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Panic Has Led to Government "Cures" That Are Worse than the Disease, History Shows

• https://fee.org, Jon Miltimore

Anyone who's seen the John Hughes movie Ferris Beuller's Day Off probably remembers the scene where Ferris's economics teacher (Ben Stein) explains the Smoot-Hawley Tariff Act to a roomful of bored, sleeping students. The scene is brilliant for many reasons, perhaps most so because it perfectly demonstrated how some of the most boring things in history are also the most important.

Smoot-Hawley was, of course, one of the great blunders in history.

Passed in 1930 over the objection of more than a thousand economists, the legislation increased tariffs (which were already high) on imports to protect US industries and farmers, sparking a trade war that deepened the Great Depression. It's a perfect example of authorities taking decisive action to alleviate a crisis—and making things much worse.

What many forget is that Smoot-Hawley didn't cause the Depression. It was a response to the Depression. Indeed, it may never have passed at all without the catalyst—the Stock Market Crash of 1929—that sent the nation into a frenzy.


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