Tuesday, March 09, 2010

ObamaCare is Today's Smoot-Hawley

Actually, more like the National Recovery Act of 1933. This act probably did more to reverse a nascent recovery and deepen a routine recession into the Great Depression in the 1930s, but Smoot-Hawley has more brand recognition as a true policy disaster. Remember, our scorecard is currently 1 for 4. ObamaCare represents higher taxes and massive regulation of the economy, and I am afraid that our one success in avoiding the mistakes of the 1930s - monetary expansion - will be swamped by this failure to learn from the past. If ObamaCare passes, not only are we double-dipping, the Great Recession deepens, perhaps into Great Depression Dos.

A few more eerie parallels: 1) Roosevelt's cadre of academics went on a trip to Moscow and came back with a glowing admiration of Stalin's putatively efficient economic model. Today, our intelligentsia is again enamored with authoritarian models of efficiency (again, putative efficiency). 2) Given the dubious constitutionality of some major provisions in the emerging Obamacare bill, we may have to wait upon a defining Supreme Court case to set us free from the economic shackles that this legislation will put on us - just like Schechter Poultry v United States, aka the Kosher Chicken case. 3) In anticipation that many of his New Deal initiatives would run into judicial scrutiny, FDR aimed to pack the Supreme Court. On cue, similar calls can be heard today.

History never repeats? Horsepucky.

UPDATE: Jim "Mad Money" Cramer thinks we double dip too.


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