OK, I tried to give Terry an "out" from what is arguably the most counterproductive plank of Pat Buchanan's proposed platform for the Republican Party. But instead he chose to lash himself to Pat's protectionist mast.
While I can't match his historical quotesmanship on the subject of mercantilism, as a libertarian-leaning free-trader, I can cite something more recent and certainly more relevant to the contemporary debate: the lead editorial in Tuesday's Wall Street Journal. That leader, which well expresses the Reagan Republican view of the world, noted that Buchanan has joined once again with Gephardtian Democrats in backing a quota on steel imports that the Journal describes as a "prosperity killer," indeed, as "the most radical American protectionist act since Smoot-Hawley."
The Smoot-Hawley Tariff, of course, was the legislation signed by President Herbert Hoover on June 16, 1930. And a tariff is nothing but a tax on trade. As Terry notes, if one taxes something, one gets less of it. The particular danger of tariffs, however, is that other countries get involved, too, and that leaves the possibility of a vicious cycle of ever-escalating trade-warring. This dire fate was exactly what an extraordinary committee of 1,028 prominent economists warned against in an open letter to Hoover a month before he put his signature on Smoot-Hawley. "Our export trade would suffer," they wrote; "countries cannot permanently buy from us unless they are permitted to sell to us, and the more we restrict the importation of goods from them by means of even higher tariffs, the more we reduce the possibility of our exporting to them." Of course, nothing in the economists' open letter wasn't to be found in any intro textbook, but Hoover and his fellow Republican Congress flunked the economic policy test; perhaps they were hypnotized by too many obsolete quotes from the 18th and 19th centuries. As a result, a recession deepened into the Great Depression.
But we should remember that this isn't an exchange about economics; it's a discussion about the Republican Party. By that reckoning, protectionist policies are Kevorkianist politics. Not surprisingly, Republicans Hoover, Smoot, and Hawley were removed from office at the voters' next opportunity. Indeed, the entire party was devastated by Hoovernomics: After winning seven of nine presidential elections from 1896 to 1928, it lost the next five in a row. GOP strength in Congress plummeted, too: Its senatorial contingent shrank from 56 in 1930 to 16 after the 1936 elections. And in the House, Republican ranks fell from 267 to 89 in the same de-Hooverizing six-year stretch.
Republican Ronald Reagan learned a lesson from those years, and he deserves most of the credit for the bull market of the last 17 years--by implementing diametrically opposite policies from Hoover. He not only slashed income tax rates and opened up the domestic economy to entrepreneurs and investors but also put forth a similarly expansionist agenda for the world; in his 1979 presidential announcement speech, he proposed a "North American Accord," which was a forerunner to the North American Free Trade Agreement.
I'll stop there and let Terry respond, perhaps with an attack on immigration, which of course is yet another pillar of our present prosperity. But by trying to draw him away from a further defense of protectionism, I'm actually doing him a favor. Because no platform is harder to defend than a return to Hooverism.