Pursuit of Truthiness

my gut tells me I know economics

Archive for September 2015

Regulating Away Competition

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People have long wanted to know (or thought they knew) the extent to which regulation hurts business. Diana Thomas and I tackle this question: the paper is here, or see our US News op-ed for a summary.

An even briefer summary:

New data on the Code of Federal Regulations finally allows us to figure out its impact. It looks like regulation stops potential entrepreneurs from starting new businesses, but doesn’t really drive existing firms out of business- and might actually help the biggest businesses.
Regulation is not so much govt vs business, as govt and big business vs entrepreneurs and job seekers.

Written by James Bailey

September 14, 2015 at 2:23 pm

Emancipating Slaves, Enslaving Free Men

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The title comes from an Abraham Lincoln quote: “Towering genius… thirsts and burns for distinction; and if possible, it will have it, whether at the expense of emancipating slaves or enslaving free men”

I find myself wanting to save quotes every couple pages; I’ve tried to put only the best of the best here. Jeffrey Rogers Hummel presents a lot of interesting facts I never knew, and weaves them into a compelling thesis about slavery and the US Civil war- one that doesn’t really fit with any of the political or historical “sides”.

One part of this thesis is about the causes of the war. Hummel points out that “what caused the civil war” is really two questions: why did the South secede? and why did the North not let them go? The answer to the first is definitely slavery. The answer to the second is less clear, but seems to largely be mystical ideas of union.

Some awesome quotes that surprised me:

Many abolitionists supported secession: “[Abolitionist William Lloyd Garrison] went so far as to denounce the Constitution for its proslavery clauses as ‘a covenant with death and an agreement with Hell.’ During one 4th of July celebration, he publicly burned a copy, proclaiming: ‘so perish all compromises with tyranny!’ He believed that if anything the North should secede. That way it could become a haven for runaway slaves. The slogan ‘No Union with Slave-Holders’ appeared on the masthead of Garrison’s Liberator for years.” (p21)
“The Georgia legislature offered a reward of $5,000 to anyone who would kidnap Garrison and bring him south for trial and punishment.” (p25)

Pro-slavery Communists were a thing: “[George] Fitzhugh defended slavery as a practical form of socialism that provided contented slaves with paternalistic masters, thereby eliminating harsh conflicts between employers and allegedly free workers… ‘A Southern farm is the beau ideal of Communism.’” (p23)

Through the Antebellum era as Northern state governments become more anti slavery, Southern governments supported it ever more strongly, even against the wishes of slaveowners: “Nearly every slaves state reintroduced or tightened restrictions upon whites privately emancipating their chattels… advocating abolition became a felony in Virginia in 1836.” (p25)
“Only in the Southern United States [of all the Americas] did legislators try to bar every route to emancipation and deprive masters of their traditional right to free individual slaves.” (p44)

Runaways are the Achilles heel of slavery.
One response to this is mandatory patrols to catch them: “Loosely connected with the local militia, patrol duty was compulsory for most able-bodied white males.” (p48) Proslavery theorist (and socialist) George Fitzhugh noted these patrols “secure men in possession of a kind of property they could not hold for a day but for the supervision and protection of the poor [who couldn’t pay their way out of patrol duty].” (p48) Stephen Douglas, of Lincoln-Douglas debate fame, echoed this: “slavery cannot exist a day or an hour anywhere unless supported by local police regulations.” (p117)
Yet “The South’s compulsory slave patrols are one of the gaping holes in the scholarly literature.” (p72)

Hummel is quite economically literate, and provides a convincing model of the economics of slavery and the importance of runaways. “Although slaveowners merely earned market returns [because of competition], they had powerful incentives to perpetuate the peculiar institution. The total value of all slaves in the United States as of 1860 is estimated at between $2.7 and $3.7 billion… ‘Were ever any people civilized or savage, persuaded by any argument, human or divine, to surrender voluntarily two thousand million of dollars?’”
“The individual runaway both helped provoke secession- northern resistance to fugitive recapture being a major southern grievance- and ensured that secession would be unable to shield slavery in the end.” (p353)

Most societies ended slavery through voluntary and/or compensated emancipation. The US took its own peculiar path, a civil war among whites with largely uncompensated emancipation. But there is also the Haitian alternative of slave insurrection. “[Frederick Douglass’] influence caused a National Negro Convention meeting in Buffalo to reject by a single vote a resolution calling for slavery’s violent overthrow…. In 1858 [Lysander Spooner] circulated plans for fomenting slave rebellions… Northern conspirators would assist with money, arms, training, and volunteers.” (p59)
“The massive uprising that [John] Brown, Lysander Spooner, and David Walker each hoped for would obviously have resulted in much loss of life, but worth speculation is whether it could even have approached the civil war’s unmatched toll: one dead soldier for every six freed slaves… this who complacently accept this as a necessary sacrifice for eliminating an evil institution inexplicably blanch at the potential carnage of slave revolts.” (p355)

The Antebellum conflict over slavery lead both sides to discard the rule of law: The Fugitive Slave law of 1850 meant that “free blacks had no legal recourse if a Southerner claimed they were escaped slaves. The law consequently spawned an unsavory class of professional slave catchers, who could make huge profits by legally kidnapping free blacks.” (p94) In response, “Northern mobs, which once had directed their fury at abolitionists, now attacked slave catchers, broke into jails, and rescued fugitive slaves… the national government tried vigorously to prosecute the law-breakers responsible for such defiance, but northern juries refused to convict.” (p95)

This lawlessness became much more pronounced once the war began. In fact, we came very close to total banana republic territory: “Lincoln simply ignored [Chief Justice] Taney’s opinion [ruling against Lincoln’s suspension of habeas corpus]. He also wrote out standing orders for the Chief Justice’s arrest, although these were never served… Secretary of State Seward ordered a lightning statewide raid that jailed thirty-one [Maryland] legislators, the mayor of Baltimore, one of the state’s Congressmen, and key anti-Administration publishers and editors. At the state’s next election in the fall of 1861, federal provost marshals stood guard at the polls and arrested any disunionists who attempted to vote.” (p142-3)
Both sides turned to conscription, and in 1864 the Confederates began assigning soldiers to industrial work. “Insofar as these soldiers were conscripts, the Confederacy was running its factories on coerced labor. The internal logic of military conscription had led the nation of black agricultural slavery to the ironic but appropriate institution of white industrial slavery.” (p251)

Lee was not the only high-level confederate who disliked secession: “[Confederate President Jefferson] Davis had been only a reluctant secessionist, while Vice-President Stephens had actually fought against his state’s withdrawal from the union.” (p135)

When Southern states started to secede, it would seem that conflict over federal possessions in the states, like Fort Sumter, was inevitable; but in fact almost all of them passed over peacefully: “Union authority meanwhile evaporated from the deep South. Federal officials resigned in droves. State troops took possession of customhouses, post offices, arsenals, revenue cutters, and military posts… only Fort Sumter in Charleston and three other forts along the Florida coast had garrisons of sufficient size and determination to keep them in Union hands” (p136-7)

Crazy Abraham Lincoln facts: “Among the ‘rules and regulations’ that Lincoln’s militia unit adopted were: ‘no man is to wear more than five pounds of cod-fish for epaulets, or more than thirty yard of bologna sausages for a sash; and no two men are to dress alike.’” (p157) “The highest commander is assumed responsible under most circumstances for operations under his control. American Presidents can sometimes escape the full force of this dictum because they delegate military responsibilities to subordinates and then take a hands-off attitude except for major objectives and policies. Only Lincoln, of all wartime Presidents, interfered in day-to-day military matters… one of the reasons Northern generals in the west usually performed much better is because they were too far away for Lincoln to foul things up.” (p174) “My paramount objective in this struggle is to save the Union, and is not either to save or destroy slavery. If I could save the Union without freeing any slave I would do it” -Lincoln (p207-8)

The Confederates may have made an even bigger military blunder right from the beginning by eschewing guerrilla war: “the Confederate high command never entertained any thoughts of conducting the kind of war for national liberation that Americans had fought during their revolution and that has become commonplace in the modern world… although much of the South would have remained exposed to invasion, Union willpower would have been patiently worn down through insurmountable logistical obstacles, continual hit and run harassment, and the countryside’s implacable hostility.” (p179)

We are usually taught that slavery was ended by Lincoln’s Emancipation Proclamation and the North’s victory in the war. But slavery may have been doomed as soon as the South seceded and the North started encouraging runaways: “’The institution of slavery is already so undermined and demoralized’ wrote Linton Stephens to his brother, the Confederate Vice-President in October of 1863, ‘as never to be of much use to use, even if we had peace and independence today’… Liberation, so often presented as something the Union did for blacks, was as much something they did for themselves.” (p212)

At least by the desperate times of 1865, the Confederates were willing to give up on slavery: “the Davis Administration promised full emancipation to the British and French governments in exchange for recognition.” (p281)

Louisiana makes many appearances, none of them flattering: “In the words of a Carpetbag governor of Louisiana, ‘I don’t pretend to be honest. I only pretend to be as honest as anyone in politics… Why, damn it, everyone is demoralizing down here. Corruption is the fashion.” (p314)

Somehow I had no real idea who Salmon P. Chase was before reading this book. Turns out he was a Governor and Senator from Ohio, US Secretary of the Treasury under Lincoln, Chief Justice of the Supreme Court, and founder of 3 political parties- including the Republicans. “Chief Justice Salmon P. Chase, in one of the most astonishing cases of intellectual honesty on the part of a public official, implicitly branded his own prior actions as Secretary of the Treasury unconstitutional when the court struck down the Greenback’s retroactive legal-tender provision.” (p330)

Either a slave revolt or compensated emancipation might have had much better outcomes than the Civil War: “Rather than revolutionary violence wielded by bondsmen themselves from the bottom up, a violence that at least had the potential to be pinpointed against the South’s guilty minority of slaveowners, the Civil War involved indiscriminate State violence directed from the top down. Nor would an insurgency’s economic devastation likely have reached the war’s $6.6 billion cost (in 1860 prices), about evenly divided between the two sides. The North’s portion alone was enough to buy all slaves and set up each family with forty acres and a mule.” (p355)