Search

Begin New Search Topic Economics Publishing Institution The Cato Institute

71. Peddling Protectionism: Smoot-Hawley and the Great Depression

Author:
Daniel Griswold
Publication Date:
09-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Let me preface this review with a confession: As an advocate of free trade, I love to link the 1930 Smoot-Hawley tariff bill with the Great Depression at every opportunity. More than 80 years after its passage, the bill still evokes negative feelings about protectionism. After reading Douglas Irwin's Peddling Protectionism: Smoot- Hawley and the Great Depression, I can see I need to curb my enthusiasm. Irwin does not defend the bill, far from it. He concludes that it failed to achieve its objectives and that it did, in an incremental way, make the Great Depression worse. But in the careful language of the professional economist and historian that he is, Irwin documents in rich and often colorful detail that the most infamous trade bill in American history had less impact than either its advocates or its opponents understood at the time or understand today. Even so, the story of Smoot-Hawley offers valuable lessons for today as our politicians seek to craft U.S. trade policy in the 21st century. Irwin is superbly qualified to write the definitive history of what was officially the Trade Act of 1930. A professor of economics at Dartmouth College, he has authored Against the Tide: An Intellectual History of Free Trade (1996), and Free Trade under Fire (3rd ed., 2009).
Topic:
Economics
Political Geography:
United States

72. Herbert Hoover: Father of the New Deal

Author:
Steven Horwitz
Publication Date:
09-2011
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Politicians and pundits portray Herbert Hoover as a defender of laissez faire governance whose dogmatic commitment to small government led him to stand by and do nothing while the economy collapsed in the wake of the stock market crash in 1929. In fact, Hoover had long been a critic of laissez faire. As president, he doubled federal spending in real terms in four years. He also used government to prop up wages, restricted immigration, signed the Smoot-Hawley tariff, raised taxes, and created the Reconstruction Finance Corporation-all interventionist measures and not laissez faire. Unlike many Democrats today, President Franklin D. Roosevelt's advisers knew that Hoover had started the New Deal. One of them wrote, "When we all burst into Washington ... we found every essential idea [of the New Deal] enacted in the 100-day Congress in the Hoover administration itself."
Topic:
Economics, Markets, Political Economy, Financial Crisis, and Governance
Political Geography:
United States and Washington

73. Social Security's Financial Outlook and Reforms: An Independent Evaluation

Author:
Jagadeesh Gokhale
Publication Date:
10-2011
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Social Security is often described as a "foundational" element of the nation's social safety net. Almost all Americans are directly affected by the program and many millions primarily depend on its benefits for supporting themselves during retirement. But the program's financial condition has worsened considerably since the last recession, which began in 2007. In that year, the Social Security trustees estimated that the program's trust fund would be exhausted by 2042. The trustees' annual report for 2011 brings the trust fund exhaustion date forward to 2038. Indeed, the programs revenues fell short of its benefit expenditures in 2010 and it appears unlikely that significant surpluses will emerge again under the program's current rules. If the program's finances continue to worsen at this rate, it won't be long before the debate on reforming the program assumes an urgency and intensity similar to that during 1982-83, when imminent insolvency forced lawmakers to implement payroll tax increases and scale back its benefits.
Topic:
Economics, Government, and Human Welfare
Political Geography:
America and Ethiopia

74. The New "Supercommittee": An "Optimistic" View

Author:
Jared Lobdell
Publication Date:
11-2011
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
An October New York Times story remarked that “with just five weeks until its deadline, a secretive Congressional committee seeking ways to cut the federal deficit is far from a consensus, and party leaders may need to step in if they want to ensure agreement, say people involved in the panel's work.” We have this “supercommittee” of twelve members of Congress, ostensibly for the purpose of cutting a minimum $1.2 trillion from our deficit, chosen by four appointers, none agreeing with any other on exactly what ought to be done, representing mostly diametrically opposing wings of two parties with irreconcilable differences.
Topic:
Debt, Economics, Global Recession, Monetary Policy, and Financial Crisis
Political Geography:
United States

75. Fannie, Freddie, and the Subprime Mortgage Market

Author:
Mark A. Calabria
Publication Date:
03-2011
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The recent financial crisis was characterized by losses in nearly every type of investment vehicle. Yet no product has attracted as much attention as the subprime mortgage.
Topic:
Economics, Government, Markets, and Financial Crisis
Political Geography:
United States

76. Lawless Policy: TARP as Congressional Failure

Author:
John Samples
Publication Date:
02-2010
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
The U.S. Constitution vests all the “legislative powers” it grants in Congress. The Supreme Court allows Congress to delegate some authority to executive officials provided an “intelligible principle” guides such transfers. Congress quickly wrote and enacted the Emergency Economic Stabilization Act of 2008 in response to a financial crisis. The law authorized the secretary of the Treasury to spend up to $700 billion purchasing troubled mortgage assets or any financial instrument in order to attain 13 different goals. Most of these goals lacked any concrete meaning, and Congress did not establish any priorities among them. As a result, Congress lost control of the implementation of the law and unconstitutionally delegated its powers to the Treasury secretary. Congress also failed in the case of EESA to meet its constitutional obligations to deliberate, to check the other branches of government, or to be accountable to the American people. The implementation of EESA showed Congress to be largely irrelevant to policymaking by the Treasury secretary. These failures of Congress indicate that the current Supreme Court doctrine validating delegation of legislative powers should be revised to protect the rule of law and separation of powers.
Topic:
Economics, Monetary Policy, and Financial Crisis
Political Geography:
United States and America

77. Globalization: Curse or Cure? Policies to Harness Global Economic Integration to Solve Our Economic Challenge

Author:
Jagadeesh Gokhale
Publication Date:
02-2010
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Globalization holds tremendous promise to improve human welfare but can also cause conflicts and crises as witnessed during 2007–09. How will competition for resources, employment, and growth shape economic policies among developed nations as they attempt to maintain productivity growth, social protections, and extensive political and cultural freedoms?
Topic:
Development, Economics, Globalization, and International Trade and Finance
Political Geography:
Global Focus

78. Short Sales Bans: Shooting the Messenger?

Author:
Laurence Copeland
Publication Date:
09-2010
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
In response to the recent financial crisis, many governments chose to ban or restrict short sales, hoping to mitigate the impact of the stock market downturn. Stock markets function as a continuous election, held to determine the allocation of resources with buyers voting for and sellers voting against investment in particular stocks. Banning short selling is akin to disenfranchising the "no" voter, thereby creating a distortion in the resource allocation process. Ban-induced price distortions damage the integrity of stock prices among investors and potentially cause stocks to expand beyond what is optimal for the firms and the economy.
Topic:
Economics, Markets, Global Recession, and Financial Crisis
Political Geography:
Washington

79. The IMF and Its Barbarous Relic

Author:
Judy Shelton
Publication Date:
09-2010
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The International Monetary Fund has a wonderful heritage, a priceless legacy. It was created for the loftiest of economic purposes—to provide a stable monetary foundation to facilitate free trade and international capital flows—and to provide hope to a world beset by vicious and destructive war. Its architects, Harry Dexter White and John Maynard Keynes, surmounted personality clashes and political strains to carry out the mission that garnered their mutual respect: to establish optimal conditions for achieving world prosperity and world peace.
Topic:
Economics and International Monetary Fund

80. A Market-Based Regulatory Policy to Avoid Financial Crises

Author:
Luigi Zingales
Publication Date:
09-2010
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
When it comes to “saving capitalism,” dealing with the “too big to fail” doctrine is a top priority. This doctrine has increasingly become the government policy on this issue, and it is probably the most dangerous policy for capitalism we can imagine. It under- mines capitalism in many ways: not only does it make the system less stable, but it also undermines the moral basis of capitalism. If you have a sector or a set of institutions where losses are socialized but where gains are privatized, then you destroy the economic and moral supremacy of capitalism. Either we deal with the perverse incentives created by this doctrine or we undermine the long-term sustainability of capitalism. So it is really important to think what we can do against this too-big-to-fail policy.
Topic:
Economics