Gordon Tullock on the Economics of Slavery

Gordon Tullock was a phenomenally precise and well-articulated economist. Since his untimely passing I have spent a few idle hours perusing some of his lesser-known works. A review of two books entitles 'The Economics of Slavery' is a true gem and showcases his excellent grasp of history. Tullock offers commentary on the phenomenon known as manumission, which should strike any slave-based society as the slaves themselves are apt to know better how to take care of themselves and how to work productively than are the slaveholders. Thus, slaves should rent themselves and work where their talents are used best, paying some fraction of their wages to the slaveholder and keeping the rest. Eventually, they might be able to buy themselves. Why was this not common practice?

Quoth Tullock (p. 11):

"The basic reason for the failure of this type of “sale” of the slave to himself in the guise of manumission to develop in the ante-bellum South would appear to be the stringent and steadily growing legal restrictions on manumission. There was also considerable social pressure against manumission, and in the last years before the Civil War a reaction to abolitionist propaganda developed into strong arguments that slavery was somehow a superior form of civilization. The explanation for these developments is fairly simple. The individual slaveholder would have been better off if he could have made a deal with his slaves to sell them their freedom, Large numbers of free negroes, however, would have endangered the “property rights” of the slaveholders in those that were still fully or partially owned. Thus the slaveholders had a motive collectively to favor laws against manumission in spite of the fact that each one would have benefitedfrom permission to manumit his own slave if he were the only one given such permission. The long run outcome of this tension between the individual and collective interests of the slave owners cannot now be known. From 1806 when importation of slaves was forbidden to 1860 was only 54 years, or considerably less than the threescore years and ten which the Bible gives as a normal life span. In economic terms this was not long enough to bring the system even near to full equilibrium. If we add on the numerous sociological factors, adjustment would have been even more delayed. Thus the possibility that slavery would have eliminated itself remains an open one."

 As they say, "read the whole thing". In fact, why not read all of his things.

Gordon Tullock

Today I was reached by the incredibly sad news that Gordon Tullock passed away on Monday, 3rd November, at age 92. These past few years have seen the demise of many of my great heroes, among whom Alchian, Becker, Coase, and now Tullock, stand out. What a dismal endeavour to go through the list in any detail. I never got to meet him, but the stories I hear all tell of an amazing character. Case in point: visited by what may have been the Governor of Virginia (if I recall the story correctly), then GMU Professor Tullock, always forthright, said to him: "So you're from the government? Very good. Then maybe you can do something about the leak in my ceiling". Actually these were also among the last words spoken between them.

Gordon Tullock is of course best known for his work on Public Choice and he was the founding editor of the eponymous journal, but his interests and articles showcase an astonishing breadth and depth of thought. He even had a publication in the Journal of Theoretical Biology. He wrote extensively on history and it is a great understatement to say that he was very well read. One article of his is 'An Economic Theory of Military Tactics', joint work with Geoffrey Brennan, in which they analyse the general's problem of getting the soldiers not to run away from battle. I have blogged about that article before, and several times about the late legend.

Tullock had a few paradoxes to his name. One, a wee note called 'The Purchase of Politicians' in the Western Economic Journal (now Economic Inquiry), says that political favours are bought for much less money than they reward, a phenomenon known as the Tullock Paradox which as far as I can tell lacks a satisfactory explanation. A better-known paradox of his is, of course, that of revolution: The individual faces great risk from participating in a protest against a tyrant, who might order the firing squads on the protestors, and the benefit he receives from doing so are hardly greater than what he would have got if he hadn't taken part in the protests.

With Tullock's passing, the world also loses a refreshing observation on the lack of necessity of formal training to be educated. Tullock never obtained a PhD in Economics even though he was surely among the two or three greatest economists to have been alive for over 40 years of Nobel Prize announcements and never received one - and a far greater recipient than many a Laureate. Tullock held a JD from the University of Chicago and only took one economics course for that degree. His works are rigorous without the formulae, which he would refer to as "ornamental mathematics". It is a tremendous loss to economic science that his example is no longer among us.

Of the tributes which I have seen, I particularly like the one by Professor David Friedman. Mine cannot compete, but I humbly add it to the pile, along with a piece of evidence as to how much Gordon Tullock has influenced my own thinking: I still do not know how yesterday's American election turned out. That will change soon enough with the number of interactions I have with others, but if it were not for them, I probably would not find out until I accidentally saw the headline on the news or maybe encountered it as part of some data crunching for a project.

We have lost a great economist and a remarkable character.

The Power of Ideas, Eh?

According to a passage in Lord Keynes' important General Theory, the world is ruled by "little else" than the ideas - good and bad - of economists and political philosophers. Virtually every discussion I have seen on Keynes that mentions this belief he had notes it with approval. For instance, I have heard both Milton Friedman and Gary Becker argue that academics' seemingly unimplementable brain-children have a good chance of taking over if old ideas result in failure, which they will if not good enough.

Yet I wonder what the evidence is that this view is right. To be sure, any action that was in some way premeditated may be said to be the result of some idea. To give more content to Keynes' position, I shall take it to mean that those ideas rule the world which have not been shot down, by logic or by empirical research, a generation or so before implementation.

To motivate my quaere, I set up a rivalling hypothesis according to which some ideas indeed do rule the world - namely, the ideas which translate into the greatest returns to whatever ruling politicians care about. These ideas are different from the ones discussed above, since they may never have enjoyed any academic respect at all (which does not necessarily make them bad ideas).

 

A common example of a good idea is free trade. Within the profession of economists, finding anyone willing to argue the benefits of autarky is almost surely impossible. For good reason. Yet, there remain many restrictions on the free movement of goods, services and labour around the world. If ideas truly rule the world, it does not seem to be the ones Lord Keynes had in mind.

 

Against this, one might argue that the world has become significantly more liberal with respect to free trade over the past few decades. Maybe so far Keynes' hypothesis is tied with mine, because I know of no good way to judge how much trade liberalization is enough to justify the proposition that academically respected ideas do eventually prevail.

Like autarky, rent control is a very bad idea. Swedish economist Assar Lindbeck has likened rent control to bombing as a method of destroying cities, yet rent control persists. Again, maybe its prevalence has shrunk in recent times (I don't know), making the truly venerable ideas (i.e. the ones respected on logical and empitical grounds and hence by academics) the really influential ones over time. But how influential is influential? The difficulties remain.

Perhaps one could claim that the existence of cycles in bad policy (such as the introduction of new trade restrictions after periods of relatively free trade) is evidence against Keynes, provided no cycles occurred in the ideas concerned at the relevant time (no apparent Lazarus ideas). Yet, at best this could only push Keynes back a little bit, because the obvious retort is that bad policy would have risen from the dead even more forcefully had it not been for academics' having buried the ideas which supported said bad policy. Alas, I do not seem to get very far in judging this contest between ideas about ideas. But if testing Keynes' proposition is so hard, what makes so many others so confident that Keynes was right?

A related issue is whether the belief in the power of ideas incentivize people to think harder about world problems. Perhaps, but if so, the incentive should have greatest bite among those who want to influence the world, which could be good or bad. Those wishing to influence society are apt to also want to simply understand it if they are to have any ideas, so the belief that ideas rule the world may not be too strong an incentive after all. At any rate, one should not hesitate to offer arguments against a proposition just because belief in its accuracy may have certain good consequences.

What's in a Name?

Imagine you want power above all else. "Public service" or "duty by one's nation" are mere catch-phrases without any real meaning. You will do whatever you deem necessary in order to hold sway. This is the kind of thinking that is behind a great deal of standard economic treatments of politics. If a politician does care about stuff other than securing sway, he will lose out to those more focused in their aim.

Strange, then, that the vast majority of the most eye-catching atrocities committed in the 20th century appear to have been committed with either communist or fascist parties in power. If politicians care mainly about power and less about policy, should not who gained power to commit these crimes have been a toss-up between whatever political forces were established at the time of the preceeding election, or between which movements were around to grab power when the country in question was last in an unsteady state? I have no good explanation for why totalitarian names should dominate. Why should not an established party on occasion have changed policy preferences to accommodate communist or fascist tendencies to prevent a party with one of those words in its name from coming to power? The atrocities would have been the same, but the perpetrators would have called themselves the Agrarian Party, the Democrats or the Conservatives. Why did this not happen?

Thoughts?

Pacifism and Political Economy (Speaking of the Crimea...)

EconLog's Bryan Caplan rightly criticizes The Economist Magazine today for a stunning lack of substance in discussing what attitude the West should take in response to recent Russian activities. It occurs to me that my post from a few days ago fits well with Caplan's case for pacifism, which can stand repetition: Sometimes, wars have arguably accomplished good things (though one cannot be too sure sans a counterfactual), but other times they have worsened life greatly (again, arguably: it is difficult to know what would have happened had things gone differently). Since, irrespective of final outcomes, the short-run costs are plainly tremendous, wars are to be avoided.

Similarly, from the more theoretical point of view of my recent post, if policy won't change as a result of military takeover, it makes no sense to resist invading armies. Maybe the idea that wars are not worth fighting would make it more tempting for foreign powers, unsympathetic to this idea, to invade, but for resultant policy to be different, it would have to be that the threat of war, now absent, impacts which policies are chosen. But there are many pacific threats which also influence policy (e.g. demonstrations, black-market activities...), so I am not sure how significant the threat of war is.

If my thoughts from a few days ago have any merit, it seems to me that they strengthen the case for pacifism, at least a little bit.

Public Choice and Annexations of Territories

The recent situation in the Crimea has made me think about the field of public choice and its potential implications for annexations of territories from one political jurisdiction by another. According to public choice theory, politicians are as self-interested as are the rest of us and will consequently take out as much as the traffic will bear from their subjects. Supposing politicians maximize pecuniary income, for instance, they will choose policies which best serve these goals. Institutional frameworkmight not actually matter too much for which public policies are chosen, so why, in terms of what legislation there is, should it matter whether one is governed by a fellow national or from the capital of a foreign power?

Maybe the annexed territory is more easily governed from the annexing power, but if politicians maximize all the time, this difference should not be too great at the time of annexation. Suppose, for instance, that the politicians of the annexing power can extract X from the annexed territory, while present rulers there can extract Y. If X is less than Y, present rulers could compensate the potential annexing power to retain status quo and thereby avoid annexation, but as soon as X gets bigger than Y, this strategy no longer pays and so annexation occurs. The point at which annexation becomes optimal from the point of view of the politicians of the annexing power is when X is just bigger than Y, so total extraction from the annexed territory should not be very different as a result of annexation.

Maybe there is a fear among members of some minority in the annexed territory of persecution under the new regime, because their new fellow nationals are apt to hate them. If so, total extraction from the population remains about the same, but different segments of the population are affected in different ways. However, mistreatment of minorities could have been part of the compensation mentioned above for as long as annexation was not chosen. This would have been a likely outcome if the annexing power really was full of haters of this minority. Again, it is hard to see why, purely as a result of annexation, any ordinary citizens should worry much about changing legislation.

It seems to me that much of this problem boils down to how large are the transaction costs associated with compensations occurring in lieu of annexation. Negligible transaction costs imply smoothness in transitions, but if it costs, say, 2Y to arrange for compensation while Y is greater than X, present rulers will not compensate the potential annexing power and X and Y can differ, potentially very greatly, at the time of annexation. I am inclined to believe politicians do not face too many obstacles in devising ways of compensating foreign powers. Trade agreements (with appropriately selected restrictions), taxation with loop-holes selected so as to effectively target specific individuals, not to mention different treatments of different individuals based on ad hoc rationales, are all “harnessable” instruments for reducing transaction costs.

Yet, if we return to the situation in the Crimea, the Tatar population there must be quite up-to-speed about the recent developments, and I would not feel comfortable announcing their recent exodus uncalled for. So, what is wrong with my analysis of annexations?