Krugman: ... why isn’t 2008- playing like 1929- ? Why no surge in protectionism this time?
The Protectionist Non-Surge
So why, exactly, arent we seeing more protection?
Why arent politicians especially conservative politicians like those responsible for Smoot-Hawley looking at the situation and saying, hmm, a tariff wont increase the deficit, it wont involve debasing the currency, but it could clearly help create jobs?
One answer might be the Smoot-Hawley caused the Depression thing;
this isnt true at all, but it might be serving the purpose of a noble lie.
Or maybe its the structure of trade agreements. The countries that arguably could really, really use some protection right now are inside the European Union, so no go. Countries outside still know that
any protection they impose will lead to big problems at the WTO; the United States has to know that a protectionist response would break up the whole world trading system weve spent almost 80 years building.
So heres a thought: maybe the secret of our protectionist non-surge isnt macroeconomics; its institutions.
http://krugman.blogs.nytimes.com/2013/04/29/the-protectionist-non-surge/