Wisdom of History

A Peace Lost by Wishful Thinking: Tariffs and Trade Barriers

Tariffs and trade barriers in the 1920s and 1930s fertilized the Great Depression which, in turn, fertilized the rise of Hitler and the horror of the Holocaust. The “America First” international trade practices of the United States were particularly harmful. Why? Because in recent decades the United States had transformed itself from a developing regional economy into a dominant global economic powerhouse, rivaling the other major economic powerhouses such as Britain, France and Germany. Unfortunately, the isolationist “America First” attitude was affecting international trade policies as well as military and diplomatic policies. In short, the United States was being selfish economically as well as militarily and diplomatically. We were not accepting the responsibilities that came from our growing international prominence in economic, military and diplomatic matters.

When the Great War ended (in 1918), virtually the whole world welcomed peace.

Nevertheless, a mere twenty years later (in 1939) another world war began. We called it World War II. And so, the Great War became known as World War I.

What insights and wisdom can we learn from the 1920s and 1930s to save us from fighting World War III? And to save the Jews from another Holocaust?

Innumerable books have been written with innumerable insights.

One generally agreed upon insight is that tariffs and trade barriers in the 1920s and 1930s fertilized the Great Depression which, in turn, fertilized the rise of Hitler and the horror of the Holocaust.

The international trade practices of the United States were particularly harmful. Why? Because in recent decades the United States had transformed itself from a developing regional economy into a dominant global economic powerhouse, rivaling the other major economic powerhouses such as Britain, France and Germany.

Unfortunately, the isolationist “America First” attitude affected international trade policies as well as military and diplomatic policies.

In short, the United States was being selfish economically as well as militarily and diplomatically. We were not accepting the responsibilities that came from our growing international prominence in economic, military and diplomatic matters.

The essence of this selfish economic blunder by the United States was captured by the infamous Smoot-Hawley Tariffs enacted in 1930.

The economies of the United States and the world were already contracting after the Stock Market Crash in 1929. But instead of reversing the downward trends with tax cuts, increased international trade, and looser monetary policy, the United States engaged in Wishful Thinking.

In what ways?

—Wishful Thinking that the increased tariffs of Smoot-Harley would protect jobs in the United States by shielding our businesses from international competition; and

—Wishful Thinking that we could collect debts owed to the United States and its citizens without first strengthening the economies of those who owed us money.

Think of it as being on a basketball team that is beginning to fall behind. The way to reverse the losing trend is to work together better as a TEAM!

How?

Pass the ball more. Let more players shoot from more places on the court. Organize players in order to rebound and to defend better.

But, instead of strengthening our international team of friendly nations in the 1920s and 1930s, the United States hogged the ball. The U.S. wanted to take all the shots. The U.S. didn’t want to pass the ball so that someone with a better shot could take it. Our selfish practices hurt the whole team, including ourselves.

A famous proverb says: “We can either hang together, or we can hang separately!”.

In basketball and in economics this wisdom plays out as: “We can either win together, or  we can lose separately!”.

A comparable challenge to that of the 1920s and 1930s is playing out in the Twenty-First Century.

Why?

Because in the Twenty-First Century, China is transforming itself from a developing regional economy into a prominent global economic powerhouse, rivaling the other major economic powerhouses such as the United States, the British Commonwealth, Europe, and Japan.

In the 1920s and 1930s, the rising economic, military and diplomatic powerhouse—the United States—had been engaging in Wishful Thinking.

Similarly, in the Twenty-First Century, the rising economic, military and diplomatic powerhouse—China—is engaging in Wishful Thinking.

How?

China is still the pursuing the selfish policies of a developing regional economy instead of being a good team player with growing international prominence in economic, military and diplomatic matters.

In the 1920s and 1930s, the economic hardships fertilized by selfish United States economic policies fertilized the rise of autocratic and totalitarian movements such as those led by Mussolini and Hitler.

In the 21st Century, we are once again seeing autocratic and totalitarian movements fertilized by economic hardships.

Such dangerous movements are even being fertilized here in the United States itself, as evidenced by the violent coup attempted on January 6, 2021 and by the violence of White Christian Nationalism.

Ideally, China would join with the United States, and with our friends and allies, to work together to overcome these economic hardships, including Climate Change.

But if China refuses to be a team player, the United States, and our friends and allies, must not despair. We must not fear. We must not give up.

Instead, we must strengthen and expand our team of governments and civilizations that are of the people, by the people, and for the people.

Expand international trade. Treat each other wisely and fairly.

This will mean forging and strengthening Grand Alliances in economic, military and diplomatic matters.

Because, even the best basketball player can’t win without a team. And nobody wants to be on a team with someone whose attitude is Me First.

Nobody wants to be on a team led by a nation whose attitude is Me First.

Such “Me First” nations failed to overcome people’s hardships in the 1920s and 1930s.

And such “Me First” nations will fail to overcome people’s hardships in the 21st Century—whether the “Me First” nations are the United States, China, or anyone else.

Why?

Because people’s hardships can only be overcome a Grand Alliance of governments and of civilizations of the people, by the people, and for the people.

Because people’s hardships can only be overcome by a Grand Alliance of governments and of civilizations that secure Life, Liberty and the Pursuit of Happiness for people.

Because people’s hardships can only be overcome by a Grand Alliance of governments and of civilizations committed to the ideal America first discovered in the hearts of Abraham, Moses and Jesus. The ideal America in which

ALL people will be blessed;

ALL pharaohs will be challenged to let ALL people be free; and

ALL people will be healed.

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For the importance of focusing on how actions and policies affect people, please read my blog “It’s All About People”.

I discuss the concept of a Grand Alliance in my blog “A Peace Lost by Wishful Thinking: The 1920s and 1930s”. When Hitler stood triumphant after the Fall of France, the British turned to Churchill to save them. Churchill saved Britain by forging a Grand Alliance with Russia and the United States.

As you may know, the idea of forging a Grand Alliance came naturally to Winston Churchill because his ancestor, John Churchill (who became the first Duke of Marlborough), led the Grand Alliance in a “world war” against Louis the Fourteenth. When I read Winston Churchill’s masterful biography about his famous ancestor (Marlborough: His Life and Times (published during the 1930s)), I could see the strategies and themes coalescing that Winston Churchill wielded to guide Britain and Humanity to victory in the Second World War.

For my thoughts about the American Civil War, and about World War I and its aftermath (especially in light of post-Cold War diplomacy and the war in Ukraine), please read my blogs: “A War That Spun Out of Control: The American Civil War”, “A War That Spun Out of Control: World War I”, “A Peace Lost by Wishful Thinking: The 1920s and 1930s”, “A Peace Lost by Wishful Thinking: Blaming Germany”, “A Peace Lost by Wishful Thinking: America First”, and “A Peace Lost by Wishful Thinking: Tariffs and Trade Barriers”.