Viral Video on the History of the Federal Reserve

Word on the web is that a documentary on the Federal Reserve that I am interviewed in has gone viral, in the good sense of course. That is the one that Augie covered several days ago here. The documentary, put together by economist Murray Sabrin at Ramapo College in "Joisey," is embedded below. Enjoy!

America: Time to Learn From So. Dak.

I published the first two grafs below on the FacultyRow site several days ago but ran out of words. Here they are again, along with my closing thoughts.

America’s huge economy is finally showing signs of renewed vigor but it still faces significant headwinds in both the long and short terms. Inflationary pressure has been building for some years due to the rapid and sustained increase in the Fed’s balance sheet following the Panic of 2008. The monetary pressure may become insurmountable if the economy continues to heat up and the federal government continues to run large deficits. Longer term, the U.S. economy may face several crises related to the effects of changing demographics and runaway healthcare and higher education costs at a time when confidence in the federal government’s ability to do anything right, much less to implement substantial reforms, is at a very low ebb. 

Most troubling of all is the decline in Americans’ “economic freedom” as measured by the Heritage Foundation. The United States now ranks tenth in the world and its absolute score has declined for five consecutive years. Numerous studies have shown that economic freedom is highly correlated with sustained economic growth and many scholars believe, after removing the statistical noise created by the business cycle and one-off shocks like wars, that economic freedom is the root cause of growth. Bigger, more intrusive government, especially one that is no longer trusted by many citizens for a variety of reasons, is not conducive to entrepreneurship, especially of the more growth-inducing innovative and inventive varieties. Crony capitalism, one of the “bad” forms of capitalism identified by Will Baumol et al, appears ascendant.

Policymakers, pundits, and concerned citizens looking for a way out of this morass will find much to learn from South Dakota, America's freest state (and just a smidge less free than Alberta, the freest place on the continent). Although solidly Republican, the state is highly democratic; its people demand efficient government and usually get it, at least relative to many other places globally and even nationally. Congress has finally passed a budget, but one that doesn't solve any fundamental problems. Washington should not waste this reprieve but instead use it to really analyze government services and cut what is not needed, privatize that which can be privatized without endangering national security or the economy, and streamline the rest. If it makes those decisions based on independent studies and not partisan politics it will win back some respect and can then start to work on cronyism.

Jon Stewart: Gutless, (Economically) Brainless, but so Funny!

Jon Stewart has been making me laugh for over a decade now ... I started to tune in to The Daily Show just before the invasion of Iraq. He has often made the right calls politically and diplomatically over the years but almost every time he tackles economic or financial subjects, he sounds like an uncastrated male bovine with diarrhea. (That means a bunch of bullshit in case you missed the joke.) Last night was no exception as he berated somebody for asking if a $15 minimum wage is good for the economy, why isn't a $100,000 minimum wage? Of course nobody means that as a serious question. What she was really asking was how do central planners (like Stewart and others advocating for a higher minimum wage) know that $10 or $12 or $15 is the "right" figure economically. (As opposed to the one that is high enough to meet their policy objectives, which apparently is to garner votes for Democrats, who are hurting after the Obamacare website fiasco, but not so high as to cause inflation, immediate derision, etc.) Once you seriously begin to consider what the minimum wage "should" be economically, it soon becomes a silly exercise because the cost of living varies over place (and time) and the ability of businesses to pay it varies over industry, location, season, and so forth. A central planner who was really interested in the commonweal, i.e. in the most economically efficient outcome, would soon begin to pine for some sort of mechanism for balancing the number of workers with the need for workers in each industry ... and oh geesh there it is, supply and demand. If S&D lead to an equilibrium that is not socially efficient, direct subsidies are much more efficient than distorting the labor market with a wage floor.

I call Jon Stewart "gutless" because he won't have me on his show. He knows I will show him up and generally kick his knee jerk liberal, uneconomic brain all over his own stage and do it in a funny way too. I have sent him books before, with handwritten notes, etc., and never so much as a query has come from his office. He has another opportunity now, with the launch of my Corporation Nation from the University of Pennsylvania Press on Monday, December 9, 2013. The book should appeal to him at some level because it shows that corporate governance has broken down, giving execs too much power over their own compensation, by exploring in detail for the first time early U.S. corporate governance rules, which contained numerous checks and balances against arbitrary power that began to seriously erode after the Civil War and today are almost completely gone. I'll be on the East Coast a few times over the next few months to make it even easier for him to finally have on his show an intellectual who is not part of the NE academic elite. But he won't because he is afraid of what scholars in the Midwest might think or say, setting back his apparent attempt to brainwash his viewers with liberal economics of dubious (to say the least!) merit.

Slavery Today

Substance of a Talk Given in Madsen Center 201, Augustana College So. Dak. at 3:30 pm, 3 December 2013:

I got interested in modern slavery soon after coming to Augustana College because I was disappointed with a student in my U.S. history survey course who kept whining about how she couldn’t believe that quote unquote WE stole the land of Native Americans and that SHE would have stopped the exploitation of Indians. When I pointed out that she was doing nothing to help Native Americans today and that they were still very much exploited, she shifted to abolitionism and complaining about what quote unquote WE did to Africans. Two minutes on Google allowed me to bash her over the head, metaphorically speaking of course, on that one too. 

Only later did I realize that I should have thanked that student for awakening me to the notion that the study of history can do more than make us feel good or bad about the past, it can help us to change the future. Now I am the Academic Director of Historians Against Slavery and editor of “Slavery Since Emancipation,” a new book series being published by Cambridge University Press that publishes books that show that knowing something about the history of slavery and abolition can help activists today to reduce slavery worldwide.

The idea that slavery still exists in the world today may sound preposterous at first, but that initial incredulity evaporates when we reflect on North Korea or other totalitarian states that clearly condone political or Lockean slavery, i.e., the subjugation of people to the arbitrary will of some leader or his agents.

          The notion that economic slavery persists to this day might seem strange at first, too, until one becomes aware of labor conditions in many Less Developed Countries, the politically correct term for what we used to call undeveloped or Third World nations. 

Please note that I refer here not to sweatshops, which may or may not be staffed by persons working against their will, but to conditions like those depicted in the 2006 film Blood Diamond starring Leo DiCaprio, where workers are essentially abducted and forced to labor for others. That is very different from someone choosing to work in a factory for a pittance over selling fruit for half a pittance or not working at all. 

What separates the slave from the non-slave is personal agency, or the ability, in other words, to choose a course for oneself, even if the alternatives do not appear very savory to the individual worker much less to rich world observers. To be a non-slave is not to have the God-like power to arrange the universe to one’s liking but to take the world as it comes and change between existing paths as one sees fit, not as directed by another. For example, I do not count myself a slave because I was too fat, slow, and weak-armed to play Major League Baseball. I am a non-slave because when confronted with the reality of my inability to consistently hit 90 mile per hour sliders I chose where to go next with my life. Some might even call that freedom but it certainly is not slavery.

That economic slavery exists in the United States, and even right here in Sioux Falls, surely must be false, right? How could anyone be forced to labor for another in the U.S. today? There are no cotton plantations in So. Dak., no slave coffles are observed on Louise Avenue, or even Minnesota Avenue, and no runaway slave notices appear in the Argus Leader. That is all true because chattel slavery was abolished throughout the United States, and indeed the entire world, by the end of the second half of the nineteenth century.

But as anyone who has ever scored some alcohol before age 21, or a little weed outside of certain states, or maybe smoked some crack with Toronto mayor Rob Ford knows, making something illegal does not eliminate it but merely forces it into new forms. Slavery never went away but transformed into debt peonage, convict labor, and sex trafficking. It is not as important economically as it once was but that does not make it right or reduce our moral obligation to free those currently ensnared. 

Today, slavers keep their slaves hidden from open public view through a variety of techniques ranging from actual physical restraints to threats against family members to subtle psychological manipulation. Even in antebellum American slavery, most of the barriers to slave freedom were invisible, psychological rather than physical. Most slaves did not slay their masters or run for the North because slavers taught them that they were inferior and worked hard to deny them access to information that would aid rebellion or escape. Slavers do the same today.

Right here in Sioux Falls, in June of this very year, 37-year-old Carl Campbell of Sioux Falls received three life sentences plus 40 years after being convicted of luring minors and young adults into his power and forcing them to engage in commercial sex acts in the Sioux Falls area and elsewhere. That was one of three local cases cracked this year alone. How many are as yet undetected? Certainly more than zero because South Dakota’s sex trafficking laws have been ranked as the weakest in the nation and not all criminals are morons and hence will gravitate to where the likelihood and costs of getting caught are lowest.

Many of the prostitutes that service the Sturgis Motorcycle Rally and some pheasant hunting lodges are trafficked. In other words, they are tricked, cajoled, bullied, and intimidated into selling sex and are not doing it of their own accord. Some are shipped in from other states or countries for those and other events while others are Native, with a capital N. For more details, see Be Free 58’s website, befree58 dot org.

Modern slavery entails more than sex trafficking.  Slavers force people to do other sorts of work as well, usually low-skilled work. In 2007, for example, Robert and Angelita Farrell were convicted of forcing Filipinos to labor at their Comfort Inn and Suites hotel in Oacoma, which is just across the Big Mo from Chamberlain in case I pronounced it wrong. The enslaved Filipinos said that the Farrells controlled every aspect of their lives, including what they ate and where they lived as well as their working hours and tasks. The Farrells issued paychecks but then forced their slaves, under threat of turning them into federal immigration authorities, to endorse them back to the Farrells.

It doesn’t bother me when people work long, hard hours for what seems to be little pay so long as compensation is set fairly, which is to say by the market forces of supply and demand. But when employers steal from their workers by forcing them to accept below market wages they need to be stopped, fined, and imprisoned. And the victims, the enslaved individuals, need to be helped. That is where students like you can help the most, by providing resources to NGOs that interdict slavers and help victims to recover from their ordeals and to reduce their vulnerability to re-enslavement. Forming an Augie chapter of The Free Project, which is now part of Historians Against Slavery, is one way to do so. It is easy to do and the chapter itself gets to direct where every dollar it raises goes. Check it out at thefreeproject, all one word, dot org.

Thanks! I can take a few questions.

Don’t Be an Armsby

Move over Kunta Kinte, Solomon Northup is back! Actually, there is no objective basis for ranking Roots and 12 Years a Slave as they served two very different Americas. The former, which first aired in 1977, struck viewers still healing from the Civil Rights Movement of the 1950s and the urban uprisings of the 1960s and still coping with the overt bigotry of All in the Family’s Archie Bunker and his ilk. The latter is hitting theaters with the nation’s first African American president in his second term and with racism, though still a potent force, lurking deep in institutional crevices and exposed to public scrutiny only occasionally, by series like HBO’s The Wire.

As a period piece, 12 Years a Slave is extremely well executed. It is so good, in fact, that I hope that some well-heeled individual or well-endowed foundation will buy the rights and make it available to the world for free. Yes, people can read the book for free on Google and elsewhere online but the big screen version supersedes the text in some respects. The savagery of the whipping scenes, followed by tenderness of the post-whipping care that slaves provided each other, belie the slavers’ claims that it was the enslaved who were the savages. The hanging scenes expose how powerless the enslaved ultimately were: Northup watches helplessly as two slaves are strung up while later slaves go about their daily activities as Northup himself tiptoes in the mud with a noose about his neck for hours on end. Similarly, the wailing of a mother separated from her children by sale will not be soon forgotten by most viewers.

Director Steve McQueen has gotten the details right too. The overseers and slave traders are suitably grimy and ignorant. The economic activities depicted, shopping in stores, picking cotton, cutting cane, milling, and so forth, are accurately portrayed. Masters lust after their chattel, as we know many did, and their wives respond in authentic ways. And Paul Giamatti plays a scumbag slave trader oh so well. In short, professors can show this film in class confident that students will come away with an accurate glimpse into antebellum American chattel slavery.

There is a deeper layer here as well, one that I hope professors will explore in their classrooms. In short, we’re all Solomon Northup now. We may get a glimpse of slavery, as Northup did in a flashback scene to his pre-abduction life in Saratoga Springs, New York, but we do nothing about it, confident that slavery is something that happens to somebody else, somebody far removed from us in time or space. We cannot believe that our loved ones could ever end up in bondage but the simple fact is that it could happen, that it already has happened to millions of people worldwide, including untold numbers of Americans both at home and overseas. (Exact figures are disputed but not the point here.) Our abduction and sale are unlikely, but so was it for Northup. His trusting nature and high market value ($1,000 at the time, or approximately a quarter million dollars today) put him at risk and bad luck sealed his fate. Today, females and children are most at risk, both to be prostituted and put to forced labor, but in some areas adult men are still prized as agricultural field hands, fishers, or industrial workers. The remote possibility of abduction must be weighed against the high cost of losing a cherished one to slavers, even if you are one of the lucky few to possess Liam Neeson’s “very particular set of skills.”

We simply do not know what percentage of the enslaved are ever emancipated from modern bondage. Surely some perish and others never recover their former identities (including possibly Northup himself, who disappeared with nary a trace in 1857). Although modern forms of slavery take place all around us, the enslaved are trapped by invisible chains similar to those that prevented Northup from trying to escape, the fear of corporal punishment and even death. While Northup, a Dickensian surname to be sure, had to contend with the great physical distance from the Louisiana plantations where he was forced to whip his fellow slaves to freedom in the North, he did not have to worry about slavers killing his family like many slaves today must.

Spreading the word about modern slavery can help people to avoid abduction in the first place but just as importantly it can help to turn everyone into Brad Pitt, or rather Bass, the Canadian laborer who Pitt plays in 12 Years. Bass was antislavery but he not an abolitionist hero. He was just a handsome working stiff who saw injustice and risked his own neck and livelihood to save a fellow human being in trouble. He probably did not know that free blacks were abducted and enslaved by the hundreds (possibly thousands) but he was intelligent enough to see that Northup’s story was plausible. Had white wage laborer Armsby (played by Garret Dillahunt) been more intelligent, or at least more informed, he might have chosen to help Northup instead of taking Northup’s money and ratting him out to the master.

Maybe by next fall term, professors can show 12 Years a Slave to their students legally and at no cost. It is good enough to be used as a straight up period piece to supplement lectures or readings on antebellum American chattel slavery but the connections to modern slavery should be explored in classrooms as well. Like Northup, most of us know a little about modern slavery but rest content in our comfortable middle class lives barely cognizant that we, too, could fall victim to slavers. More likely, we could be cast to play a potential savior and will have to choose between Armsby and Bass. Let’s help our students to pick the latter every time.