Theme: Incentives

THE NORTH AND SOUTH DIFFERENCES IN INCENTIVES VS “ITS ALL ABOUT SLAVERY” NONSENSE
(Part of my ‘it’s not really slavery’ but economics and self determination that caused the war)

Moralizing an economic issue is always and everywhere a useful political tactic. Propaganda to justify a costly war during and after it’s conduct is always and everywhere also a useful political tactic. Grownups who study history pay little heed to what people argue or justify and simply look at the incentives that they are arguing or justifying.

The 3 Billion in 1865 dollars in immediate losses to the South that in current equivalent is at least 108 Billion – and on a population of five only million. However, the total losses over the next more-than-century are likely in the trillions in current equivalent.

Add to this that the South was paying more than half the federal taxes with 1/4 the population of the North – or stated differently the South was paying 4 times the taxes per person as the north.

So the people lost an absurd amount of money, killed over 600 thousand people, destroyed a civilization, because we wouldn’t borrow the money to buy back the slaves and repatriate them to Africa, so that the South could afford to make the transition, and not be ‘stuck’ with a permanent underclass.

Instead we spent 5 Billion in 1865 dollars on the war, meaning about 90 Billion today, when we could have incrementally purchased the slaves and incrementally brought the south into an industrialized economy for their industrial scale agriculture serving international markets – especially for cotton and tobacco.

The price of slaves at the time was about:
Ordinary (of any age, sex, or condition) in 1860 = $800 ($21,300 in 2009 dollars)
Prime field hand (18-30 year-old man) in 1850 = $1,200 ($34,000 in 2009 dollars)
Skilled slave (e.g. a blacksmith) in 1850 = $ 2,000 ($56,700 in 2009 dollars)

If the average cost of a slave was $800, and we round up to 4M slaves, that’s 3,200,000,000 (3 Billion in 1860) or $122,000,000,000 (122 Billion Today), meaning that a population of 18.5 Northernerss + 5.5 Southerners 24M would bear a cost of $133 per person, with an average income of $300 per year, but only around 40% of people worked for wages, and the rest were subsistence farmers.

Economic context: In 1865, while the average income in the USA was approximately $300 per year, this number varied depending on factors such as occupation, location, and gender. For example, a skilled laborer might have earned around $500 per year, while a farm laborer might have earned only $200.

If paid over ten years including the interest necessary at the time, the average person’s cost per year would have been a burden but not an unsustainable one. Though this cost would have been distributed by tax revenue, and the south and north would have each paid half, despite the federal tax rate of the south being 4 times that of the north.

In other words, the North was trying to impose economic warfare on the south in order to prevent the south from dominating the western expansion, and when the south withdrew from the union to do so, the north began it’s war of aggression to prevent the south’s secession, and the south’s dominance of the western expansion. Even given that most immigrants were moving into northern territories, once in western territories their intersets would have aligned with Atlanta over the North’s NY, Boston, Philadelphia and even Chicago.

So was slavery the issue? Or was it basic realistic economics and slavery was a solvable problem that the north wouldn’t agree to pay for directly, but instead would pay for the war and the consequences just to prevent the north’s loss of control over the western expansion.

My interest here is not justifying slavery but illustrating that giving up slavery for the south was an economic impossibility without a gradual medium term plan of costly transition that the north refused to pay for. And that, as good christians, the folly of that age, like the present, consists of casting pragmatism as oppression in order to motivate a democratic (ignorant) polity to prosecute a war and pay its higher costs than the lower costs of simply solving the problem incrementally and financially.

Cheers

(Ps: I’ve used very loose numbers here so that I don’t need to take three days to write a twitter post. That said, the purchasing power of money, and the unaccounted for risk of the differences in income between these periods, leaves room for understanding the general principles rather than values more precise than those I”ve used here.)