January 9, 2009

ALL HE HAS TO DO IS AVOID THE MISTAKES OF COOLIDGE, HOOVER AND FDR:

Obama and trade: an alarm sounds (Jagdish Bhagwati, January 8 2009, Financial Times)

[T]he US president-elect’s eloquent silence on trade issues – and his failure to balance his protectionist appointments with powerful trade proponents – require that we abandon these illusions and sound an alarm.

Consider Mr Obama’s support for the multilateral trading system. It must be admitted that the Doha round is on hold and Mr Obama could not move it forward even if he so desired. A principal problem is that its completion turns critically on the US making further reductions in its distorting agricultural subsidies. But the issue has become even more difficult with the collapse of commodity prices and hence increases in support payments. Besides, history shows that the freeing of trade is nearly impossible to achieve in times of macroeconomic crisis.

But Mr Obama (unlike Gordon Brown) missed the opportunity, provided by the Group of 20’s affirmation of trade’s importance, to affirm that he attaches the highest priority to closing the Doha round and will work on this urgent task throughout his first year.

More important, Mr Obama has missed the bus on preventing a slide back into protectionism.


The presidents of the late 20s and 30s made a series of mistakes tied to: nativism, protectionism, tight money, raising taxes, trying to balance budgets, and having government spend large amounts of money instead of giving it to tax payers to spend. Just reverse the formula.

Posted by Orrin Judd at January 9, 2009 12:37 PM
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