So all those who remember Smoot Hawley are dead then?
A standard - and we do so dislike the accusation of cynicism, we prefer realist - timetabling of the next banking crisis is a few years after the retirement of that generation of bankers who worked through the last one. Few who have experienced one wish to repeat the process but those without that personal visceral knowledge just will succumb to the siren voices inherent in fractional reserve banking to create the next one. So, run with 2038 to 2048 as a pencilled in date then.
Something as well studied as a global depression might last longer in the collective memory - so many books written about it and so on. But now, near a century later, we do seem to be prepping up for a new Smoot Hawley. Or perhaps it’s the recent departure of Ronald Coase, aligning this with the observation about banking:
Europeans must stop their capital from going overseas to the US and use it for a massive investment drive on green technologies, AI and defence. They must build strategic critical minerals stockpiles to make Europe’s defence industry a bit more crisis-proof. Countries should make clear political commitments to buy European-made batteries and exclude Chinese wind turbines from their infrastructure.
But de-risking is not enough. Europeans must realise that they can pull levers of their own. For one, there is the EU’s famous “trade bazooka”, or anti-coercion instrument, which governments have been loth to use until recently. Momentum might finally be moving in the right direction. Clément Beaune, France’s high commissioner for strategy and planning, has recently argued that 30% across-the-board tariffs on Chinese goods ought to be on the table (this figure is well in excess of the French government’s formal position). The EU’s Digital Markets Act and Digital Services Act, known mostly as a source of irritation for Mark Zuckerberg and Elon Musk, could also be used to limit TikTok’s parent company ByteDance, Tencent and Alibaba’s operations in Europe. And even more aggressive options exist: few realise that Europe could ground more than half of all Chinese commercial planes by withholding software updates for China’s Airbus fleet.
We must have a trade war again. Darn those beastly Johnny Foreigners with their decent and cheap goods that the proles desire to have. We must instead orient the economy to benefit our domestic capitalists by making everyone else poorer. We’ll do this by erecting massive trade barriers. This is indeed Smoot Hawley all over again.
Mark Leonard is director of the European Council on Foreign Relations
We guess we’ll have to add ECFR to our little list of not-think tanks. Seriously, why would anyone want to recreate the economic policies of the early 1930s?
Tim Worstall