POL-UA 700 Lecture Notes - Lecture 21: Rationality, Status Quo, Bayes Estimator
4 May 2016
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Governments that favor free-trade policies promote greater income equality (equity) than those that pursue protectionism. p(relationship due to chance)< 0. 001. probability that this relationship is due to chance is less than a thousand. Out of 24 million populations only 200 are rich: income equality is good almost everyone is desperately poor. Inequality doesn"t inherently reveal how successful a society is: the larger the coalition on which a government depends for its survival in power, the more open it is to trade that is, the freer its trade policies. Autocrats, not democrats, are most likely to favor protectionism, presumably on behalf of their small-coalition loyalists. Thus, free trade promotes income equity and efficiency; protectionism does the opposite, and how much of each a country has is a consequence of its domestic political infrastructure o. Countries with the most trade protection: labor"s share of value-added in manufacturing is 41 percent. o o.
