Mr. Magness’s book examines the 1619 Project’s assertion that slave labor powered the U.S. economy, an argument that rests on “dubious statistical claims and shoddy research practices,” which have been refuted empirically in peer-reviewed journals. “The thrust of these exaggerations is to recast slavery as a distinctly capitalist enterprise, which, in turn, services the 1619 Project’s political message,” Mr. Magness writes. “The worthy historical task of documenting the horrors of American slavery has been cynically repurposed into an ideological attack on free-market capitalism.”
The 1619 Project is not an intellectual exercise in search of truth. It’s a political exercise in search of power. More scholars could and should be calling out this false history, but let’s be grateful to the ones who have risen to the occasion.
Baptist’s book has come under additional scrutiny for a widely-cited passage in which he purports to show the cotton sector’s singular centrality to the antebellum American economy. Using a “back of the envelope” calculation of “second order” and “third order” effects of cotton production, transport, shipping, and finance, he eventually arrives at a stunning statistic asserting that “more than $600 million, or almost half of the economic activity of the United States in 1836,” as measured by Gross Domestic Product (GDP), could be traced to slave-produced cotton (321–22).
Far from showing that cotton truly was the economic king, these figures are the result of an elementary accounting error. GDP, by definition, only measures finished goods, under the assumption that their final price reflects intermediate stages of production. By including what he calls second- and third-order effects, however, Baptist effectively double-counts cotton’s intermediate stages in the numerator while failing to similarly adjust the GDP-based denominator. In at least one instance, he further confuses shipping and insurance, which fall on the cost side of the balance sheet, for outputs, thereby artificially increasing the value of cotton production. The result haplessly inflates cotton’s share of national economic output from roughly six to eight percent to an astounding fifty percent (Jason Brennan, Why It’s OK to Want to be Rich, Routledge, 2020, pp. 130–31).
Industrial policy advocates have expressed shock and dismay at the various Senate Committees’ “logrolling” efforts, but their surprise is unwarranted. Indeed, this kind of behavior is exactly what the literal dictionary definition of public choice tells us will happen:
The logic of collective action explains why farmers have secured government subsidies at the expense of millions of unorganized consumers, who pay higher prices for food, and why textile manufacturers have benefited significantly from trade barriers at the expense of clothing buyers. Voted on separately, neither of those legislatively enacted special-interest measures would pass. But by means of logrolling bargains, in which the representatives of farm states agree to trade their votes on behalf of trade protectionism in exchange for pledges of support for agricultural subsidies from the representatives of textile-manufacturing states, both bills can secure a majority. Alternatively, numerous programs of this sort can be packaged in omnibus bills that most legislators will support in order to get their individual pet projects enacted. The legislative pork barrel is facilitated by rational-voter ignorance about the adverse effects of legislative decisions on their personal well-being. It also is facilitated by electoral advantages that make it difficult for challengers to unseat incumbents, who, accordingly, can take positions that work against their constituents’ interests with little fear of reprisal.
And we’ve known for months now that every industry group and lobbyist in town was gearing up for this moment. Throw in the fact that this is (supposedly) must-pass, bipartisan “China legislation,” and it’d be shocking if all the logrolling and pork didn’t happen.
George Will rightly celebrates American innovativeness (although he seems to be more optimistic than am I – and more optimistic than is Scott Lincicome [see above] – about the likely outcome of Congress’s current effort to further spur such innovativeness).
For starters, the lack of federal money to fight poverty isn’t the issue with child poverty. As Robert Rector of the Heritage Foundation noted recently, “before the COVID-19 recession, the U.S. spent nearly $500 billion on means-tested cash, food, housing, and medical care for poor and low-income families with children. This is seven times the amount needed to eliminate all child poverty in the U.S., according to Census figures.”
One reason for that anomaly is that most of these benefits aren’t counted as income in official government poverty reports. But the most profound reason is that no country gets out of poverty through redistribution of income. To make a noticeable improvement on the poverty front, people need to improve their ability to earn and move up the income ladder. Unfortunately, built into this tax credit expansion (with no requirement to work or look for work) is a disincentive to work that could put the brakes on this process—as we saw before in the bipartisan welfare reforms of 1996.
Who’d a-thunk it?: “Teen Cigarette Smoking Went Up Following Flavored Tobacco Ban.”
Wise writing from Anthony Gill. A slice:
But is there an alternative to the long shadow of the state? Yes! That alternative is civil society and it has a long history of governing human relations. We form voluntary clubs. We live in communities. Sometimes these associations develop formal bylaws that govern our behavior, but they also include “unstated rules” amongst friends and infrequent acquaintances. Most importantly, civil society involves its participants in the creation, propagation, and maintenance of the daily rules we live by, and in doing so creates a shared culture that helps bring cooperation, coordination, and peace.
Juliette Sellgren talks with Sally Satel about addiction.
Here’s my GMU Econ colleague Larry White on the origins of U.S. government paper money and the end of private banknotes. Here’s his conclusion:
The imagined benefits of centralized control rested on wishful thinking. Few economic historians today would give a passing grade to the Federal Reserve’s conduct of monetary policy in the decade before or in the decade after 1935. The Fed’s post-Depression performance has also left a lot to be desired, but not for lack of control over the currency.
