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Pittsburgh Tribune-Review: “The Pilgrims’ economic progress”

In my column for the November 29th, 2012, edition of the Pittsburgh Tribune-Review I wrote about a vital economic lesson learned very early by the English settlers of Massachusetts. You can read my column in full beneath the fold.

The Pilgrims’ economic progress

On Thanksgiving, I sparked some controversy by recounting to friends the story of the first Thanksgiving.

As every schoolchild knows, the small band of brave souls carried to Massachusetts in 1620 by the Mayflower did not have much to be thankful for at first. Nearly half of the passengers died before that winter was over. Less well known, however, is that the Pilgrims’ existence in Plymouth Plantation continued to be precarious until they abandoned primitive communism and adopted private-property rights.

Here’s Yale law professor Robert Ellickson:

“Although they planted household gardens almost from the start, they collectivized initial field and livestock operations. The settlers had some agricultural successes, but they were unable to grow corn in their common field. Within six months of reaching Plymouth, almost one-half of the population had perished from disease.

“In 1624 the Plymouth colonists deviated from the investors’ plan and assigned each family from one to 10 acres, depending on the number of family members. This greatly increased productivity.”

Indeed it did, as noted by Plymouth Gov. William Bradford:

“(Privatization) had very good success; for it made all hands very industrious, so as much more corne was planted then other waise. … The women now wente willingly into the field, and tooke their little-ones with them to set corne, which before would aledg weaknes and inabilitie; whome to have compelled would have bene thought great tiranie and oppression.”

The lesson is clear. Economic systems in which each person is entitled to live off the fruits of other people’s efforts discourage the production of the fruits that we’d all like to live off of. In contrast, economic systems grounded on private-property rights make “all hands very industrious” by strengthening everyone’s incentives to work hard and produce.

Some friends objected to my telling of the Pilgrims’ progress. These friends insisted that reality is too complex to be reduced to such simple accounts.

It’s true that reality is vastly more complicated than any one account or theory of it often leads gullible undergraduates to believe. And caution is always in order when drawing lessons from individual historical incidents.

Yet the complexity of reality doesn’t mean that every account of it must be encyclopedic to be useful.

At the start of each semester, I ask my students a hypothetical question: “If I promise that you’ll get an ‘A’ for this course, regardless of how you perform on the exams, will that promise affect your study habits for my class?” Each and every one of my students immediately confesses: “Of course it will. I won’t study as hard as I would if my grade depends on my performance on the exams.”

Lessons don’t get any simpler than this one. And while a doctoral student writing a dissertation on the motivations of college undergraduates would undoubtedly give a more full and detailed analysis of my students’ reactions, the essential and unadorned point of my hypothetical question is powerful. That point is that incentives matter. People respond to incentives, and they respond in pretty predictable ways.

Our Pilgrim fathers (and mothers) proved this point.

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