Thursday, February 19, 2015

Even Better Than a Balanced Budget Amendment Would Be a No More Presidential Family Dynasties Amendment

As noted in an earlier post, I'm skeptical of a federal balanced budget amendment. I'd rather see a return to the Fiscal Constitution described by Bill White. The matter is much more complex than the 22nd amendment, which established a two-term limit for U.S. presidents.

What I would like to see, though, is an end to presidential family dynasties. I think an amendment that would give real meaning to the 22nd amendment by banning the children, parents, siblings, and spouses of presidents from serving as president (or vice president) would be very helpful in the long run and in the short run would prevent the horror of another Bush, Clinton, or Obama (don't think they haven't thought about it) in the White House. The simple fact is that thousands, if not tens of thousands, of people could serve as president with distinction. (And untold others could muddle through like the last two did.) So why risk de facto breaking the 22nd Amendment (by electing a person effectively controlled by a former 2-term president), looking bad to foreigners (or more importantly to future Americans!), and perpetuating presidential family dynasties? Costs > benefits.

Would such an amendment be unfair to the children, parents, siblings, and spouses of presidents? Yes, but it would be less unfair than the name recognition, patronage, and other boosts that those close to presidents receive. Would Hillary have been Secretary of State without Bill's presidency? Nope. Would George W. have won if daddy didn't? Nope. (In fact, he didn't really win the first time!) John Quincy rode on his old man's coattails too, and didn't really win his election either.

Friday, February 13, 2015

The Economics of Slavery and Freedom, 1750-2050



The Economics of Slavery and Freedom, 1750-2050


3 in 1 Room, Augustana College SD, Thursday, 12 February 2015, 7 p.m.

I was ten years old when I first went to work. … There were five people in the home, and I did all the work – cooking, cleaning, washing clothes, washing dishes. I woke each morning at 5 A.M. and went to sleep at 10 P.M. I slept on the floor in the drawing room. I did this work seven days a week. Sometimes the wife would beat me. The husband in the home would rape me. … After two years, they sent me to another home. … I was in this home for two years. They did not beat me, but I was working all the time. Finally, I was in a third home for three years. I had to do everything. They had two daughters, and I had to take them to school each morning. I wished I could go to school like them. In this home they would beat me very badly.
If pressed on, say, a game show, many people would date the passage I just read to the nineteenth century or earlier because the speaker was clearly enslaved: beaten, raped, forced to work long hours for others who denied her an education. Unfortunately, the narrative is actually from the present century. It is part of the haunting story of Nirmala, a young girl from Nepal, as recorded by Siddarth Kara, a Harvard University professor and one of the world’s foremost experts on human trafficking and contemporary slavery.
A specter haunts the world – the specter of slavery. This is a serious matter, though I’m teasing a bit by invoking Karl Marx’s Communist Manifesto. You were probably taught, as was I, that slavery was a quote unquote peculiar institution that flourished in America for a few centuries before Abraham Lincoln and Ulysses S. Grant ended it once and for all. If you are a history geek, you’ll know that matters were a little messier than that – slavery pervaded the New World and the freedpeople and their progeny suffered for decades after Emancipation – but the basic Whiggish view that slavery is a relic of the past still likely dominates your view of the matter. My goal tonight is to disabuse you of the notion that slavery is something that happened in the past to the ancestors of a readily identifiable group and to help you to see that American chattel slavery was not peculiar at all. Rather, it was part and parcel of a long and continuing history of forced or coerced labor. As Sigmund Freud once wrote, Homo homini lupus … man is wolf to man.

I hope that by the end of the evening you will be so outraged that you will want to spring to action, or at least be interested enough in the topic to attend the other lectures in this series, which is sponsored by the Institute for Humane Studies at George Mason University in Virginia, near the nation’s capital. All that the Institute requests in return for its money, which will be used to pay the travel expenses and honorariums of all the speakers except me, because I’m doing this for free and live nearby, is the acknowledgement just made, a headcount, a few pictures of the event, and the paper survey being passed around. All students who complete a survey and provide a valid email address will be entered to win a $25 Amazon gift card. Yes, this means you will receive an email from the Institute. If you don’t want it, you can of course unsubscribe as it would be ridiculous for an organization dedicated to advancing human liberty to force people to accept electronic junk mail. Yes, you are allowed to laugh. Finally, if you have any questions about liberty, or want to learn more about its role in our society, I am the “go to person” for the Institute here at Augustana so feel free to contact me via email, Twitter, Skype, my website, or my office, which is 111 Madsen Center, just to the north of the Social Science division main office on the first floor.
I should also take this opportunity to thank four of the students in my interim course on global slavery who helped me with this speech, Augie history majors Gabe Dunn and Dan Jansen, Augie economics major Cephas Mampuya, and St. Thomas economics major Nicole Niedringhaus. Any remaining mistakes or lame jokes, however, remain my sole responsibility. See that last comment was actually a lame joke that only professors would get.


Anywho, thanks to the funding provided by the Institute for Humane Studies, exactly a month from tonight, in this very room, historian Matthew Mason of Brigham Young University will talk about the politics of abolition in historical context. On April 9, literature professor Elizabeth Swanson Goldberg of Babson College in Massachusetts will show how businesses can help to reduce the incidence of slavery. And on May 7, again right here in the 3-in-1 Room, economic historian John Majewski of the University of California, Santa Barbara, will discuss his work on the hidden economic costs of slavery. If the continued enslavement of other human beings somehow does not morally outrage you, John will show you how slavery hits everyone squarely in the pocketbook.
At this point, some of you are probably wondering what exactly I mean by terms like enslavement, slave, and slavery. Most broadly, I mean the term literally, not metaphorically, and regarding labor, not politics. Phrases like “I slaved away on the project” or we “worked like slaves” are obviously just metaphorical and hence not the subject under discussion this evening. Before their War for Independence, many of the colonists of mainland North America claimed that King George, the British Parliament, and London bureaucrats were trying to enslave them by limiting the colonists’ political influence over fiscal, monetary, and other public policies. That is obviously an important topic, one that I have been writing a book about for 15 years now, but not the subject tonight, though admittedly finding the boundary between political enslavement and labor slavery can be difficult, particularly when a government owns labor slaves, as many have done throughout history, including Germany and Japan during the Second World War. I would assert that North Korea is the worst offender today, but I won’t for fear that its hackers will shut down my blog, on which this speech will be posted … minus the sentence I just spoke of course. Let me remind you that you are free to laugh when appropriate.

What I mean tonight by enslavement is the practice of forcing people to labor for others. Slaveholders, a.k.a. enslavers, are businesses, governments, or individuals who claim to own human beings or a unilaterally decided portion of the economic value created by their labor. Slaves, a.k.a. enslaved persons, are the people that enslavers purportedly own and de facto expropriate the labor of. Right now, so far as the best experts can tell, about 30 million people are enslaved throughout the world. 30 million! That figure may be higher than at any other time in human existence. Of course 30 million is a small percentage of the global population, which is now a record 7.3 billion, so we can’t rightly say that slavery is more prevalent than ever before. But it is still 30 million souls, roughly the population of both Dakotas, Colorado, Montana, Wyoming, Nebraska, Iowa, Missouri, Minnesota, and Wisconsin combined. That is almost as many people as have died of AIDs since its global proliferation began in the 1970s. Slavery appears to be spreading as quickly as HIV and in fact the two phenomena are linked because sex slaves, a sizeable portion of the 30 million total slaves, can’t insist on condom use or other safe sex practices.

Another way to think of the 30 million figure is that it is less than one percent of the world’s population. Yet and I quote here Nobel Laureate Robert Fogel: quote between 1600 and 1800, New World slaves represented less … than 1 percent of the world’s population. unquote Nevertheless, by the end of that period slavery was rightly considered one of the world’s most pressing problems. In short, slavery today is already a major problem and likely to get worse before it gets better, especially if good people like yourselves stand idly by.

Before I explain the economic reasons why slavery, if left unchecked, is likely to continue to spread, however, I want to continue to explain what is meant by the term as some of you may be picturing shackled Africans picking cotton or other iconic images from America’s checkered past. It is Black History Month after all. But slavery today looks different from that depicted in Twelve Years a Slave or Roots because enslavement is technically illegal the world over but no government has managed to extirpate it. De jure, there are no slave and free states or countries anymore but de facto all are slave states because slaves can be found in every country on the globe and every state in the United States, including South Dakota.

Some of you may find it difficult to believe that South Dakota is a slave state because if you drive from Sioux Falls to Pierre you won’t see gangs of slaves tending to the fields. Slaves today usually work indoors, or at least out of sight, and at a wide range of activities, not just growing and harvesting agricultural staples. Many girls and young women, and some boys, are forced to sell sexual access to their bodies and forced prostitution has been documented in this state on several notorious occasions. We can call South Dakota a free state when we have made it so costly to enslave other people here that no one would even think of trying it. Cost, by the way, is a function of both the penalties for enslaving others, including jail time and fines, and the probability of being caught and convicted. Passing harsher penalties, in other words, is meaningless if enslavers know they remain unlikely to be convicted.

Other forms of slavery may also occur in good, old So. Dak. We know that elsewhere in the world, some enslaved individuals are forced to beg and to turn over the proceeds to their masters at the end of the day. Others make simple manufactured goods like bricks, cigarettes, and textiles. Others are forced to fish or raise shrimp. Any good that is relatively easy to produce can be made by slave labor, and probably is, at least somewhere.

Slavery today has no racial component per se. Enslaved persons are more likely to come from oppressed minorities and poor communities than from affluent, mainstream groups, but slaveholders are equal opportunity enslavers. Today, people of every race, religion, and ethnic group are enslaved and people of every major race, religion, and ethnic group hold slaves. That was pretty much true in the eighteenth and nineteenth centuries as well, though you may not have heard much about Muslims enslaving Europeans and Americans, the use of Asian coolies in Latin America, the serfs beholden to Russia’s Tsar, and so forth, but they are all part of humanity’s not so illustrious and not so distant past.

Nobody knows when slavery began but anyone familiar with The Holy Bible, the Quran, or the holy texts of the major Asian religions knows that it is an ancient practice. In fact, the first human writings, from the Epic of Gilgamesh to the Code of Hammurabi, are rife with mentions of slaves and slavery. Thanks to the discovery of iron shackles in eastern Europe, we know that slavery existed in prehistory, although the details remain obscure. Slavery probably arose during the Neolithic Revolution, as some groups of humans shifted from a hunting and gathering foraging strategy to herding and horticulture and, in some areas, outright agriculture. It is difficult to see how or why hunter-gatherers would enslave others, except perhaps for sexual recreation or procreation, and indeed a survey of remaining hunter-gatherer societies conducted in the twentieth century revealed that virtually none of them countenanced slavery. Most remaining pastoral and agricultural societies, by contrast, had allowed slavery in the past and some had made extensive use of slaves.

In fact, slavery may be one of the defining characteristics of our species, along with trading. Adam Smith’s observation that humans are the only critters that regularly trade with unrelated conspecifics, to wit with other members of the species that are not part of the same kin group, holds up to this day. So too, however, does the observation that human beings are the planet’s most prolific enslavers. We are consummate warriors, too, but all wars eventually end while trade and slavery just go on and on and on. From this broader biological and historical perspective, it is not at all surprising that slavery remains so ubiquitous today.

But are there really some 30 odd million people enslaved today? Well, that figure is not based on census counts as in early nineteenth century Trinidad, the antebellum U.S., Brazil before its emancipation, and so forth because, again, slavery is everywhere illegal. Measuring illicit activities is notoriously difficult, but I think the order of magnitude is correct. We are not talking about 1 million people here, nor 100 million. Whether the right number is 15 million or 45 million, slavery is an important problem demanding our attention, especially because the number of enslaved persons is more likely to grow than to shrink unless good people act.

A more interesting question than the number of slaves, I think, is the degree to which people are enslaved. Thinking about the degree of enslavement might strike you as a strange notion as the traditional belief in this country is that people are either free or they are enslaved and that was certainly the case of the iconic New World slavery of the seventeenth, eighteenth, and nineteenth centuries. But if we look at slavery more broadly throughout the globe and human history, it quickly becomes apparent that people can be forced to labor for others in many different ways. In New World slavery, as in the United States before ratification of the 13th Amendment exactly 150 years ago this December, slaveholders used all known methods of coercion and control. Employers of other forms of forced labor utilize fewer methods, allowing the worker somewhat more leeway or freedom.
Armed with that insight, I constructed a degree of slavery index that takes the form of 17 characteristics of enslavement. I don’t want this to sound too flippant but I feel we need a brief interlude of comic relief so here goes: my slavery index is sort of like the “You might be a redneck if” jokes that were popularized by Jeff Foxworthy over a decade ago. I happen to be a redneck so I have no problem repeating some of them here:
·         You might be a redneck if you’ve ever been kicked out of the zoo for heckling the monkeys. That actually happened to me but in my defense the monkeys started it!
·         You might be a redneck if you have the local taxidermist’s number on speed dial. If you don’t believe this one, you haven’t seen my office lately.
·         You might be a redneck if you’ve ever hit a deer with your car...deliberately. Okay, I have not done this recently but I have tried to clip roosters and rabbits, only in open season, though, and only when they were too close to buildings or livestock to shoot them instead.

There are at least 300 of those redneck jokes extant so my list of 17 is not so bad, except my list isn’t at all funny, it’s quite sobering in fact. Here goes, in no particular order:
1.      You are enslaved to the extent that you are not paid in whatever your society considers to be cash money or other liquid assets. Many slaves are paid only in kind, that is in food, clothes, and shelter, in order to prevent them from accumulating liquid wealth that could be used to aid in their escape. Other forced laborers are paid in company scrip good only at company-owned businesses, like grocery stores and apartments, also as a means of control. Surely some of you remember Tennessee Ernie Ford’s song about life in a company coal town, “Sixteen Tons”: Oh you load 16 tons and what do you get? Another day older and deeper in debt. St. Peter dontcha call me cause I can’t go, I owe my soul to the company store. Still other forced laborers, called debt peons, are quote unquote paid only in account book entries, which they usually cannot see or understand if they could. Again, control is the main purpose for not paying a laborer in cash.
2.      You are enslaved to the extent that you are physical restrained beyond the requirements of the labor undertaken. This is a pretty easy one. A jockey is not enslaved because he or she has to sit in a saddle on a horse. That is the job. Ditto an airplane pilot in a cockpit and so forth. Chains around the ankles of a strawberry picker or doors that prevent egress from a factory, by contrast, are certainly a means of control.
3.      You are enslaved to the extent that you are psychologically constrained beyond the requirements of the labor undertaken. This is a more difficult one to understand. Some call these mental constraints invisible chains and modern slaveholders much prefer them to physical chains because they are cheaper and more easily hidden. They include the threat of physical violence or magic against the laborer or those he or she holds dear and the use of theology to convince slaves that some deity or deities desire their enslavement. Enslavers also sometimes use alcohol or drugs to psychologically control their victims.
4.      You are a slave to the extent that you are legally required to work. That is because the law precludes an important avenue of escape from bondage, not working at all. Typically, employers induce governments to pass such legislation to elicit aid from the police to help control their workers. The postbellum U.S. South, for example, passed so-called vagrancy laws to force freedmen and their descendants to work for wages or risk being sentenced to prison labor camps.
5.      You are a slave to the extent that your body or its labor can be transferred to another employer without your consent. This is why highly paid professional athletes have sometimes called themselves slaves, typically to public ridicule. The ridicule was well placed because professional athletes are not enslaved in most other ways but the athletes were correct that transfer without consent is a common tactic of slaveholders.
6.      You are enslaved to the extent that you owe your employer significant sums or are listed as collateral security for a loan. Employers who are also creditors have tremendous control over their worker-debtors and a relatively large incentive to work them hard. Use of debt laws has been the prime mechanism for controlling workers in near-slave conditions in numerous post-emancipation societies, including the postbellum South and the nations of South Asia to this day.
7.      You are enslaved to the extent that you have been seasoned, by which I mean subjected to procedures, physical and/or psychological, designed to break your will to find other employment or escape bondage. African slaves sent to the West Indies during the Diaspora were seasoned through whippings and other physical torture. Today, young girls being seasoned for prostitution are repeatedly raped, or just beaten senseless if their virginity can be sold at a premium.
8.      You are enslaved to the extent that you cannot choose another employer whenever you wish to do so. Many people today are tricked into slavery with false promises of better working conditions, a different job description, and so forth. Their enslavers try to justify enslavement by claiming that the workers quote unquote chose to work for them and will often produce a signed contract to quote unquote prove it. Liberty, or non-enslavement, consists of choosing whether or not to continue working for a particular employer every time work commences. A surgeon shouldn’t walk out in the middle of an operation or a railroad conductor in the middle of a run but with sensible caveats like those, employment should be at will, at least for workers.
9.      You are enslaved to the extent that you do not control your own work schedule. Over the last few decades, many companies began to allow flex time and other forms of self-scheduling because it made workers happier by returning some control to them. Flexible scheduling is not always possible and inflexible scheduling on its own hardly constitutes slavery but being forced to work a disagreeable schedule is a characteristic of slavery. Enlightened employers offer a wage differential in compensation.
10.  You are enslaved to the extent that you do not control the number of hours worked per day or other period. Employers sometimes force hourly workers to work overtime by threatening termination for noncompliance. In those cases, workers are essentially at least 1/17th slaves unless they feel adequately compensated for the imposition.
11.  You are enslaved to the extent that you cannot control the tempo of your work. Again, many hourly workers are effectively enslaved by being tied to the output of machines, like that famous episode of I Love Lucy where Lucille Ball tries, and comically fails, to keep up with the candy conveyor belt. Many workers throughout history chose to be paid a piece rate rather than an hourly wage because it gave them some control over their work tempo as well as their schedules and hours worked.
12.  You are enslaved to the extent that you cannot choose your place of residence. This sounds unlikely outside of chattel slavery but most debt peons are effectively told where to live. Consider, too, the situations of military personnel, indentured servants, and convict laborers.
13.  You are enslaved to the extent that you do not control your own name. P Diddy, Sia, and the Artist Formerly Known as Prince chose to change their names, as do many women upon marriage. Children are stuck with those concocted by their parents but only until they turn 18. Employers who force name changes on workers, by contrast, are engaging in an act of enslavement. Recall the scene from Roots when Kunta Kinte was whipped for not accepting his slave name, Toby Waller. You might recall that enslavers also changed Solomon Northup’s name, to Platt. Similarly, the seasoning process for forced prostitutes today often entails acceptance of a new name.
14.  You are enslaved to the extent that you do not have freedom of movement in order to purchase goods or search for other employment. This is another control mechanism employers and masters use to keep their workers from escaping and/or to maximize the amount of labor they can extract from them by monopolizing each worker’s consumption as well as his or her labor.
15.  You are enslaved to the extent that you are not able to marry on the same terms as your employer. This is yet another control mechanism. Slaveholders do not want their laborers forming attachments that might reduce their productivity or aid in their escape.
16.  You are enslaved to the extent that you are not able to control your own children on the same terms as your employer. Enslavers can use children to manipulate their laborers. Children can be used to incentivize slaves to work harder or to punish them for escaping, plotting rebellion, and so forth.
17.  Finally, you are enslaved to the extent that you cannot own property on the same terms as your employer. Property is a means of independence, so slaveholders usually prevent slaves from owning much of it, typically claiming each slave’s possessions as their own.

I’m sure that other conditions could be adduced, which is what I said when my list was only 12 items long. In terms of my index as it now stands, New World chattel slaves were completely enslaved as they typically enjoyed none of the 17 freedoms just detailed. CEOs today, by contrast, are completely free because they enjoy them all. Tenured college professors today are pretty darn free too. In between lay other types of workers, from South Asian debt peons today, who are nearly completely enslaved, to American wage workers today, who are much more free than not. In the middle toil coerced laborers, like apprentices, indentured servants, interns, family members, and convict laborers, who are partly free and partly enslaved. Whether you want to count such people as quote unquote slaves or not will of course influence your estimate of the number of people enslaved in the world, both in the past and today.

Astute listeners may have noticed that my list did not mention specific material conditions of labor, to wit minimum compensation, maximum hours of work, and so forth. That is because conceptions of quote unquote fair wages or onerous workload vary over time and place. While the notion of a wealthy slave jolts us, slaves are not always the poorest people around in material terms, nor do they necessarily work the longest or in the harshest conditions. For example, U.S. cotton plantation slaves worked an average of 58 hours per week when free commercial farmers in the North worked 60 hours per week on average and factory workers put in an average of 72 hours weekly. The farmers were clearly materially better off than the slaves but factory workers not so much so. The same could be said of wage laborers in many parts of the world today. The difference is that the wage laborer retains his or her free will, well as much free will as any human being has. That is why wage workers in the North bristled at the notion that they were quote unquote wage slaves even though the average slave ate more meat than they did.

Rather than quibble over whether person X is a slave or not, I’d like to argue that any form of enslavement is bad for society, for two reasons. Firstly, enslavement diminishes human liberty, which many people believe is a good, i.e. something of value, in and of itself. Ceteris paribus, all else equal in other words, who would choose less liberty instead of more? Only people confused about the meaning of liberty I’d venture. Liberty is not, as one of your louder professors would have it, freedom from constraint. Rather, it is freedom to do as you list, as you want, within the constraints imposed by nature and the laws of man. That is why we do not consider ourselves quote unquote enslaved by gravity, which is a law of nature that we cannot change, the movie Interstellar to the contrary notwithstanding. For similar reasons, we should not consider ourselves enslaved by markets, which are also natural phenomena unless distorted by the laws of man. Rightly speaking, people can only be enslaved by other people, individually or in concert. Humans cannot be enslaved by natural forces and certainly not by sociological constructs of dubious empirical merit like quote unquote capitalism, which at best is an abused, vague holdover from the Cold War whether the term is wielded by votaries of the Left or the Right.

The tricky part is that manmade laws also place constraints on us, constraints that are not binding, or in other words that can be changed. Some of those constraints are salubrious, while others are not, but discerning between the two is often difficult, even for unbiased observers, of which too few exist. Almost all laws favor some groups over others but a surprisingly large number help some groups at the expense of others. We should work to extirpate all laws of the latter class, whether they ostensibly help or hurt workers or employers. I can go no further in this direction tonight without significant digression but suffice it to say that more liberty is better than less even if some political Liberals, ironically enough, suggest otherwise. Economic freedom has been shown econometrically to lead to increased economic output per person as well as higher levels of education, higher life expectancy, and other outcomes most people would consider good.

So the second reason that I believe that slavery is bad for society is because it hurts economic health in direct proportion to the degree that enslavement is countenanced by that society. In other words, multiply my slavery index score by the number of people so afflicted in a given nation or region. Sum the figures for each type of laborer and divide by the total workforce. The higher the resulting number, the lower will be that society’s economic achievements and prospects. Please allow me to try to convince you of this proposition, though it will require an extended explanation.

Enslaving others is obviously immoral and now it is also illegal. So why do people still do it? The simple fact is that enslaving others is profitable. Enslavers control both their labor costs and their labor supply, to wit both the price and quantity. They command, in other words, at least as much market power as monopolists do. Enslavers of course do not subject themselves to minimum wage laws and they are not subject to fluctuations in the supply or demand for free laborers. They compensate their slaves as little as possible, which typically is just enough to keep the slaves alive and healthy enough to work, and, tragically, they can buy as many as they need at low prices whenever and wherever there is an international slave trade, as de facto there is today. Human trafficking in other words. Like other businesses, slaveholders have overhead and capital costs but their labor costs are much lower than those of their competitors, especially when they can trick society into controlling their slaves for them. That means that enslavers earn big rents, which is what economists call profits above the normal profits that would be earned in a competitive market.
Slaveholders today generally have to expend some of those rents to control their slaves and to prevent government interference or even solicit governmental aid. Corruption and slavery today go hand in hand. Not all police officers or judges are corrupt, but it takes only a few bad apples to prevent enforcement of the laws. In some places, border patrol officers, police, and politicians are themselves enslavers and use the coercive power of the state to keep their workers slaving away, if you will pardon the expression. Where officials are not easily paid off, enslavers expend some of their rents on various forms of so called muscle, or in other words big, scary dudes with guns who keep the slaves physically restrained and/or electronically monitored, make credible threats against their families, and so forth. Even with those extra costs, enslaving others is still very profitable. If it weren’t, it would be limited to psychopaths, like that guy recently apprehended in Cleveland, who seek power over others instead of cash.

Some people conclude that the profitability of slavery means, ipso facto, that slavery is good for the economy, or in other words that it causes economic growth, which is the term that economists use to describe sustained increases in inflation-adjusted per capita income, typically measured by GDP. Several historians, including Robin Blackburn of Essex and Ed Baptist of Cornell, have jumped on this notion to proclaim that America’s current wealth was built on the backs of slaves. Their ultimate goal is to create political support for reparations for the descendants of slaves. I find the claim that slavery causes growth both wrong and wrongheaded. Slaveholders in developing countries today have latched onto such claims to argue that the United States and other rich nations should allow slavery in poorer nations. It is not fair, they argue, for the West to get rich due to slavery and then to prevent other nations from following the same path. Such arguments of course injure the efforts of neo-emancipationists, people like myself who want to decrease the number of slaves, and the index of total enslavement, throughout the world.

The claim that slavery leads to economic growth is not just wrongheaded, it is empirically false. As previously noted, almost every country and empire on the planet has countenanced slavery at some point and yet only a small percentage has ever experienced economic growth. Ergo, slavery cannot be a sufficient cause of economic growth. Merely having slaves, in other words, will not induce an economy to grow.

Slavery is also not a necessary cause of economic growth because numerous nations have experienced sustained increases in real per capita income without expropriating the labor of significant numbers of slaves: the Scandinavia nations, Japan, South Korea, Canada, Australia, and New Zealand come immediately to mind. I won’t invoke modern Britain, Holland, France, and Germany because, while they did not have much slavery at home, they all possessed overseas empires where slavery, debt peonage, and indentured servitude were widespread. I’m with Adam Smith in the belief that the overseas colonies hurt the domestic economies of the European imperialists but that is a large area of debate in and of itself so I won’t go further. Finally, I think it would be fairer to say that the United States became rich in the nineteenth century despite slavery rather than because of it but again time precludes an extended discussion and later speakers in the series will address the issue in full.

What about all the wealth the slaves built on the South’s cotton, sugar, and tobacco plantations? Like I said, slavery was profitable for slaveholders. That is why they owned slaves. Just because an activity is profitable, however, does not mean that it generates economic growth. Consider, for example, the 1850 essay of French economist Frederic Bastiat, “That Which Is Seen, and That Which Is Not Seen.” In the essay, Bastiat notes that people are apt to praise a child who breaks a shopkeeper’s window because the act creates employment for glassmakers and window repairmen. Bastiat grants that those groups benefit from the careless child, noting that quote All this is that which is seen. unquote But what is unseen, Bastiat explains, is that the shopkeeper now cannot afford to buy dinner, or a bottle of wine, or new shoes, or a book. Destruction of the window, therefore, does not increase the economy’s output, it merely shifts it from some industries, like wineries and publishing, to others, including glass manufacturing and window installation.

Most people understand the gist of Bastiat’s story, which for shorthand is often referred to as Bastiat’s window or the broken window fallacy, which is why breaking windows is illegal and why we usually don’t bash in our windows when recession threatens or even when depression hits. But some still cling to the old myth that World War II saved America from the Great Depression even though it is now clear that what kept the national economy from generating jobs was certain aspects of the New Deal, including the National Industrial Recovery Act and other so-called high wage policies. It is true that wars stimulate aggregate demand and hence output but gains are fleeting and wiped out by inflation, or rationing, as in the U.S. during World War II. Wars also cause the destruction of capital, both human and physical, including windows but much more as well. Wars are worth more than absolutely nothing, the lyrics of the song “War” to the contrary notwithstanding: you know, War, what is it is good for? Absolutely nothing. Uh!. Wars may be necessary, for example, to protect home and hearth from violent outsiders. War, per se, however, is costly and hence never justified on economic grounds alone and anyone who argues otherwise is an unreformed Keynesian, the owner of a munitions plant, or both. Pause for laughter.

American chattel slavery has been likened to war, but one need not go that far to see how it, or other forms of forced labor, cannot possibly promote economic growth. No slave worthy of the appellation ever reached his or her full potential. The opportunity cost of slavery to an economy is the sum total of the difference between each slave’s actual total output and each slave’s potential output under a less oppressive labor regime. So when people, often the descendants of slaves, claim that slaves made major contributions to the economy, they are not wrong per se, they are merely emphasizing that which is seen. That which is not seen, however, must be accounted for if we are to understand the whole picture, which is that slaves would have produced much more if they had been free to pursue their own interests, whether they perceived those interests to be individual, familial, or as part of some collective.

As Bastiat’s story makes clear, breaking windows redistributes wealth but it doesn’t generate growth. If it did, all the nations of the world could grow wealthy by employing window breakers. Ditto with slavery. Enslaving others redistributes wealth from slaves to slaveholders but it doesn’t stimulate growth, it doesn’t grow the size of the economic pie. If it did, the world would have grown wealthy long, long ago and be flush with pies. Mmmmm pie.

But I’m not content to show that slavery merely redistributes wealth because it is much more pernicious than that. Slavery actually reduces GDP, the overall size of the economy in other words, because it creates what economists call negative externalities, or costs that slaveholders manage to foist upon society rather than bearing themselves. Slavery, not enslaved persons but the act of enslaving others, is a form of pollution. The negative externalities or types of pollution created by slavery are numerous and in aggregate quite sizeable and go a long way toward explaining why non-slaves spilled so much blood and treasure in the nineteenth century helping to emancipate slaves in Brazil, Cuba, Russia, the United States, the West Indies, and elsewhere. Simply put, slavery impoverishes everyone.

What forms has this pollution taken? The specifics are time and culture bound, of course, but some generalizations can be safely made.

First, as previously noted, slaves rarely achieve their full potential. They have little incentive or opportunity to improve their human capital through education, including basic literacy and numeracy, and little incentive to innovate because the slaveholder would not share the resulting gains and cannot even credibly promise to do so. In addition, slave morbidity and mortality rates exceed those of non-slaves, while their fertility rates are typically dramatically lower than those of non-slaves, to the point that only a few slave societies have been able to rely on natural increase to reproduce the slave population. Slaves that somehow escape bondage are typically so physically and/or psychologically damaged from years of overwork and torture that they never achieve their potential productivity. In large measure, then, enslavers do not just steal slaves’ labor, they waste slaves’ lives, thereby denying them to society.

Second, slaves rarely take kindly to their enslavement. Some are seasoned, or inured to their plight, but enslavers can never fully trust them. Slaveholders therefore must expend non-trivial sums to control their slaves, from chains to guards to surveillance devices. And still they worry that their slaves will rise up and kill them or run away. To fully protect themselves from the wrath of their slaves would prove so costly that the profits of slavery would disappear, unless, that is, some or all of the cost of controlling slaves can be foisted upon society at large. Here, slaveholders achieved some of their greatest successes. In the antebellum U.S. South, slaveholders managed to make the public pay for slave patrols, public whipping stations, militias the only purpose of which was to put down slave rebellions, and even nationwide fugitive slave laws that enjoined every adult American to help return runaway slaves. The Code of Hammurabi shows that similar laws subsidized the slaveholders of ancient Mesopotamia and the Romans had similar laws. Wherever slavery has been legal, governments have helped slaveholders to control their bondsmen.

Third, slavery almost universally weakens institutions and governance. Education lags because slaveholders fear it, and the trouble it can cause them, as hilariously depicted in the Life of Aesop. Enslavers have little interest in other forms of public infrastructure because they are mobile labor lords, not people with deep community ties. Most today don’t even pay taxes. Diplomacy is distorted because slaveholders want to maintain the value of their human property and that means extending slavery whenever and wherever possible and protecting it from all threats. Where slavery is illegal, corruption is rife as enslavers buy off police officers and government officials. Some scholars have even suggested that slavery was abolished in many countries so that politicians could directly share in its profits by taking bribes to look the other way. Worldwide, but especially in nations where slavery is most prevalent, enslavers are rarely convicted and when they are, they suffer penalties that are a mere pittance compared to their profits. They literally get away with murder but also rape, fraud, theft, and kidnapping.

Slavery also hurts slaveholders and their families. Many attain wealth but at the cost of their souls 
and their morality. I point this out not out of sympathy for enslavers but to suggest that enslaving others, whether done legally or not, imposes costs on society. Many slaveholders are also adulterers, murderers, and rapists who teach those around them to solve problems through violence. Today, they often traffic illicit arms and drugs as well as people.

I’m currently writing a book about the negative externalities created by slavery and, alas, it is not going to be a thin one. I won’t bore you with any more details or examples but I do hope you come away from this talk understanding that, at best, slavery redistributes wealth from slaves to slaveholders and, in fact, far from causing economic growth slavery hurts economies by producing prodigious amounts of pollution, or costs, called negative externalities, borne by society and not by the slaveholders themselves. Slavery, therefore, is not so much a specter as it is a scourge, an instrument of punishment that impoverishes us all, giving us a second reason, in addition to slavery’s obvious moral turpitude, to work toward emancipation. But, ironically, slavery is wildly profitable for slaveholders and hence the practice of enslaving others is likely to continue to spread until enslavers are caught, tried, convicted, and made to pay for their crimes many times over.

If the story of twenty first century slavery, Nirmala and 30 millions like her, has moved you at all, what I would like you to do is to come listen to the other speakers in the series. And bring a friend or two along with you. The other speakers will have some concrete suggestions for the activists among you. I’ll leave you with only one other action item, the notion that you should help the government to get its priorities in order. Our nation currently spends far more controlling something clearly protected by the Constitution, firearms, than it spends preventing slavery, which has been clearly unconstitutional since ratification of the 13th amendment a century and a half ago. The government needs to expend fewer resources monitoring drug use and incarcerating non-violent offenders, who are disproportionately black, Hispanic, Indian, or poor, and expend more resources interdicting human trafficking and imprisoning their ringleaders. It also needs to do more to help freed slaves to heal and make the most of the rest of their lives. It also needs to stop arresting prostitutes and to start arresting the people who force them to sell their bodies. Basically, we need to ensure that our government fulfills the basic goals of its job description, which is to protect its citizens’ lives, liberty, and property. 

Before I entertain questions and comments, I want to remind students to turn in their surveys, with a valid email address, for a chance to win a $25 Amazon gift card and zero chance that they will receive more than one unwanted email from our sponsor, the Institute for Humane Studies at George Mason University. Thank you. Questions?


Saturday, January 31, 2015

Balanced Budget Amendment: The View from History

Since the 1840s, many U.S. states have had balanced budget requirements in their state constitutions. Some have worked but others have gotten worked around in various ways, via exceptions or pushing the debt down to the municipal level. Exceptions can be minimized by the language of the clause or amendment but the tradeoff is that ironclad language is inflexible in the face of crises, unexpected situations, etc.

I much prefer returning to what Bill White has called America's Fiscal Constitution. Here are excerpts from my review of his book as it appeared on page 38 of the fall edition 2014 of Financial History:
 

Every policymaker, politician, and pundit in America should read this book even though author Bill White, a long-time Democratic  mayor of Houston turned investment banker, might seem at first blush an unlikely policy hero. White’s weighty tome (500+ pps.) would qualify as a doctoral dissertation at any university on the planet because it contains 40+ pages of notes, almost 40 pages of bibliographic entries, and almost 40 pages of statistical appendices reconstructed from original sources. Most impressively of all, the end result is not a partisan political screed but a highly readable and well-balanced account of the rise and demise of America’s unwritten fiscal constitution, the set of budgetary rules that made the United States one of the world’s most creditworthy nations in the nineteenth and twentieth centuries.

White shows that U.S. lawmakers long countenanced only four acceptable use of debt: preservation of the union; expansion of the nation’s borders; waging of war; and keeping the government afloat during recessions. After each war, expansion, and recession, the federal government stopped borrowing and sometimes even ran surpluses. That, combined with robust economic growth, prevented the national debt from ballooning out of control and kept the country’s credit strong, ready for use during the next emergency or opportunity.

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White suggests that America’s fiscal constitution could be reconstituted through a few, simple-to-implement reforms. First and foremost, the budget needs to be made, in Jefferson’s words, “clear and intelligible” to “any man of any mind” (p. 363). That means producing a tax-financed budget based on good faith revenue estimates updated monthly. Any appropriations above the tax-financed budget need to be clearly distinguished as such and voted on separately so that voters can readily identify politicians who want to borrow and spend instead of make difficult choices about tradeoffs. Second, the debt ceiling system needs to be dismantled because Congress votes on the ceiling only after it has voted to spend more than its tax revenues. Third, bond issue votes, like the thousands held annually at the state and municipal levels, should be held at the federal level as well. “Nothing,” White argues, “prevents Congress from holding a national referendum on whether to incur federal debt for specific purposes and amounts” (p. 369). Since 1970, he notes, state and local debt levels have grown at only half the federal rate.
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