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Trade Policy Before 1914.docx

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McGill University
Political Science
POLI 346
Mark Brawley

Trade Policy Before 1914  Domestically—huge issue Competing Theories on Tariffs  Does three things o Tax:  Main form of tax for states (main way the US raised money) o Aggregate direction of trade:  A barrier to trade; if you want to charge a tax on goods coming in you will be raising the price and thus imports (less)  Use this as a political tool o Internal distribution of wealth:  You can push for tariffs on different products  Treat the goods differently  Change the profits for certain goods within the country  Redistributing wealth (some protected others open to international competition)  Neo-Classical Realism o External threat creates need for security o Internal balancing requires government revenues o Tariff imposed to raise money o Ensure country gains more than other countries  Analytical Liberalism o Domestic interests are divided o Helps you survive or make a profit o Groups organize to compete for control of government o Winner gets preferred policy  Distribution of Interests within US o Factor-based Interests: Capital, Land and Labour  Owners of land prefer freer trade, owners of other factors desire protection  Depends what factor you own o Sector-based Interests:  Urban industrial manufacturing composed of both labour and capital intensive sectors  Depends on what industry you are in  Manufacturing goods  Agriculture composed of land-intensive, labour- intensive and capital intensive sectors  Only land-intensive agriculture prefers freer trade  Only the section of farmers will really want free trade o Interests geographically concentrated: sectionalism o Industrial manufacturing mostly in urban areas of the North (and in the cities because of concentration of capital and labour) o Capital-intensive agriculture mainly in the north too (small farms, settled earlier) o Land-intensive agriculture in west and mid-west (large farms, less people) o Labour-intensive agriculture in the south Organizing Domestic Interests  National Political Parties o Institutional pressures for a two-party system (FPTP vs. PR) o Who makes trade policy—congress o So for trade policy it is important not only who is president but also which party dominates congress o Small parties thrive in proportional systems o US is first past the post 
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