Sunday, December 2, 2012

Jeffersonian Economics?

Struck by the confidence and clarity of this Op-Ed piece in the New York Times (for simplicity, Finkelman argues that Jefferson was a deeply racist man,) I had to compare the Thomas Jefferson Foundation's Monticello web site official statements on Jefferson and slavery, (which treats the matter of his slaves very "delicately" to say the least.)

Two entirely incontrovertible statements: Jefferson owned lots of slaves.  Jefferson was a brilliant thinker.

Armed with these two statements, and some basic facts from the Thomas Jefferson Foundation, what could anyone with a basic understanding of economics conclude?

Question 1: Did Jefferson have a basic understanding of economics?

Rather than simply saying "he was a really smart guy who knew most things", we can point to the official Monticello statements again:
"I consider a woman who brings a child every two years as more profitable than the best man of the farm," Jefferson remarked in 1820.  "What she produces is an addition to the capital, while his labors disappear in mere consumption."
So, in 1820 Jefferson clearly understood that "his" capital stock grew naturally, and this drove its value.  For a farmer, or anyone who raises animals, this is obvious.  Female cattle have far greater value than male cattle.  People have known this since ancient times.  (Why else would virtually all animal sacrifices in ancient times call for males of the species!)

Question 2: Did Jefferson understand that artificially limiting supply was good for owners of commodities?

Have you ever heard the phrase windfall profits?  Jefferson most certainly had.  The British outlawed cutting down large trees in the colonies that could serve as masts for naval ships.  If the wind blew down a tree, the owner could sell it.  For a fortune.  

Now, turn back to Monticello comments on slavery, (from the second paragraph): "In 1778, [Jefferson] drafted a Virginia law that prohibited the importation of enslaved Africans." So, the brilliant man, with a good grasp of basic economics, drafts a law to restrict imports of a commodity he owns and carefully manages for growth.  Yet we are still to believe he thought people shouldn't own this commodity?

Question 3: Did Jefferson understand that slavery reduced his cost of labor and therefore cost of finished goods?

The only word that comes to mind: Duh.  Next sentence from Monticello: "In 1784, he proposed an ordinance that would ban slavery in the Northwest territories."  Okay, great! Propose restrictions on your competitor that raises their production costs.  That's brilliant!  Imagine if GM had the foresight to organize Ford's labor force, yet keep their own factories union wouldn't be driving a Ford today!

Question 4: Did Jefferson understand that working his capital stock too hard would reduce their value in a sale, or reduce the internal growth rate of the capital stock?

Again, from Monticello:
To try to erode Virginians’ support for slavery, he discouraged the cultivation of crops heavily dependent on slave labor—tobacco—and encouraged the introduction of crops that needed little or no slave labor—wheat, sugar maples, short-grained rice, olive trees, and wine grapes.  But by the 1800s, Virginia’s most valuable commodity and export was neither crops nor land, but slaves.[emphasis added!]
So, Jefferson was trying to "erode Virginians' support" by shifting to crops that required no slave labor, (which seems an absurd statement in itself...I've never seen wheat or rice harvest itself, but I don't live on a special Virginia farm!) but he didn't free his slaves, or even sell his slaves?

I think the economists have to vote with Professor Finkelman.