Buy American! Buy Spanish! British jobs for British workers! The ideology of economic nationalism seeks to implement trade policies that help to keep jobs and investment at home, while ignoring the advantages of open international trade and invest-ment. Economic nationalism was popular during the Great Depression of 1929–33, when it served to protect domestic firms from international competi-tion. However, this led to curtailing international business activity, making the global economic slow-down worse. Widely recognized as a myopic policy, economic nationalism nevertheless re-emerged dur-ing the global financial crisis that originated in the United States in 2008, prompting many analysts to wonder whether the public has learned anything from international business history.Soon after the U.S. stock market crash of 1929, Willis Hawley and Reed Smoot, two Republicans in the U.S. Congress, sponsored a bill to raise import tariffs to the highest level in U.S. history.21 Given the high rate of U.S. unemployment at that time, the bill was passed in order to keep jobs at home. This resulted in retaliation from other nations as they raised tariffs on exports from the United States and other countries. The net result was a ruinous fall in global trade and a worldwide depression.In late-2008 and early-2009, when the United States faced the worst recession since the Great Depression, the call for a new round of trade barriers was being debated. However, this time, the focus was upon inserting non-tariff barriers on items in the American Recovery and Reinvestment Act of 2009, which was meant to give the floundering U.S. economy a boost. This legislation, com-monly known as the “stimulus package,” included a “Buy American” provision that restricted government spend-ing to U.S. companies. As a result, public works such as infrastructure projects were required to use commodi-ties such as iron and steel that was domestically sourced, despite that these products cost more than imports from countries such as China. Similarly, the development and delivery of computerized medical records would be restricted to domestic IT firms, even if such services could be sourced at a much lower cost from India.Some experts argued that such protectionism may violate international trade rules, and U.S. exporters feared retaliation against their goods and services. Canada, in fact, soon threatened retaliation. Meanwhile, other countries moved in similar directions. The British prime minister talked of “British jobs for British work-ers,” the French president urged French car compa-nies to invest at home rather than elsewhere in the European Union, the government of Spain launched a “Buy Spanish” campaign. It may not be Smoot-Hawley, but the global implications could be the same.

Answer in Case Analyis format.

Is the Smoot-Hawley plan better or worse than “Buy American? Buy Spanish? Or British jobs for British workers?

Question

Buy American! Buy Spanish! British jobs for British workers! The ideology of economic nationalism seeks to implement trade policies that help to keep jobs and investment at home, while ignoring the advantages of open international trade and invest-ment. Economic nationalism was popular during the Great Depression of 1929–33, when it served to protect domestic firms from international competi-tion. However, this led to curtailing international business activity, making the global economic slow-down worse. Widely recognized as a myopic policy, economic nationalism nevertheless re-emerged dur-ing the global financial crisis that originated in the United States in 2008, prompting many analysts to wonder whether the public has learned anything from international business history.Soon after the U.S. stock market crash of 1929, Willis Hawley and Reed Smoot, two Republicans in the U.S. Congress, sponsored a bill to raise import tariffs to the highest level in U.S. history.21 Given the high rate of U.S. unemployment at that time, the bill was passed in order to keep jobs at home. This resulted in retaliation from other nations as they raised tariffs on exports from the United States and other countries. The net result was a ruinous fall in global trade and a worldwide depression.In late-2008 and early-2009, when the United States faced the worst recession since the Great Depression, the call for a new round of trade barriers was being debated. However, this time, the focus was upon inserting non-tariff barriers on items in the American Recovery and Reinvestment Act of 2009, which was meant to give the floundering U.S. economy a boost. This legislation, com-monly known as the “stimulus package,” included a “Buy American” provision that restricted government spend-ing to U.S. companies. As a result, public works such as infrastructure projects were required to use commodi-ties such as iron and steel that was domestically sourced, despite that these products cost more than imports from countries such as China. Similarly, the development and delivery of computerized medical records would be restricted to domestic IT firms, even if such services could be sourced at a much lower cost from India.Some experts argued that such protectionism may violate international trade rules, and U.S. exporters feared retaliation against their goods and services. Canada, in fact, soon threatened retaliation. Meanwhile, other countries moved in similar directions. The British prime minister talked of “British jobs for British work-ers,” the French president urged French car compa-nies to invest at home rather than elsewhere in the European Union, the government of Spain launched a “Buy Spanish” campaign. It may not be Smoot-Hawley, but the global implications could be the same.

Answer in Case Analyis format.

Is the Smoot-Hawley plan better or worse than “Buy American? Buy Spanish? Or British jobs for British workers?

Accepted Answer

Answered: Image /qna-images/answer/b9e24cc6-df5d-4f9a-b818-df9af2e25fb9.jpg