There is a major difference between then and now:
In 1929 the USA was a major exporter, both of raw material (steel, oil,…) and of manufactured goods. (To be honest, I am not sure about services…)
Right now, the US exports only a few types of goods (food, microprocessors, weapons), and has income from selling services (banking and such) and from intelecual property (from Madonna CDs to the Coca Cola Brand printed on bottles worldwide.) But it imports a lot from cars and other consumer goods to components like memory chips to vital raw materials like oil.
Now, what does this mean? High tariffs today would help balancing the 700 Bio USD hole, would encourage an import-substituting industry and would not substantially hurt exports in the case of backlash (since there are so few of them). But it would hurt the US-consumer, esp. lower and middle class citizens would face considerably higher cost of living. And it would reduce the international goodwill for the US – in line with the policy since GWB got elected.

Posted by: No So Ana | Oct 4 2008 16:23 utc | 4

jdp: good points all around. the loss of good manufacturing jobs has been a tremendous blow. 400,000 jobs? Michigan?
a few weeks ago i went to a luncheon where four panelists gave quick talks about the rising cost of food. one of the most interesting points brought up was the loss of food manufacturing infrastructure in my state; sixty, seventy years ago we had the means in this state to produce and process local food. cheap fuel made centralizing food production outside of the state possible, but now that model is breaking down.
from coast to coast, we need to completely rethink the corporate obsession with unlimited growth and mass production. the economy is shedding its dysfunctional skin, but the voodoo capitalists refuse to relinquish their ponzi schemes.
fuck ’em. communities better start taking care of their own backyards because the connivers in dc and wallstreet are not close to being done with this financial coup, but really, if you think about it, Hank is doing us all a favor by bringing the war against the people out from the shadows into the light for all to see.
the people, whether they know it or not, are virtually unified in their disgust at what’s being done with their hard earned money. because the “rescue plan” doesn’t address the root causes of this slow motion collapse it was destined from the beginning to fail.
the farce of free markets, democracy, and freedom is ridiculous beyond belief. when i see conan the barbarian (arnold) saying california is weeks away from not covering paychecks, i have a hard time registering it as reality and not some hilariously bad movie with an unbelievable plot and bad actors.
our choices in the political arena might mean next to nothing, but our choice regarding how we perceive these events as they unfold is still ours. as things get stranger, and more unbelievable, that choice will become increasingly important.

Posted by: Lizard | Oct 4 2008 16:44 utc | 6

Country by country, region by region, era by era, Chang shows how countries that rose to become industrial or trade superpowers did so only by totally repudiating the Milton Friedman/Tom Friedman “free trade” and “small government” mythos, and instead following Alexander Hamilton’s tried-and-true formula. Hamilton, after all, hadn’t invented it – he simply observed what the British had been doing since the year 1601 when Queen Elizabeth chartered the British East India Company, and she had simply been observing what the Spanish, Portuguese, and Dutch had been doing for a hundred years before that. And all of them had the example of the Roman and Greek empires, which rose and maintained their economic power by similar Hamiltonian policies.
America held such policies, too, until the 1980s when Ronald Reagan became president and his economic advisers began advancing the radical Libertarian views of Milton Friedman, and the (Ayn Rand) Objectivist views of Alan Greenspan (who had been inducted into Rand’s cult in her New York apartment in the 1960s). Reagan began his overt push during the Uruguay Round of the General Agreement on Tariffs and Trades (GATT) talks in 1986, suggesting what was needed was a radical worldwide leveling of tariffs and reduction of government participation in everything from R&D funding to support for higher education (Reagan had ended the nearly-free tuition rates at the University of California while Governor of that state). As the Uruguay Round was about to get underway, Reagan’s speech writers had him suggest “new and more liberal agreements with our trading partners – agreement under which they would fully open their markets and treat American products as they would treat their own.”
George H.W. Bush, initially decrying Reagan’s economic world view as “Voodoo Economics,” embraced it, as did Bill Clinton, who really kicked the door of tariffs and “protectionism” down by signing the United States up for both the full GATT, the creation of the World Trade Organization (WTO), and the North American Free Trade Agreement (NAFTA).
For the first time in its history, our country’s industries stood essentially naked and defenseless against those of other fully developed nations, most of which were still holding in place tariffs, R&D supports, and intense support of the commons infrastructure including free higher education and free health care.
The result was just what Alexander Hamilton feared – the rapid unraveling of the American middle class as the nation bled its industrial base into the gutter of cheap labor countries. While today both China and India have import tariffs that average between 20% and 30% on manufactured goods (to protect their domestic industries and markets), we’ve dropped our average tariffs from a 1973 average of 12% to today’s average of around 2 percent.
If you want to understand how – and why – America has become so rapidly and radically deindustrialized, read Bad Samaritans. And buy an extra copy to send to Tom Friedman. He needs it.

Rest of the review.

New York Times columnist Thomas Friedman comes in for prime attention from Chang as “Amnesiac-in-Chief,” as the very title of his best-selling homage to free trade, “The Lexus and the Olive Tree,” betrays his ignorance of even the not-so-distant past. Friedman wrote that it was a visit to a Toyota Lexus factory in Japan that got him thinking about the importance of weaning the undeveloped world from arguing “over who owns which olive tree” (which is how he characterized matters in the Middle East), and onto a path that might one day allow them to produce luxury cars. He concluded that these countries will need to fit themselves into the “Golden Straitjacket,” a regimen of privatization, free trade and low government spending otherwise known as the “Washington Consensus.” The path is “not always pretty or gentle or comfortable. But it’s here and it’s the only model on the rack this historical season.”
The irony, the South Korean-born economist Chang notes, is that “the Japanese government kicked out General Motors and Ford in 1939,” subsequently bailed out Toyota with public money, and even then, the company failed badly with its first U.S. export attempts in 1958. Yet Japan persevered in its support of the industry, with the result that “today, Japanese cars are considered as ‘natural’ as Scottish salmon or French wine,” but “[h]ad the country donned Friedman’s Golden Straitjacket early on, Japan would have remained the third-rate industrial power that it was in the 1960s, with its income on a par with Chile, Argentina and South Africa. … In other words … the Japanese would now not be exporting the Lexus but still be fighting over who owns which mulberry tree.”

Link to entire review.

Posted by: Bad Samaritans | Oct 4 2008 21:49 utc | 8

The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society. Conservation of the old modes of production in unaltered form, was, on the contrary, the first condition of existence for all earlier industrial classes. Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.
marx engel – the communist manifesto

Posted by: remembereringgiap | Oct 5 2008 0:04 utc | 10

Since World War II and the succeeding years of revolutionary upsurge, there has been a great rise in the level of political consciousness and the degree of organization of the people in all countries, and the resources available to them for mutual support and aid have greatly increased. The whole capitalist-imperialist system has become drastically weaker and is in the process of increasing convulsion and disintegration. After World War I, the imperialists lacked the power to destroy the new-born socialist Soviet state, but they were still able to suppress the people’s revolutionary movements in some countries in the parts of the world under their own rule and so maintain a short period of comparative stability. Since World War II, however, not only have they been unable to stop a number of countries from taking the socialist road, but they are no longer capable of holding back the surging tide of the people’s revolutionary movements in the areas under their own rule.
U.S. imperialism is stronger, but also more vulnerable, than any imperialism of the past. It sets itself against the people of the whole world, including the people of the United States. Its human, military, material and financial resources are far from sufficient for the realization of its ambition of dominating the whole world. U.S. imperialism has further weakened itself by occupying so many places in the world, over-reaching itself, stretching its fingers out wide and dispersing its strength, with its rear so far away and its supply lines so long. As Comrade Mao Tse-tung has said, “Wherever it commits aggression, it puts a new noose around its neck. It is besieged ring upon ring by the people of the whole world. ” 1
When committing aggression in a foreign country, U.S. imperialism can only employ part of its forces, which are sent to fight an unjust war far from their native land and therefore have a low morale, and so U.S. imperialism is beset with great difficulties. The people subjected to its aggression are having a trial of strength with U.S. imperialism neither in Washington or New York, neither in Honolulu nor Florida, but are fighting for independence and freedom on their own soil. Once they are mobilized on a broad scale, they will have inexhaustible strength. Thus superiority will belong not to the United States but to the people subjected to its aggression. The latter, though apparently weak and small, are really more powerful than U.S. imperialism.
The struggles waged by the different peoples against U.S. imperialism reinforce each other and merge into a torrential world-wide tide of opposition to U.S. imperialism. The more successful the development of people’s war in a given region, the larger the number of U.S. imperialist forces that can be pinned down and depleted there. When the U.S. aggressors are hard pressed in one place, they have no alternative but to loosen their grip on others. Therefore, the conditions become more favourable for the people elsewhere to wage struggles against U.S. imperialism and its lackeys.
Everything is divisible. And so is this colossus of U.S. imperialism. It can be split up and defeated. The peoples of Asia, Africa and Latin America and other regions can destroy it piece by piece, some striking at its head and others at its feet. That is why the greatest fear of U.S. imperialism is that people’s wars will be launched in different parts of the world, and particularly in Asia, Africa and Latin America, and why it regards people’s war as a mortal danger.
U.S. imperialism relies solely on its nuclear weapons to intimidate people. But these weapons cannot save U.S. imperialism from its doom. Nuclear weapons cannot be used lightly. U.S. imperialism has been condemned by the people of the world for its towering crime of dropping two atom bombs on Japan. If it uses nuclear weapons again, it will become isolated in the extreme. Moreover, the U.S. monopoly of nuclear weapons has long been broken; U.S. imperialism has these weapons, but others have them too. If it threatens other countries with nuclear weapons, U.S. imperialism will expose its own country to the same threat. For this reason, it will meet with strong opposition not only from the people elsewhere but also inevitably from the people in its own country. Even if U.S. imperialism brazenly uses nuclear weapons, it cannot conquer the people, who are indomitable.
comrade lin piao (1966) – long live the victory of people’s war

Posted by: remembereringgiap | Oct 5 2008 0:19 utc | 12

I am severely out of my depth to have any coherent opinion about of the present crisis (and I might add that I have been learning a lot here lately; thanks, b. & all the rest). Nevertheless, I’ve come upon an interesting – and frightening – article by a history professor that may shed some new light on what is discussed in this thread. He argues that the 1929 Crash is the wrong model for the current situation, which would have more resemblances to the Panic of 1873, the “Real Great Depression”:
http://chronicle.com/temp/reprint.php?id=477k3d8mh2wmtpc4b6h07p4hy9z83x18

Posted by: Pedro | Oct 5 2008 2:50 utc | 14

Grundrisse:
“in as much as [capital] both posits a barrier specific to itself, and on the other side equally drives over and beyond every barrier, it is the living contradiction”
Capital is the only solution to the barriers of accumulation created by capital.

Posted by: slothrop | Oct 5 2008 3:15 utc | 16

fuckin says it all

Posted by: slothrop | Oct 5 2008 3:39 utc | 18

Monbiot: This green subsidy for car makers is just a disguised corporate bail-out

The motor companies in both Europe and the US claim they need these loans to help them go green. They will invest the money in a new generation of environmental technologies, which will allow them to meet the efficiency standards their governments are setting. There is more joy in heaven over one sinner who repents … but how strange this green enthusiasm seems, now that there’s the smell of public money in the air. For the past 10 years the car manufacturers have driven every useful green initiative into the wall.
…
In the US, manufacturers have still not reached the standard (an average of 27.5 miles per gallon) that they were supposed to have met, under the Energy Policy Conservation Act, by 1985. The average car sold in the States today is less efficient than the 1908 Model T Ford.
What makes this dithering so frustrating is that to be talking, in 2008, about targets of 130 or 120g/km is a bit like discussing whether modern computers should have 10 rows of sliding beads or 100. In 1974 a stripped-down 1959 Opel T-1 managed 377 miles to the US gallon (160km/l), which equates to 15 grams of CO2 per kilometre. There is no technical reason why the maximum limit for mass-produced cars shouldn’t be 50g/km.
…
There is no need to spend a penny of public money on greening the motor industry. As a recent report by the House of Commons environmental audit committee shows, you could achieve the same outcome by creating a bigger differential between vehicle tax bands: it proposes that people buying the least efficient cars should pay around £2,000 more per year than those buying the most efficient. This would kill the market for gas guzzlers and force the industry to make the changes it has long resisted.
…
But subsidies are what governments pay when regulation doesn’t happen. If you don’t have the guts to force companies to do something, you must bribe them instead. It’s a fair guess that European car makers will still fail to meet their environmental targets, even if they get the money they’re demanding. The greenest thing governments could do is to allow these foot-dragging, planet-eating spongers to go under.

Posted by: b | Oct 7 2008 8:32 utc | 20