Noah Smith tweeted this today.
In the long run, most wealth is produced, not plundered. Slavery
created bad institutions that inhibited industrialization.
Which prompted the following back and forth on Twitter.
Josh Mound Retweeted
Noah Smith
@Ed_Baptist
The following tweet seems to be almost the polar opposite of one of your book's
main args, right?
Josh Mound added,
Noah Smith @Noahpinion
In the long run, most wealth is produced, not
plundered. Slavery created bad institutions that inhibited industrialization.
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@JoshuaMound
The emergence of cotton slavery in the US South is pretty highly correlated
with the Industrial Revolution.
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@Ed_Baptist
Right, he goes on to say that b/c North industrialized first it shows slavery
was inefficient, which is also opp of your book.
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@Ed_Baptist
It's a pretty clear case of economists abstract anti-empirical theorizing on
historical issues that totally misses actual facts.
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@JoshuaMound
For the record (and as @Ed_Baptist
& I have discussed) abstract economic theorizing need not be wrong. http://economics.mit.edu/files/8975
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@Econ_Marshall @JoshuaMound agreed! But let's mark our
theories to data and analysis.
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10:53 AM - 20 Jan 2016 · Details
The remarkable thing about this is Baptist’s assertions about economists' abstract anti-empirical economic theorizing and the need to “mark our theories to data.”
This, again, is Baptist’s argument on the economic significance of slavery
In 1836, the total amount of economic
activity―the value of all the goods and services produced―in the United States
was about $1.5 billion. Of this, the value of the cotton crop itself, total
pounds multiplied by average price per pound―$77 million―was about 5 percent of
that entire gross domestic product. This percentage might seem small, but after
subsistence agriculture, cotton sales were the largest single source of value
in the American economy. Even this number, however, barely begins to measure
the goods and services directly generated by cotton production. The freight of
cotton to Liverpool by sea, insurance and interest paid on commercial
credit―all would bring the total to more than $100 million (see Table 4.1).
Next come the second- order effects that
comprised the goods and services necessary to produce cotton. There was the
purchase of slaves―perhaps $40 million in 1836 alone, a year that made many
memories of long marches forced on stolen people. Then there was the purchase
of land, the cost of credit for such purchases, the pork and the corn bought at
the river landings, the axes that the slaves used to clear land and the cloth
they wore, even the luxury goods and other spending by the slaveholding
families. All of that probably added up to about $100 million more.
Third
order effects, the hardest to calculate, included the money spent by
millworkers and Illinois hog farmers, the wages paid to steamboat workers, and
the revenues yielded by investments made with the profits of the merchants,
manufacturers, and slave traders who derived some or all of their income either
directly or indirectly from the southwestern fields. These third order effects
would also include the dollars spent and spent again in communities where
cotton related trades made a significant impact another category of these
effects is the value of foreign goods imported on credit sustained the opposite flow of cotton. All
these goods and services might have added up to $200 million. Given the short
term of most commercial credit in 1836, each dollar “imported” for cotton would
be turned over about twice a year: $400 million. All told more than $600
million, or almost half of the economic activity in the United States in 1836,
derived directly or indirectly from cotton produced by the million odd slaves―
6 percent of the total US population―who in that year toiled in labor camps on
slavery’s frontier.”
Put aside the fact that he is comparing GDP to things that
are not counted in GDP. The really important thing to notice about Baptist’s
argument is this
“perhaps $40 million”
“probably added up to about $100 million more”
“might have added up to $200 million.”
These are not estimates based upon examination of historical
sources; Baptist simply made the numbers up. Even the one table that he refers to does not actually contain the suggested information. This is the empirical work, the
marking to data, that he engages in. Baptist’s argument is supported by neither
logic nor evidence. Apparently, Baptist’s supporters have either not actually read
the book, or they find this kind of “evidence” persuasive. If you find Baptist
persuasive you should probably stop reading this blog.
Tomorrow, I’ll write about my thoughts on Smith’s initial
statement.
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