Don’t just do something, stand there!

There’s an old City adage that specific mistakes only come along once in a generation. Folk see the mistake, learn from it, then don’t repeat it. But this only lasts as long as there are people still in the markets who recall having seen the mistake and the aftermath. This then leads on - the City’s a cynical place you understand - to a musing on which mistake is about to get repeated given the generation that’s just retired?

In economics it takes rather longer. Most politicians are running on the fumes of the one or two terms they took at university, those were taught by - and from books written by - an earlier generation. It takes perhaps two, even three, generations for the same mistakes to be made.

As an aside, one of the joys of younger politicians is that those same mistakes get made sooner.

That’s the Kindlberger web chart. What happened to trade when the Smoot Hawley tariffs came into effect and everyone started to do something in reaction rather than just standing there. There is also that little echoing detail, that the last time all started with how cheap foreign eggs were undermining the American farmer. We hear - so a rumour, not a fact - that on the southern border they’re now interdicting more of those horrendously cheap $2 a dozen Mexican eggs than they are of fentanyl: in order to protect those $10 a dozen California eggs.

Mr. J Foreigner is doing something, is he? The correct reaction is to just stand there. Really, don’t do anything. We’ve been here before and it was not a happy time. Inaction This Day.

Tim Worstall