Bastiat's Bastions

Here is a timeless post from last year that I wrote with one of my Econ 255 students.

http://www.nicholls.edu/bastiatsbastions/2006/11/16/the-pilgrims-progress-and-the-peasants/

-MC

This past week, John DeSantis came out with a very well-done three-part series in the Thibodaux Daily Comet    on the exploitation of labor, most assuredly African-American labor, in the not too distant past of our local sugar cane industry.   The story illustrates several important points that beginning students should note.   One article  looks at the personal stories of people, now elderly, who worked the sugar cane fields many years ago.

Another story chronicles the ways in which workers were kept on the plantations, through payments in plantation scrip   which could only be used on the plantation, at the plantation’s company store, denying workers the cash that could have been used to finance the worker’s escape from the plantation and extending plantation credit to the workers that kept the workers owing the plantation.   Here, the monopsony  power of the employer is strengthened, making it easier to take advantage of the workers, by reducing the workers’ options.   In addition, workers are charged monopoly prices at the company store.   You should note that the use of scrip and company stores was not just a agricultural phenomena, but was used to exploit workers in other industries, such as coal, which provided the inspiration for the Tennessee Ford song, 16 tons.

A third story  discusses the fight for “fair” wages for sugar cane workers.   Several things one should note in this article: 1) employers got together and fixed wages, the way a cartel gets together and fixes prices, which is usually very illegal, but there may have been some provision in the 1937 Sugar Act which made this a legal practice, but I just do not know about that; 2) wages are now similar to those in other area industries for those with similar education, in the $7-15 range; 3) mechanization has increased worker productivity tremendously, which increased the demand for labor; and 4) not mentioned in the article, but something we all know, is that there has been a reduction (I did not say elimination) in hiring discrimination in other local industries which has led to an increase in the opportunity costs of sugar cane workers, cutting the supply of sugar cane workers.   The increase in demand and reduction in supply has definitely led to an increase in pay.

Of course, the elimination of payment in scrip made moving from the plantation possible, opening up other opportunities far away from the plantation and increasing the cane workers’ opportunity costs.   The reduction in hiring discrimination in other area industries eliminated the monopsony position of the plantations, forcing the plantations to pay a wage sufficient to attract workers from other area industries as well as from industries further away (or at least high enough to keep workers from having to move away to get good pay).

Do take a look at these stories and keep in mind that employers always and everywhere will try to get workers for as little as they have to pay.   What is different in the case of earlier day sugar workers is that they were denied opportunities away from the plantation through hiring discrimination, were tied to the land as much as a serf and it seems that employers were able, and perhaps encouraged, by legislation to act as a cartel to keep wages low.

To see the audio and video files of oral histories, please check this link out.  but I cannot find it now.   Mr.  DeSantis emailed me for its location.   By all means, though, read these three articles.  

-MC

One of my students, B.L., recently commented about Sen. Clinton, “I do give her kudos for stepping up to the plate and being the first woman to run for president.”

Please understand that I am not saying to B.L. “oh, you are so wrong,” so please don’t take it as that, but many people now make this same mistake about Ms. Clinton being the first woman to run for president.

Actually, the first woman to run for the nomination of a major political party for president of the US was an African-American woman born of immigrant parents, Shirley Chisolm (this statement is incorrect–see my comment).   I think she may have even been the first African-American to run for president for a major political party, running well before Jesse Jackson, Al Sharpton, Alan Keyes and Burak Obama.

Ms. Chisolm began her campaign for president in 1972 running as a Democrat, not as a fringe party candidate. She was also the first African-American Congresswoman (back then, women made up only 3% of Congress, compared to 16% today). In addition, she was one of the founders of the influential Congressional Black Caucus. Two other women ran for president in 1972, but I don’t remember what party they ran for–they also started their campaigns after Congresswoman Chisolm. That was the year that Nixon easily won re-election. Congresswoman Chisolm won 152 delegates in the first balloting of the Democratic Convention, which made her the 4th place candidate at the convention, but she still had less than 10% of the delegates of front-runner, George McGovern, and less than half the delegates of 3rd place segregationist, Alabama Gov. George Wallace. For more information on her, look at: http://en.wikipedia.org/wiki/Shirley_Chisholm

But, the first woman to run for president of the US was Victoria Woodhull who ran 100 years before Congresswoman Chisolm, securing the nomination of the Equal Rights Party. This was almost 50 years before women were guaranteed the vote with the 19th amendment which was not ratified until 1920. And women could not vote at all in 1872.

What makes any of this have anything to do with economics? This is an economics blog, after all. Well, examining gender and racial differences in activities, like labor force participation, educational attainment, occupational choice are all a major part of labor economics. This week, Dr. Turner and I were at the Southern Economic Association meeting, where we presented our research with Gokhan Karahan (recently of Nicholls, but now at Delta State) and Tom Dalton, at University of Arizona, and also a former member of the Nicholls faculty. That work looks at barriers to entry in politics and opportunity cost differences for women and certain occupations.

-MC

Big government advocates assert that democratic choice is somehow to be preferred to choices made through market processes. The idea is usually that people in markets act selfishly and have little information and are swayed too easily by advertising dollars, but when those same people get behind the curtain of the voting booth, they are somehow smarter. A lesson comes from Oregon. After his election to the governor’s mansion, Oregon’s Gov. Ted Kulongoski was sure to make some statement about the “people having spoken.” Those same voters, when they voted down a cigarette tax increase to fund children’s health insurance that Kulongoski backed, have suddenly become dullards whose votes can be easily bought by the tobacco lobby. If a tax increase does get passed in Oregon, it will only be the voters coming to their senses. Then, the “right decision” will have been made–because it agrees with the big government advocates. Here is my question: If the votes of the people are to be distrusted, and seen as being manipulatable by special interests when pet projects are voted down, how is it that those same voters suddenly become all wise, all knowing and altrusitic when they vote on how tax dollars are to be spent?

-MC

According to some commentors on the debates, Hillary really took a beating from her Democratic opponents.   Take a look at these comments of George the First (George H. W. Bush) and Newt Gingrich.   I can only respond, “Oh, really?”

Don’t get me wrong, I am not really a Hillary supporter, but give me a break, she took the ganging up by her opponents and had trouble, but to see how she really did, don’t listen to her opponents, and George 41 and Newt are harsher opponents that Obama and Edward will ever be —  when it comes to the campaign for president, Obama and Edwards will be in Hillary’s corner, unlike George 41 and Newt.   The real measure of how she did in the debate is in her loss of stock price at the Iowa Electronic Markets.   Her stock fell by $0.02, but that was from a high of $0.72 down to $0.70, which is still less than a 3% drop, really not that much.   Check out the Iowa Electronic Market and its predictions on the Democratic Convention outcome, the party  nominee.

-Morris Coats