In a frighteningly uncanny case of life imitating art, this well-known scene from John Hughes classic Ferris Bueller's Day Off features an economics teacher (real-life economics commentator Ben Stein) monotonously explaining the Hawley-Smoot Tariff of 1930 to his class.
Though it's now more famous for the lines "Bueller?... Bueller?..." and "Anyone?... Anyone?...", the dialogue in this scene does a pretty tidy job of explaining the tariff, which raised taxes on imports to the United States. The goal was to protect American farmers and businesses by making foreign goods more expensive. This would, in theory, encourage Americans to buy domestically made products and help pull the country out of the Great Depression.
Sound familiar?... This is one hundred percent what the Trump administration is attemptingright now (albeit in a much more clumsy, illogical and random way.) After details of Trump's tariff plan were announced this week, the global economy was disrupted, U.S. markets sank and 401(k) and other investors experienced substantial losses, including significant decreases across portfolios, retirement funds, etc.
As Stein explains in painfully boring fashion, the Hawley-Smoot Tariff did not work. Foreign nations didn’t like it because it made their goods more expensive for American consumers and those nations responded by raising their own tariffs on American goods. This created a trade war and the result was international trade decreased, hurting businesses in both the U.S. and abroad. Instead of helping the economy, the tariffs exacerbated the Great Depression by reducing trade and making it harder for businesses to sell products overseas.
All of this is either explained in (or serves as the backstory for) Stein's dialogue in this scene, so as a student of history, I'll pick up the story from here.
The decline in international trade plunged some foreign nations, including Germany, into economic hardship because they could no longer easily sell their products to the U.S. In Germany, this in turn led to massive unemployment, poverty, and widespread discontent with the German government. Many Germans felt betrayed by their government and turned to extremist political movements, including the Nazi Party, led by Adolf Hitler. Hitler promised to restore Germany’s economy, bring back national pride, and provide jobs for the unemployed and by 1932 (just two years after Hawley-Smoot) the Nazis were the largest political party in the country. In January of the following year, with no other leader able to command sufficient support to govern, President Paul von Hindenburg appointed Hitler chancellor of Germany.
Once in power, Hitler began dismantling his country's democratic institutions and weaponizing the government against all who opposed him. The Enabling Act of 1933, for example, gave him the power to make laws without the approval of the German parliament and he subsequently began manipulating the law to suit his agenda while ignoring any judicial orders that were in opposition to his policies... I'll ask again -- any of this sound familiar?
So when you follow the trail, it's not a stretch to say that tariffs had quite a lot to do with the rise of one of the most diabolical dictators in world history -- one who would go on to persecute foreign nationals and political opponents, threaten to (and successfully) seize strategic territories belonging to other nations, and ultimately ignite the greatest global conflict in world history.
Just something to think about.
Related Posts:
Remembering John Hughes