Lecture 17 - March 18th, 2019
The Politics of Trade in the U.S. 1908-1912
Tumult within the Republican Party
, Changes in the American Economy
- Where was the US situated in the international economy in 1908?
- Just beginning to show signs of successful industrialization.
U.S. industrializing - relative position vs. the rest of the world changes (ca. 1900)
- The U.S. had accumulated enough capital, and though it was not the top country in terms
of capital abundance, it was becoming relatively more competitive.
- In the 1890’s, the United States was well endowed with land but scarce in capital
and labour (like Canada)
Switches from capital-scarce to capital-abundant
- Note that this is saying something about how we think of the United States comparative
advantage relative to other countries ← system-level
Political Effects of the Economic Changes
Stolper-Samuelson view: owners of capital should abandon protectionism, and back freer trade.
- Predicts that owners of capital in the 1890s adhere to protection, but as capital becomes
more abundant, they will prefer free trade.
Sector-Specific view: capital and labour tied to capital-intensive industries switch positions.
- Predicts that the capital-intensive sectors (including capital-intensive agriculture) will
prefer free trade.
The Politics of Trade in the U.S. 1908-1912
Tumult within the Republican Party
, Changes in the American Economy
- Where was the US situated in the international economy in 1908?
- Just beginning to show signs of successful industrialization.
U.S. industrializing - relative position vs. the rest of the world changes (ca. 1900)
- The U.S. had accumulated enough capital, and though it was not the top country in terms
of capital abundance, it was becoming relatively more competitive.
- In the 1890’s, the United States was well endowed with land but scarce in capital
and labour (like Canada)
Switches from capital-scarce to capital-abundant
- Note that this is saying something about how we think of the United States comparative
advantage relative to other countries ← system-level
Political Effects of the Economic Changes
Stolper-Samuelson view: owners of capital should abandon protectionism, and back freer trade.
- Predicts that owners of capital in the 1890s adhere to protection, but as capital becomes
more abundant, they will prefer free trade.
Sector-Specific view: capital and labour tied to capital-intensive industries switch positions.
- Predicts that the capital-intensive sectors (including capital-intensive agriculture) will
prefer free trade.
