Could the American South have worked without Slave Labour?

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Båtsman

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I must admit I am not sure what this strong empirical evidence is. Japan has inflation that has averaged 0.3 over the last 4 quaters which is close to the trend rate over the last 25 years. Abenomics has been a complete failure, as I predicted it would.


The Long Depression is a misnomer. Friedman himself admits that the decade from 1869 to 1879 saw a 3-percent-per annum increase in money national product, an outstanding real national product growth of 6.8 percent per year in this period, and a phenomenal rise of 4.5 percent per year in real product per capita. There was no contraction in monetary supply, the money supply increased by 2.7% per annum over this period and the value of banknotes in the economy increased from $1.9bn to 2.3bn - that is an increase of 2.6% a year! I don't know how you define a depression but I would bet that most European chancellors would kill to have macroeconomic indicators like that!


Sorry for sidetracking this thread a bit.
I'm not all that up to date on the current Abenomics program unfortunately, having only read a few scattered newspaper articles from the economist and the like. I did however finish Steinmo's The Evolution of Modern States just yesterday, which is the best account of the Japanese post-war economy. But it is from 2010 and doesn't touch any of Abe's reforms. What current book do you recommend for understanding the structural reforms of Abe? Since the ills of Japan are structural in nature (The current problems all stem from the implementation of neo-liberal ideas upon the smallest welfare state in any industrialised nation, which predictably lead to disaster (according to Steinmo)).
 
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cacra

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Sorry for sidetracking this thread a bit.
I'm not all that up to date on the current Abenomics program unfortunately, having only read a few scattered newspaper articles from the economist an the like. I did however finish Steinmo's The Evolution of Modern States just yesterday, which is the best account of the Japanese post-war economy. But it is from 2010 and doesn't touch any of Abe's reforms. What current book do you recommend for understanding the structural reforms of Abe? Since the ills of Japan are structural in nature (The current problems all stem from the implementation of neo-liberal ideas upon the smallest welfare state in any industrialised nation, which predictably lead to disaster (according to Steinmo)).
Pmed
 

keynes2.0

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I must admit I am not sure what this strong empirical evidence is. Japan has inflation that has averaged 0.3 over the last 4 quaters which is close to the trend rate over the last 25 years. Abenomics has been a complete failure, as I predicted it would.

51833-1.jpg


Japense 1 year inflation average: .3%
Japense 3 year inflation average 1.37%


Energy was cheap in 2016 and Japan as a major energy importer was feeling the effects of that. Real wages rose after four straight years of decline.

The Long Depression is a misnomer. Friedman himself admits that the decade from 1869 to 1879 saw a 3-percent-per annum increase in money national product,

US population, 1870 census: 38,558,371
US population, 1880 census: 50,189,209

Average annual increase: 2.66%

So the per capita increase in the nominal GDP was not 3% but .33%.
By comparison "Abenomics has been a complete failure, as I predicted it would" is a per capita increase in nominal GDP of 1.02% annually since Abe took office (so even including before he did anything!). And Abenomics has not happened under the benefit of what was probably the most rapid period of total factor productivity growth in human history while the Long Depression did.

Now I dont actually think that the Long Depression was a horrible economic time frame. The aforementioned rapid improvement in TFP was a great thing and that more then compensated for all the mistakes. My argument is more subtle, while it was a period of rapid economic growth it clearly should have been a period of even more rapid economic growth but was held back by bad monetary policy. You might disagree with this assessment if you wish however it is very bizare of you to argue against this by using nominal GDP, nominal GDP is exactly what highlights the failure!

What current book do you recommend for understanding the structural reforms of Abe?

Books shouldn't really be the go to source on events that are still unfolding, IMHO. I like Bloomberg View myself. Any major development on Japan is going to get an article and if there is an important article somewhere else, they'll put it in the weekly roundup.

I also follow Noah Smith on twitter but I have to admit that has become more for the sci-fi references then for his expertise on Japanese economics. ;)
 
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Yakman

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I must admit I am not sure what this strong empirical evidence is. Japan has inflation that has averaged 0.3 over the last 4 quaters which is close to the trend rate over the last 25 years. Abenomics has been a complete failure, as I predicted it would.
b/c inflation was .3 over the past year, then an entire economic programme is a failure? hardly.

Japan has massive structural problems which impeded growth - and yet, it's doing just fine. I'd say Abenomics needs to be seen through, but as of right now, it's working.
 

cacra

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51833-1.jpg






US population, 1870 census: 38,558,371
US population, 1880 census: 50,189,209

Average annual increase: 2.66%

So the per capita increase in the nominal GDP was not 3% but .33%.
By comparison "Abenomics has been a complete failure, as I predicted it would" is a per capita increase in nominal GDP of 1.02% annually since Abe took office (so even including before he did anything!). And Abenomics has not happened under the benefit of what was probably the most rapid period of total factor productivity growth in human history while the Long Depression did.

Now I dont actually think that the Long Depression was a horrible economic time frame. The aforementioned rapid improvement in TFP was a great thing and that more then compensated for all the mistakes. My argument is more subtle, while it was a period of rapid economic growth it clearly should have been a period of even more rapid economic growth but was held back by bad monetary policy. You might disagree with this assessment if you wish however it is very bizare of you to argue against this by using nominal GDP, nominal GDP is exactly what highlights the failure!
Fine, real national product grew 6.8 percent per year from 1869-79, and real product per capita rose of 4.5 percent per year during the period.

Rothbard in his history of money and banking in the United States puts it best imo (it's available as a free PDF from mises.org.)

'It should be clear, then, that the “great depression” of the 1870s is merely a myth—a myth brought about by misinterpretation of the fact that prices in general fell sharply during the entire period. Indeed they fell from the end of the Civil War until 1879. Friedman and Schwartz estimated that prices in general fell from 1869 to 1879 by 3.8 percent per annum. Unfortunately, most historians and economists are conditioned to believe that steadily and sharply falling prices must result in depression: hence their amazement at the obvious prosperity and economic growth during this era. For they have overlooked the fact that in the natural course of events, when government and the banking system do not increase the money supply very rapidly, freemarket capitalism will result in an increase of production and economic growth so great as to swamp the increase of money supply. Prices will fall, and the consequences will be not depression or stagnation, but prosperity (since costs are falling, too) economic growth, and the spread of the increased living standard to all the consumers.'
 

JodelDiplom

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'It should be clear, then, that the “great depression” of the 1870s is merely a myth—a myth brought about by misinterpretation of the fact that prices in general fell sharply during the entire period. Indeed they fell from the end of the Civil War until 1879. Friedman and Schwartz estimated that prices in general fell from 1869 to 1879 by 3.8 percent per annum. Unfortunately, most historians and economists are conditioned to believe that steadily and sharply falling prices must result in depression: hence their amazement at the obvious prosperity and economic growth during this era. For they have overlooked the fact that in the natural course of events, when government and the banking system do not increase the money supply very rapidly, freemarket capitalism will result in an increase of production and economic growth so great as to swamp the increase of money supply. Prices will fall, and the consequences will be not depression or stagnation, but prosperity (since costs are falling, too) economic growth, and the spread of the increased living standard to all the consumers.'
Of course a libertarian crank like Rothbard would put it like that and cite his idea of what a "natural course of events" would be, to trump evidence cited by others. Ideology over evidence... par for the course for libertarians.
 

keynes2.0

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Unfortunately, most historians and economists are conditioned to believe that steadily and sharply falling prices must result in depression: hence their amazement at the obvious prosperity and economic growth during this era.

What a ridiculous strawman. Economists call the period the second industrial revolution as well as calling it the long depression. Kind of an unusual name if they have a pavlovian response to assume growth is impossible under those conditions.

By my count that is strike three.
 

cacra

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What a ridiculous strawman. Economists call the period the second industrial revolution as well as calling it the long depression. Kind of an unusual name if they have a pavlovian response to assume growth is impossible under those conditions.

By my count that is strike three.
Every single macroeconomic indicator I've provided shows clear evidence that there was no recession and there was certainly no depression; instead America experienced a boom by any meaningful definition.

I don't think it is useful to just say that 'despite it being a period of rapid economic growth, it should have been a period of even greater economic growth.' You could make that argument about any period of history.
 

keynes2.0

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Every single macroeconomic indicator I've provided shows clear evidence that there was no recession

Hey, do me a quick favor. Either:
1) Quote for me the post where any person in this thread said there was a recession
2) Stop talking as if they did

I don't think it is useful to just say that 'despite it being a period of rapid economic growth, it should have been a period of even greater economic growth.' You could make that argument about any period of history.

Yes, it's rather remarkable how if you ignore the reasons for a conclusion it becomes unsubstantiated.
 

cacra

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Of course a libertarian crank like Rothbard would put it like that and cite his idea of what a "natural course of events" would be, to trump evidence cited by others. Ideology over evidence... par for the course for libertarians.
Rothbard is guilty of hyperbole on occasion but have you read The Monetary History of the US? Friedman and Schwartz are guilty of hyperbole at least as much as Rothbard is.
 

cacra

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Hey, do me a quick favor. Either:
1) Quote for me the post where any person in this thread said there was a recession
2) Stop talking as if they did


Yes, it's rather remarkable how if you ignore the reasons for a conclusion it becomes unsubstantiated.
A depression is a long, severe recession. What do you think it means?
 

keynes2.0

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A depression is a long, severe recession. What do you think it means?

A period of long term economic under-performance characterized by a financial sector that does not produce investment equal to the needs of society at the current technological frontier and low interest rates (so not the same as stagflation).

Rothbard is guilty of hyperbole on occasion but have you read The Monetary History of the US? Friedman and Schwartz are guilty of hyperbole at least as much as Rothbard is.

So the radical conspiracy right wing is guilty of hyperbole and the respectable hard right is also guilty of hyperbole.

Well guys, I dont know where we can go from here.
 

cacra

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That's stagnation or just underperformance, a depression requires a fall in output by definition. I think it's just basic knowledge gcse-tier economic definitions. any further words will just be wasted so I'll stop.
 

noobermenschen

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I am in the middle of reading 1493 by Charles Mann, author of 1491 (which I haven't read yet) and he does discuss possible incentives to slavery which have been touched upon in this thread (before the derail anyway :p). Mann starts by laying out the case that British colonies would have been the least likely places for slavery to take root:

- Indentured servants were much more productive than slaves as they knew the language, customs and work requirements. They were also willing participants and moreover proper subjects who would have moved on to become productive landowners when their contracts expired.

- British culture was the most anti-slavery in Europe. I am very unsure of this claim given English conduct in Ireland and English participation, including direct investments by Her Majesty Queen Elizabeth, in John Hawkins' slaving voyages during the 1560s. Social mobility was higher in England than most of Europe and making a fortune through owning or especially trading slaves was a fast way to move on up in society (this also contributed to the Englishman's gleeful pursuit of piracy). On the other side of the coin (not mentioned in this book, at least not yet) the Cimmarrones - escaped African slaves - were recognized by England and even earlier by Spain to be a serious threat to the security of Spanish colonies, one which the Spanish themselves created.

Mann then lays out his argument with two small and one very large reasons why slavery took root south of Chesapeake bay, As he put it, colonies north of the Mason-Dixon line were societies that owned slaves - colonies south of that line developed into slave-owning societies.

- Labor was desperately short and land unbelievably plentiful to the point that those indentured servants that fit right in would sometimes run off to another colony to gain a fresh start as a freeholder, thus reducing their value a bit. Though this would have happened in all the colonies, I suppose it likely would have been more desirable to run from the sweltering south to the more salubrious north. Moreover, the total supply of indentured servants dried up periodically during the English Civil War and English-Dutch wars.

- Indian tribes bordering on Carolina colony were almost endemically at war, a continuation of the shakeout from the collapse of the mound-building societies a couple of centuries before. (Not mentioned in the book was that northern tribes, especially the Iroquois Confederation, had a more developed diplomatic toolbox for conflict resolution.) A byproduct of this constant war was capturing and owning slaves, which was greatly exacerbated by colonists' demand for labor, willingness to trade guns, and demands that their new partners repeatedly hit tribes allied with the Spanish (who were trying to push the English out of Carolina). So the southern colonies developed a large slave market even before Africans started arriving in large numbers.

- Finally, and most importantly, were the microscopic immigrants: Malaria (plasmodium vivax, endemic to much of the Old World, including Southeast England; and plasmodium falciparum, endemic only to the tropics and subtropics, including Southern Europe) and Yellow Fever.

As can be guessed by the name, mal-aria (bad air) was not well understood at the time, often called tertiary fever, and was pretty widespread. The original Jamestown colonists probably brought p.vivax with them, but the disease did not stand out much, any deaths not of starvation or indian attacks (lots of those too) were called "seasoning deaths", usually caused by p.vivax or another disease jumping a weakened malaria victim. Mann points out that after a steep and costly learning curve seasoning deaths had been reduced to a mere 10% of new arrivals when they began to spike upwards again, almost certainly marking the arrival of p.falciparum.

Now during this time population records showed slavery did develop in, but did not take over, the Old South. That came after the "Yellow Jack" hit in the 17th century. Of the victims with white or red skin, fully half of the adults died vomiting blood (children were much less likely to die of Yellow fever, though more likely to die from Malaria just to make things fair). That is when the scales tipped in favor of African labor, despite the much greater cost and risk (both physical and spiritual) associated with chattel slavery. West and Central Africans were largely immune from Malaria, and new arrivals often had Yellow Fever as a childhood ailment. Their survivability in spite of their harsh treatment made them the only sure source of labor for the South, so the machinery (both physical and spiritual) for large scale bondage were slowly built over the late 17th to the early 19th century.

As an aside Mann also makes a case why large plantations flourished in this region rather than small family farms. A large farm with twenty workers could weather the loss of a hand during harvest time better than a small farm with three. Large plantations had the space for a house on a huge manicured lawn atop a treeless, breezy hilltop - the better to keep away the mosquitoes. And finally wealthy farmers could afford to literally head for the hills (or for the coast) during the sickly season in the fall. It's definitely easier to maintain a farm if the farmer ain't dead.

Good book so far, the author throws a few squirrelly theories on the table but nothing on the level of China discovering America. I am just beginning the chapters on Asia but I believe Mann attempts to answer the "why Europe and not China?" question that Jared Diamond refused to answer in Guns, Germs, and Steel.
 
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Well, could it?
White indentured servants had a pretty high death rate upon arriving in the South due to Malaria while black slaves were mostly immune to Malaria.
What else would have made it harder?

If they had not used slave labor to such an extent initially they could have but the south developed their economy in a way that needed slaves for it to be profitable. This is one big reason for the civil war being that the south was established in a way that relied on slaves for their economy to work. Of course this in no way justifys the use of slaves.
 

Klausewitz

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US population, 1870 census: 38,558,371
US population, 1880 census: 50,189,209

Average annual increase: 2.66%

So the per capita increase in the nominal GDP was not 3% but .33%.

The US is exactly the wrong example to use if you want to try and put some tie between gold and silver backing of currencies and secular deflation in the late 19th century. The US financial sector wasn't tied to gold or silver solely, but also had an immensely powerful tie to government debt, since the national banks were required to back their note issue (the bulk of the circulation) with US bonds. In an era where the US was paying off the debt at a high rate, of course there was deflation: The monetary base wasn't failing to keep up with demand because of problems in the supply of gold and silver (absolutely huge amounts were being mined in this period -- some absurd percentage of the world's gold supply, in the 90%+ range IIRC, was mined only since 1850), but because the crucial reserve asset was outright shrinking in supply.

'There's no enough gold!' is such a silly argument to make against gold standards in systems with long run flexible prices. There are much better reasons to be against specie standards.
 

Klausewitz

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Indentured Servants?
they run away. you have to recruit more. they complain. they get unindentured. you don't get their children. they demand wages.

ugh.