On Monday evening I was lucky enough to hear Michael Bloomberg, Mayor of New York, address a meeting organized by the City of London Corporation. His speech was primarily focused on the financial crisis [obviously] and its impact on both New York and London, discussing how these cities could recover.
A key point he made was that, “free trade is most important" to aid the recovery and that the actions during the Depression are in no way a provision of guidance for the future. Indeed, he clearly intimated that there was little if anything, in terms of policy, that could be learned from that period. What we could learn was that isolationism and protectionism are not intelligent courses to follow. Protecting jobs is a waste of time and money, as there is always someone who can produce things cheaper than you are currently.
Unfortunately for world trade the above warning may not be heeded by the next resident of 1600 Pennsylvania Avenue. If the Democrats are elected in the US (in conjunction with control of both houses) then this crisis could turn into a series of crises. Reading Obama's issue pages concerned with the economy, it is fairly obvious that the competition America faces from around the world will only be fought via subsidies and renegotiated deals that imbalance trade. In the long run this will be detrimental to not only Americans (raising tax bills) but also the rest of the globe. We could see a prolonging of the current crisis in the confidence of capitalism. But to many this will be irrelevant. They will be wrapped in the cloak of moral smugness, protecting them from the harsh reality of the unintended consequences of electing the wrong person to the White House.