous strategy that had such calamitous consequences around the world 70 years ago.

Indeed it is worth remembering that industrial production in the United States halved in the three years which followed the Wall Street collapse of 1929.

Indeed it is worth remembering - and it is also worth remembering that it wasn't until 1933 that the USA turned to protectionism - four years after the depression hit and the year which most historians agree was the turning point of the Great Depression. It was only when the USA applied the "disastrous strategy" of protectionism that they started to recover and it was only when the rest of the world joined in that we started to catch up.

And it is also worth remembering that by the time we had turned to protectionism Hitler was already in power, Japan - which had remained protectionist before the global downturn struck - had escaped the depression and was now a major regional power and the world was on course for a war the scale of which we had never witnessed before and I hope never witness again.

The thing is, Oborne must know this. He knows as well as I do that the Great Depression began in 1929. He knows as well as I do that it was preceded by a period of globalisation and he knows as well as I do that the worst of the depression happened in the years before the USA resorted to protectionism.

Either he is deluding himself or he is lying.

5 comments:

Chalcedon said...

Obourne is wrong. The Americans only achieved and then surpassed their production of 1929 in 1942. It was war orders that did it, not the New Deal. What got America out of depression was World War 2.

Now, there's a thought.

JuliaM said...

Yup, it was WWII.

I don't think WWIII would be so propitious, though...

Stan said...

It's true that they only surpassed the production of 1929 in 1942, but it's also true that the New Deal was the point at which production stopped falling and started to rise from 1934 onwards.

The USA spent four years trying to avoid protectionist measures and things got worse and worse - only when they and the rest of the world turned to protectionism did the world start to undergo a slow recovery.

Oh, and though WW2 was very lucrative for the USA (and a couple of other nations) it wasn't so rewarding for Europe.

Chalcedon said...

Ah no. We were bankrupted. The Yanks forced us to open up our trading empire to them and eventually to dismantle it. Still, at least we have paid off the loans now!

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