The General Economics Thread

You could start with the biography the musical was inspired by with The Federalist Papers as supplementary material. Founding Brothers is also a good read.

We did follow the Jeffersonian path, though. The Jeffersonian legacy eventually became the Democrats through a series of ideological maneuvers and changing the support base over the years, but the agrarian focus of the economy dominated the US up through the 1840s or so. That's why you notice a marked friction about slavery emerging only in the late 1840s or so, even though slavery had become a big deal 20 years earlier with the invention of the cotton gin. Slavery was part of an agricultural America, and the debate over slavery was much less about abolition (although that was always a small part of the conversation dating back to before the Revolution), and more about free farmers, especially in the North and Midwest, who were afraid that they couldn't compete with slavery. Free-soiler opposition to slavery was not for the benefit of blacks, which led to things like the early state of Oregon being both vehemently anti-slavery and also banning black people from living in the state at all.

Slavery didn't become very contentious until rising industrialism threatened the large farmer's place as the driving force behind America, and it was after the Civil War and the Jeffersonian legacy was forcibly suppressed for a while that Hamilton struck back, as it were.

One might say that Hamilton ruled in the industrializing North, while Jefferson was dominant in the South and in the frontier. Once the borders of the nation stopped expanding, Hamilton caught up.

Slavery was contentious during the Revolutionary era - Hamilton was an abolitionist, his friend Laurens (also in the play) was even more of one and fought to raise black regiments both because soldiers were desperately needed and because he wanted to prove they were worthy of being freemen, a clause condemning slavery had to be struck out of the Declaration in order to get the Southern states to accept it and the Constitution was full of related compromises such as the 3/5ths (of a person) compromise and a moratorium on any federal laws outlawing the slave trade "before 1808". At most, the Founders succeeded in kicking the can down the road about 40 years (at which point the abolition movement started to get serious and every new state admittance to the Union had a fight over whether it could be slave or free).

edited 26th Oct '16 10:19:16 AM by Elle

Indeed, slavery was a contentious issue even very early in American history. They knew it was going to cause problems, too, but they couldn't resolve it without destroying the country in the process — which almost happened anyway. There's a quote to the effect of "if we don't resolve this issue now, then in 80 years we'll be going to war over it", which not only correctly predicted the civil war, but also go the timing basically correct. Unfortunately I can't recall the exact quote or who said it.

But yeah, the reason slavery was such a massive and intractable issue in early American history is because a large part of the Southern economy was based on it. Which reminds of of the quote by Upton Sinclair: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it." You couldn't get slaveholding southerners to agree with abolitionists because doing so would ruin them. The American Civil War was essentially inevitable for this single very basic economic reason.

The question was whether slavery would have gone peacefully into the night in another 25-30 years as the potential for industrialization left agriculture in the dust, although that begs the subquestion of whether slaves wouldn't have made good industrial workers, which would have been very scary, because then it might never have gone away, and the American example would have had it spread back to Europe.

Yeah, the fact that the Constitution has an "agree to disagree... for now" clause on slavery is incredibly interesting and relevant. I'm really surprised this isn't more common knowledge.

Well, slavery did evolve, in principle, to "factory towns", indentured servitude, and so on. Despite the fact that the workers were paid wages, they still had nearly as little choice about their occupations and labor conditions. It was the gross inequities introduced by that system that led to the economic and political revolutions of the late 19th and early 20th century.

The Northern industrial interests pushing for abolition weren't really all that excited about the "natural rights of humans", but wanted to get their hands on an expanded supply of cheap labor. The moral argument made for a convenient rallying cry that helped get public sentiment in their favor.

edited 26th Oct '16 11:11:51 AM by Fighteer

The 1776 trope page says the playwright's DVD commentary attributes the quote to Sam Adams' writing - he originally had John Adams in the play say a hundred years hence but took it out because he believed the audience would think he was speaking in hindsight.

(my memory apparently sucks, nevermind)

It's probably more realistic to say that it was a combo of both moralistic and non-moralistic motives, when talking about abolitionists in general.

edited 26th Oct '16 11:15:54 AM by Elle

See Nobel-Prize-winning The Grapes Of Wrath for a fictionalization of how that life felt like.

Still better than slavery: you wouldn't wake up to find that Massa sold your children from under you. You'd just wake up to find them starved, literally.

Of course, the winners of the conflict like to present their motives as entirely philanthropic.

The key macro economic difference between slaves and factory labor is that labor is free to move to where the jobs are (that is, where the economy needs them to be).

edited 26th Oct '16 4:02:37 PM by DeMarquis

Ironically, the movie Lincoln notes that your average non-abolitionist Northerner was lukewarm about supporting the Thirteenth Amendment because they didn't want freed slaves coming up north to "steal their chickens and their jobs."

I'll second Founding Brothers as a good light read concerning Hamilton and early American economic/political policies. Jefferson and Hamilton and The Great Divide go into greater detail, the later makes the case that the Unites States goes through stages of Hamiltonian/Washingtonian and Jeffersonian influence throughout its history.

Also this:

Yeah, but what about the founders of the treasuries of other countries? How much did Hamilton copy from France and England? What about Spain? What about newly-emancipated Latin American countries? What is the history of the Treasuries and Central Banks of Mexico, Argentina, Brazil, Colombia, Cuba?

Wikipedia has a broad overview - the original central bank had a model in the Bank of England. We had about a 25 year period after Jackson where we didn't have a central bank (with the ensuing issues), then an attempt to do it as a distributed national bank system, then in 1907 we finally got The Federal Reserve in more or less its current form.

Extra History's currently running series on the history of paper money is also relevant (they're still on the 1600s).

I can't remember off the top of my head all the details, but I think Elle's links sum most of it up. You remember a the beginning of "Cabinet Battle #1" where they debate Hamilton's debt policies and the creation of a national bank? The bank idea was lifted from the Bank of England. Likewise Hamilton's plan to pay off the debt they assumed from the states and older Articles of Confederation era government was to create a sinking fund like the one Britain used to pay off it's debts.

Hamilton was a great admirer of all things British. More specifically, he loved British power and was determined to protect the Unites States by copying Britain until the young nation was powerful enough to fend off any opportunistic European invaders. He didn't have much use for France's system, which came crashing down during the Revolution anyway.

Yeah but what about Napoleon's system, though?

The history of the Treasury in Brazil is borderline depressing, it moved from being the personal piggy bank of whoever was in charge to another populist tool for the presidency and the legislative.

Speaking of which I've been trying to understand the economy policy of Brazil of the last 8 years and I've found myself with a massive headache over what acts like a Neoclassic Chicago school of macroeconomic thought trying to look like a Keynesian one.

We've had lots of investments and a few tax cuts on upper economic groups, specially the commodity, agribusiness and construction companies and a marginal investment in social security programs (which do something but nowhere near enough), several infrastructure and mineral wealth privatization programs, like privatized roads and mining rights being sold to the Spanish and Chinese respectively.

A spending program that encouraged banks and financial groups to lend money and open more credit lines that encouraged the lower classes to consume using credit and loans. While at the same time keeping the basic interest rates above the inflation, from 7% to 14% while the inflation moved from 6% to 10%.

Lots of constructions from roads and bridges to hospitals and stadiums but not the budged to properly staff, equip and maintain them.

Plenty of fiscal stimulus for agriculture, oil and mining companies to explore the natural resources focused on exportation but little for local production and consumer goods focused on the internal market. Even though the former employs nowhere nearly as much people as the latter.

That is without getting in the mess that happened between 2013 to 2015 where the government essentially burned the country's Dollar reserves to cover the deficit it was running since the end of 2012 while acting it was running with a surplus and increasing the spending accordingly.

Uber UK might be about to have some problems, a ruling was just made that the drivers are employees, so they're entitled to breaks, time off and a minimum wage. My understanding of Uber is that this pretty much runs counter to their business model of just being an app that connects people.

Uber wants to have its cake and eat it too, having as much control over drivers as they would over employees while not giving them the associated benefits. Being just an app that connects people is their stated business model, not their real one.

edited 28th Oct '16 7:19:16 AM by Khudzlin

That is the core of what I think is really messed up about Uber. And with the "sharing economy" in general.

I sometimes feel like Hamilton and more broadly the rest of the Washington administration, are what kept the US from turning out as badly as some of our neighbors to the south, specifically in debt and mired in astronomical corruption, though the early US government was certainly no Singapore.

Edit: Though of course their are other reasons, Britain made a clean break with us whereas I recall reading that Spain tried to claim sovereignty over the nations of Latin America long after the war was over, thus limiting their trade options, and forcing them to prepare themselves for possible invasions. And of course their's the case of poor Haiti, which ended up embargoed by most of the world, including the US, and forced to pay a gigantic sum to France to avoid yet another invasion. Speaking of Haiti, I'm curious as to why the nations of Latin America, bar Brazil, were able to abolish slavery so soon after their wars of independence, whilst the issue simmered for so long in the US.

edited 29th Oct '16 7:31:34 PM by JackOLantern1337

The reason slavery vanished real quick from most of Latin America can be summed up as "Simon Bolivar," the big man of Latin American independence who was also fiercely anti-slavery.

Outside of the Bolivar-sphere, slavery was abolished a lot more gradually and often in piecemeal format. (Indian slavery was legal in Mexico until the 20th century, IIRC.)

I think the reason that the US generally avoided the problems of the Latin American administrations is because its culture and elite came from England, with the English constitutional tradition (such as it was) behind them. British ex-colonies have generally done better than Spanish ex-colonies, though the road's often been rocky for both - so I might well conclude that there's something in the idea of "the rights of Englishmen."

edited 29th Oct '16 8:13:43 PM by Ramidel

Also Latin American slavery was different, it was import based with slaves having to constantly be bought over from Africa. The US actually treated its slave population better and thus enabled it to grow and become multi generational. While Latin America often worked its slaves to death before they could have children.

For Latin America slavery thus became much more difficult without the Spanish Navy to protect slave shipments, especially if any slavery action at sea had begun by that point.

edited 29th Oct '16 8:56:19 PM by Silasw

I think Crash Course mentioned that the nature of working in the silver mines and sugar plantations (South America) was simply way, way more deadly than in cotton plantations (North America)....yeah, it's super depressing to think about that it made more economical sense to work slaves to death and buy new ones than try to keep alive the ones you had...

edited 30th Oct '16 2:28:41 PM by nightwyrm_zero