My intrepid Mercatus Center colleague Veronique de Rugy continues her on-going effort to expose the shenanigans and power-lust of that great geyser of cronyism, the U.S. Export-Import Bank. Phil Magness, in a piece that originally appeared in National Review, eviscerates the take of practitioners of the so-called “New History of Capitalism” on the connection between slavery and capitalism. Two slices: The NHC came under intense fire from other experts, and not only for its anti-capitalist politicking. As with most theories that attempt to reduce economic development to a single product or industry, its empirical claims about the U.S. cotton sector fell flat. [Edward] Baptist, for example, employed novel accounting practices of his own invention to suggest that slave-produced cotton
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Phil Magness, in a piece that originally appeared in National Review, eviscerates the take of practitioners of the so-called “New History of Capitalism” on the connection between slavery and capitalism. Two slices:
The NHC came under intense fire from other experts, and not only for its anti-capitalist politicking. As with most theories that attempt to reduce economic development to a single product or industry, its empirical claims about the U.S. cotton sector fell flat. [Edward] Baptist, for example, employed novel accounting practices of his own invention to suggest that slave-produced cotton and its derivatives amounted to a full half of the United States’ gross domestic product before the Civil War. In a typical year, the actual number hovered around 5 or 6 percent. Economic historians made quick work of several core NHC books, finding evidence of seemingly deliberate misquotations, misrepresented sources, and above all else a general unfamiliarity with the previous half century of academic literature on the subject.
But a casual reader of the New York Times’ 1619 Project would find no indication of how poorly the NHC literature has fared in the last decade. To the contrary, contributor Matthew Desmond—a sociologist with no expertise in the history of slavery—adopts the NHC literature as his own in a blistering essay that faults a slavery-infused American capitalism for rising inequality, environmental destruction, failures to expand the welfare state, insufficiently progressive federal income taxes, and a long list of related 21st-century progressive discontents about economic policy. The overarching message: Capitalism is brutal, that brutality derives from slavery, and our national reckoning with slavery’s legacy must therefore alter the very nature of our economic system to allow expansive government interference in the economy. The New History of Capitalism’s case for linking capitalism to slavery is intended as a case against capitalism itself.
In practice, American slavery benefited from immense government support. Federal appropriations sustained the Fugitive Slave Act and subsidized slave patrols to return escapees to the South. Although an extraordinary example, the rendition of escaped slave Anthony Burns from Boston in 1854 cost the federal government an estimated $40,000 (over $1 million today when adjusted for inflation)—most of it spent on a massive military escort after a group of abolitionists attempted to free Burns from a federal courthouse. Antebellum federal statutes not only prioritized fortifications and armories to deter the threat of slave revolts. They also included provisions to censor abolitionist literature from the mail; to fund “internal improvements” in the ports, canals, and railroads used to ship slave-produced cotton; to subsidize a domestic textile industry built around the South’s raw materials; and even to create government credit and monetary policies that favored large plantation owners. Indeed, several of the Confederate secession proclamations of 1860–61 aired common grievances about the threatened loss of these and other tax-dollar-subsidized federal obligations to slavery.
Policies of this type are hallmarks of what is commonly referred to as “mercantilism”—an economic system in which government policy aims to cultivate a symbiosis between public expenditures and strategically selected beneficiary sectors of production. In shirking long-standing definitions, the NHC literature simply rebrands the same policies as extensions of “capitalism.” The final sleight of hand in this semantic game is to equate the relabeled slave-based economic system with something resembling a noninterventionist laissez-faire economic theory, thereby saddling 21st-century free-market economic policy—tax cuts, budget balancing, even opposition to the Green New Deal—with the moral baggage of plantation slavery.
There’s a problem with the NHC’s genealogical lesson, though—it’s almost entirely false, the product of a willfully negligent intellectual history.
The Green Left has recklessly claimed that global warming will increase the number of people killed by natural disasters. Instead, since 1920, the number of people killed by natural disasters has declined by over 80 percent, as the planet’s average temperature has risen by 1.12 degrees Celsius and world population has quadrupled from less than two billion to almost eight billion.
This move by FedEx is just one example of how a market system allows businesses to mitigate problems. FedEx didn’t have to be ordered to do this. The company saw a need and found an original way to meet that need with capacity it already had.
It wasn’t a market failure that led to the port congestion in San Pedro Bay. Over the past few decades, different levels of government have stood in the way of modernizing America’s most important ports. Shippers shouldn’t be forced to choose between sending freight from Asia through the Panama Canal to the East Coast, sending it on FedEx’s imported containers to a small port, or waiting in a line of more than 100 ships waiting for a berth at Los Angeles/Long Beach. But that’s where we’re at right now, and FedEx is demonstrating one way that market participants can make the best of a bad situation.
Historically, the practical case is that it’s the wrong solution chasing a nonexistent problem. Proponents of mandatory voting think that low voter turnout is a sign of civic decay and democratic entropy. This view, no doubt accurate or at least plausible for some people, misses the fact that for many other Americans not voting is a sign of general satisfaction. We had record-breaking turnout in 2020. Raise your hand if think that was proof that America’s civic and democratic commitments are stronger than ever.
More importantly, if voting is virtuous, its virtue—like all virtue—derives from it being voluntary. Compelled virtue is an oxymoron.