Smoot-Hawley

Jim Lindgren over at the Volokh Conspiracy explains how the Waxman-Markey Cap-and-Trade energy bill is the worst and most dangerous piece of legislation since the Great Depression. Disclosure: the next two paragraphs are heavily borrowed from Jim's post.

A quick refresher: Smoot-Hawley was passed in 1930 as a backstop to sliding US domestic production. The bill imposed huge tariffs on thousands of foreign products, in order to make US goods more competitive. Other countries struck back by imposing their own tariffs. In the end, gross US international commerce was cut in half, and global trade suffered. It is likely that this bill helped deepen the recession. By removing many of the comparative advantages of manufacturing between countries, the bill reduced global efficiency, which had enjoyed substantial gains during the 1920's as trade boomed.

Waxman-Markey effectively does the same thing. By rationing handing out emissions credits to favored companies, it makes US goods more expensive. Realizing this, the bill's sponsors included a provision which approximates the cost the bill would have on a foreign good if it had been produced in the US and assigns it a tariff of that amount. Not only will the US engage in a new tariff war, but the country will also ship the remnants of its industrial sector overseas. The result: Americans will be poorer and less competitive. Even worse, domestic emissions reductions will be almost insignificant on a global scale, since states like China, Brazil and India are only beginning to industrialize.

EDIT: I speculate that in the short-term, this bill might actually increase America's dependence on foreign oil, because the US will be discouraged from using coal, which is dirtier, though domestic and abundant.

If you're interested in trying to stop this bill from making it through Congress (after which Obama will undoubtedly sign it), here are some talking points for our Senators and Representatives:

1. If you live in a farm state, explain how Waxman-Markey will be the death knell of the agricultural sector.
2. If you live in a manufacturing state, explain how the bill will kill the industrial sector.
3. For New Jerseyans and others with large refining capabilities, like Texas, explain as above. Also mention that the bill continues federal support for ethanol subsidies, strengthening an anti-environmental practice while depressing traditional gasoline demand.
4. Talk about Smoot-Hawley and your concerns for the successful recovery of the US and global economies.
5. EDIT: Pennsylvanians, talk about the coal industry!
   

Good luck! If anyone tries this, please comment below to let me know how it went.