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Voting for protection: an electoral model of tariff policy

Published online by Cambridge University Press:  22 May 2009

John A. C. Conybeare
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The political economy of trade policy has largely neglected popular elections. When legislatures determine protection, politicians supply tariffs that are demanded by their constituents. A model of this political market is specified and tested with data related to the McKinley Tariff of 1890. An index of the extent to which tariff protection accrued to individual congressional districts is applied, along with demand and supply variables, to three questions: Did representatives supply tariffs to their districts as the model predicts? Did they vote in accordance with the district tariff interest in the roll-call vote on the McKinley Tariff? Did electors reward representatives for the district tariff protection in a manner consistent with a political market model? Empirical estimations based on the model provide answers that are generally affirmative and appear to be inconsistent with the traditional view that the Republican defeat in 1890 was a result of the McKinley Tariff.

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Articles
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International Organization , Volume 45 , Issue 1 , Winter 1991 , pp. 57 - 81
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Copyright © The IO Foundation 1991

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References

I gratefully acknowledge the research assistance of Eduardo Magalhaes. For their comments, I thank Christopher Achen, Giulio Gallarotti, Stephen Krasner, David Lake, Charles Lipson, Timothy McKeown, Helen Milner, Edward Ray, Cheryl Schonhardt, Peverill Squire, two anonymous reviewers, and participants in the University of Chicago's International Political Economy and Security Seminar and UCLA's International Political Economy Seminar.

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29. Taussig indicates that the increases in the tariffs on raw wool were “too small to have any serious effect.” The raw sugar tariff was repealed but replaced with a bounty; this may have been of some import in the roll-call vote (see discussion of equation 9). According to Stanwood, the benefits of tariff increases on barley, eggs, meat, potatoes, and butter (benefits that were only large in the case of barley) were confined to the Canadian border area. See Taussig, , The Tariff History of the United States, pp. 257–59Google Scholar; and Stanwood, , American Tariff Controversies, p. 266.Google Scholar

30. The Sherman Silver Purchase Act of 1890 was an attempt to buy the support of farmers and Western mining interest groups by obliging the treasury to purchase silver and mint coins and thereby inflate the money supply. The devaluation of farm debt through inflation would have taken some time to occur and thus provided little short-term benefit to the Republicans. The immediate effect was financial panic and heavy buying of gold, which probably hurt the Republicans.

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40. See Fiorina, Morris P., Representatives, Roll-Calls and Constituencies (Lexington, Mass.: Lexington Books, 1974)Google Scholar. The same issue arises in analyzing votes on tariff bills: the roll-call vote on the McKinley Tariff was a party line split, but this does not mean that ideology or party loyalty dominated constituency interests.

41. For a discussion of electoral safety and homogeneity, see footnote 64 (below).

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48. In The Tariff, Politics and American Foreign Policy, p. 138, Terrill notes that “in the 1888 election the Republicans worked vigorously to bring the high tariff gospel to the South,” arguing that it would lead to industrialization.

49. Diminishing marginal utility for a good implies that the price consumers will pay for each successive unit falls. However, the total value of consumption still rises, albeit in diminishing increments, producing a quadratic total revenue curve. The total amount of CHGT accruing to a district is analogous to total revenue.

50. See Peltzman, Sam, “An Economic Interpretation of the History of Congressional Voting in the Twentieth Century,” American Economic Review 75 (09 1985), pp. 656–75.Google Scholar

51. See Fiorina, Morris P., “Some Problems in Studying the Effects of Resource Allocation in Congressional Elections,” American Journal of Political Science 25 (08 1981), pp. 543–67.CrossRefGoogle Scholar

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53. See Fiorina, , Representatives, Roll-Calls and Constituencies, pp. 121–24Google Scholar; and Kingdon, , Congressmen's Voting Decisions, pp. 29–67Google Scholar. Kingdon associates safety and long tenure with following constituency interests on “high salience votes,” a term that surely fits the McKinley Tariff.

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56. See footnote 49 (above).

57. The 1880 census was the last one to list employment by county and by industry. The practice of listing this data was subsequently abandoned on the grounds that it revealed confidential information about specific firms. The index uses 1880 employment data in calculating T90 and T83, so that CHGT is holding employment constant. Although this introduces bias into the index, it avoids a worse problem. If CHGT included changes in both employment and tariffs, it would be unclear whether a relationship between CHGT and the electoral variables was due to the political market for tariffs or to changes in employment.

58. See Clausen, Aage R., How Congressmen Decide (New York: St. Martin's Press, 1973), p. 156Google Scholar; and Kingdon, , Congressmen's Voting Decisions.Google Scholar

59. Fiorina, , Representatives, Roll-Calls and Constituencies.Google Scholar

60. District protection (the Tj index) can be broken down into two parts: the part due to the level of manufacturing activity in the district and the part due to the variation in the industry composition of the district. In this case, equation 6 would be as follows:

where MFGj is the manufacturing employment as a proportion of total population. If a district's change in tariff protection is related more to the across-electorate variation in the overall level of manufacturing industry in the district (MFGj) than it is to the across-industry variation in the industry composition of the district (eij/Σieij), then the geographic discrimination in the tariff will be inflexible, always having a greater effect in districts with a high level of manufacturing industry, and only one district could ever have market-clearing tariff rates. This is not the case: the bivariate correlation of CHGT with the across-electorate variation (r = −.024) is insignificant, but the correlation of CHGT with the across-industry variation (measured as CHGT/MFG) is high (r =.549). The association of district protection with differences in the industry composition of districts suggests that the degree of geographic flexibility in the tariff is sufficient to produce tariff rates that will approximately clear each district's political market. Independent evidence supporting my analysis on this point is provided by Peltzman, who notes that the economic heterogeneity of states and regions of the United States (a variable similar to my variation in the industry composition of districts) was high at the beginning of the twentieth century. Brady and Althoff make a similar point in noting the agricultural-industrial “polarization” of the American economy in the period 1890–1910. See Peltzman, , “An Economic Interpretation of the History of Congressional Voting in the Twentieth Century,” p. 659Google Scholar; and Brady, and Althoff, , “Party Voting in the U.S. House of Representatives.”Google Scholar

61. The pseudo-R2 used here is that of McKelvey and Zavoina, cited by Aldritch, John H. and Nelson, Forest D. in Linear Probability, Logit and Probil Models (Beverly Hills, Calif.: Sage, 1984), pp. 57–58CrossRefGoogle Scholar. It is the ratio of the explained sum of squares divided by the sum of the explained sum of squares and the number of observations.

62. The regional variables are omitted because of collinearity between party and region.

63. See Stanwood, , American Tariff ControversiesGoogle Scholar; and Taussig, , The Tariff History of the United States.Google Scholar

64. I would note, however, that the data do not support Fiorina's hypothesis about homogeneous districts being safer (see Representatives, Roll-Calls and Constituencies). If this were true, there should be a relationship between V88 and the proportion of manufacturing industry in a district (MFG): V88 = a · MFG2 + b · MFG + c, where a > 0. An estimation of this equation, controlling for regional variation, produced an adjusted R2 =.17, with a significant coefficient value for a < 0, indicating that heterogeneous districts (medium levels of manufacturing industry) are safest.

65. Terrill, , The Tariff, Politics and American Foreign Policy, p. 11.Google Scholar

66. Mayhew, , Congress, p. 28.Google Scholar

67. Lewis, W. Arthur, Growth and Fluctuations, 1870–1913 (London: Allen & Unwin, 1978), pp. 57–58.Google Scholar

68. See Fiorina, Morris P., “Economic Retrospective Voting in American National Elections,” American Journal of Political Science 22 (05 1978), pp. 426–43CrossRefGoogle Scholar; and Mayhew, , Congress, p. 29.Google Scholar