Minor Thoughts from me to you

Archives for Economics (page 1 / 1)

Slavery and Southern Income

Tyler Cowen shares this quote from Douglas Irwin’s book Clashing Over Commerce: A History of US Trade Policy.

The South’s enormous economic stake in slavery far outweighed the impact of protective tariffs on its income. In 1860, the aggregate value of slaves as property was $3 billion, nearly 20 percent of the nation’s wealth. The value of slaves was more than 50 percent greater than the capital invested in railroads and manufacturing combined, a calculation that excludes the value of land in southern plantations. Slavery generated a stream of income that enable overall white per capita income in the south to approximate that of northern whites. In the seven cotton states, nearly a third of white income came from slave labor.

That’s staggering. Growing up in the South, I had an inherent bias towards finding reasons for the Civil War that didn’t involve slavery. For instance, Southern anger over Northern tarrifs. And, sure, that was a factor. But these numbers are a convincing indication that slavery was the chief economic reason for the Civil War.

In terms of both capital investment and income, slavery was the foundation of the Southern economy. Ending slavery would have financially wiped out many of the Southern whites, especially the rich and the powerful. Moral arguments against slavery barely stood a chance — to paraphrase Upton Sinclair, “It’s difficult to get a man to agree to end slavery when his income depends on his maintaining it”.

Trade Is a Labor-Saving Device →

Sheldon Richman, writing at Reason.com, shares some wisdom about trade.

think about the saving of labor. Normally we see this as a good thing. We buy electric toothbrushes, power lawnmowers, dishwashers, clothes washers and dryers, and self-cleaning ovens, among many other things, precisely to save labor. Why? Obviously because labor is work—exertion. Most of what we think of as work we would not do if we could have the expected fruits without it. (Of course we sometimes are paid to do things we'd do anyway, but then it is something more than mere work.) Saving labor through technology not only relieves us of particular exertion; it also frees us to obtain other things we want but would otherwise have to do without—including leisure. Thus labor-saving enables us to have more stuff for less exertion. Time and energy are scarce, but our ends are infinite. That's why no one in private life fails to see labor-saving as good.

Trade is a labor-saving "device." We each have two legitimate ways to acquire any good: produce it ourselves or acquire it through trade (after producing something else). For most goods, trade will be the lower cost method. (See why "comparative advantage" is "The Most Elusive Proposition.") The day is simply too short to make everything we want. Thus trade makes us wealthy. When government interferes with trade, it makes us poorer.

Bastiat believed that people found the destruction of cross-border trade ("protectionism") attractive "because, as free trade enables them to attain the same result with less labor, this apparent diminution of labor terrifies them." (Read about the bias against saving labor in Bryan Caplan's The Myth of the Rational Voter.) Why do people who try to save labor every day believe this? Because they think a society's principles of well-being are different from those of an individual's. As long as they do, political candidates will feed the bias.

Donald Trump and Hillary Clinton may or may not know that trade unfettered at political boundaries makes people wealthier. We need not waste time (which of course could be put to better use) wondering if they are demagogues or just ignoramuses. Rather, we should devote our scarce energy to showing people that what is good for them individually—saving labor—is just as good when observed from a bird's-eye view.

Reading Idea: The Horse in the City: Living Machines in the Nineteenth Century

$29 in paperback

Tyler Cowen references an interesting sounding book, in his Equine Markets in Everything post.

Circa the late nineteenth century, in urban America:

Even the wastes of horses were commodified.  The collection of urban manure had old, even ancient roots.  Again, the process is most easily documented in New York City.  Before 1878, individuals roamed the street and picked up manure.  In that year the Common Council supposedly sold an exclusive license to a William Hitchcock, who sold the street sweepings to farmers for fertilizer.  Street sweepings varied in quality and were worth more if from an asphalt street than if from a gravel street or a dirty alley.  They were always worth less than stable manure, a purer product.  The older pattern of individuals collecting street manure for urban gardens never fully went away, and as late as the first half of the twentieth century neighborhood children in the Italian American neighborhood of East Harlem did a thriving business collecting horse manure from the streets for backyard gardens in the area.

That is from Clay McShane and Joel A. Tarr, The Horse in the City: Living Machines in the Nineteenth Century, an excellent book from 2007.  I am sorry it took me so long to discover this work.  It has wonderful sentences such as:

Stables rarely make it into the histories of the built environment, although they constituted a substantial part of that environment.

How can you go wrong with that?  There is a good economics on every page of this book.