Rent-Seeking Rebels of 1776

Since yesterday was Independence Day, I thought I should share a recent piece of research I made available. A few months ago, I completed a working paper which has now been accepted as a book chapter regarding public choice theory insights for American economic history (of which I talked about before).  That paper simply argued that the American Revolutionary War that led to independence partly resulted from strings of rent-seeking actions (disclaimer: the title of the blog post was chosen to attract attention).

The first element of that string is that the Americans were given a relatively high level of autonomy over their own affairs. However, that autonomy did not come with full financial responsibility.  In fact, the American colonists were still net beneficiaries of imperial finance. As the long period of peace that lasted from 1713 to 1740 ended, the British started to spend increasingly larger sums for the defense of the colonies. This meant that the British were technically inciting (by subsidizing the defense) the colonists to take aggressive measures that may benefit them (i.e. raid instead of trade). Indeed, the benefits of any land seizure by conflict would large fall in their lap while the British ended up with the bill.

The second element is the French colony of Acadia (in modern day Nova Scotia and New Brunswick). I say “French”, but it wasn’t really under French rule. Until 1713, it was nominally under French rule but the colony of a few thousands was in effect a “stateless” society since the reach of the French state was non-existent (most of the colonial administration that took place in French North America was in the colony of Quebec). In any case, the French government cared very little for that colony.   After 1713, it became a British colony but again the rule was nominal and the British tolerated a conditional oath of loyalty (which was basically an oath of neutrality speaking to the limited ability of the crown to enforce its desires in the colony). However, it was probably one of the most prosperous colonies of the French crown and one where – and this is admitted by historians – the colonists were on the friendliest of terms with the Native Indians. Complex trading networks emerged which allowed the Acadians to acquire land rights from the native tribes in exchange for agricultural goods which would be harvested thanks to sophisticated irrigation systems.  These lands were incredibly rich and they caught the attention of American colonists who wanted to expel the French colonists who, to top it off, were friendly with the natives. This led to a drive to actually deport them. When deportation occurred in 1755 (half the French population was deported), the lands were largely seized by American settlers and British settlers in Nova Scotia. They got all the benefits. However, the crown paid for the military expenses (they were considerable) and it was done against the wishes of the imperial government as an initiative of the local governments of Massachusetts and Nova Scotia. This was clearly a rent-seeking action.

The third link is that in England, the governing coalitions included government creditors who had a strong incentives to control government spending especially given the constraints imposed by debt-financing the intermittent war with the French.  These creditors saw the combination of local autonomy and the lack of financial responsibility for that autonomy as a call to centralize management of the empire and avoid such problems in the future. This drive towards centralization was a key factor, according to historians like J.P. Greene,  in the initiation of the revolution. It was also a result of rent-seeking on the part of actors in England to protect their own interest.

As such, the history of the American revolution must rely in part on a public choice contribution in the form of rent-seeking which paints the revolution in a different (and less glorious) light.

Algeria: a sparse memory

In 1962, France and the Algerian nationalists came to an agreement about Algerian independence. That was after 130 years of French colonization and eight years of brutal war including war against civilians. I participated in the evacuation of large number of French civilians from the country as a little sailor. The number who wanted to leave was much greater than anyone expected. It was too bad that they left in such large numbers. It was a pity for all concerned. The events were a double tragedy or a tragedy leading to a tragedy. The Algerian independence fighters who had prevailed by shedding quantities of their blood were not (not) Islamists. In most respects, intellectually and otherwise, they were a lot like me.

The true revolutionaries were soon replaced however by professional soldiers that I think of as classical but fairly moderate fascists. I went back to Algeria six years after independence. I was warmly received and I liked the people there. People invited me to lunch; I shared with them the fish I caught and a baby camel tried to browse my hair in a cafe.

I still think the nationalists were on the right side of the argument but I miss Algeria nevertheless. It’s like a divorce that should not have happened. And I am very sorry about where French incompetence and rigidity led everyone, especially the Algerians who keep migrating to France in huge numbers because they can’t find what they need at home.

The Deleted Clause of the Declaration of Independence

As a tribute to the great events that occurred 241 years ago, I wanted to recognize the importance of the unity of purpose behind supporting liberty in all of its forms. While an unequivocal statement of natural rights and the virtues of liberty, the Declaration of Independence also came close to bringing another vital aspect of liberty to the forefront of public attention. As has been addressed in multiple fascinating podcasts (Joe Janes, Robert Olwell), a censure of slavery and George III’s connection to the slave trade was in the first draft of the Declaration.

Thomas Jefferson, a man who has been criticized as a man of inherent contradiction between his high morals and his active participation in slavery, was a major contributor to the popularizing of classical liberal principles. Many have pointed to his hypocrisy in that he owned over 180 slaves, fathered children on them, and did not free them in his will (because of his debts). Even given his personal slaves, Jefferson made his moral stance on slavery quite clear through his famous efforts toward ending the transatlantic slave trade, which exemplify early steps in securing the abolition of the repugnant act of chattel slavery in America and applying classically liberal principles toward all humans. However, this very practice may have been enacted far sooner, avoiding decades of appalling misery and its long-reaching effects, if his (hypocritical but principled) position had been adopted from the day of the USA’s first taste of political freedom.

This is the text of the deleted Declaration of Independence clause:

“He has waged cruel war against human nature itself, violating its most sacred rights of life and liberty in the persons of a distant people who never offended him, captivating and carrying them into slavery in another hemisphere or to incur miserable death in their transportation thither.  This piratical warfare, the opprobrium of infidel powers, is the warfare of the Christian King of Great Britain.  Determined to keep open a market where Men should be bought and sold, he has prostituted his negative for suppressing every legislative attempt to prohibit or restrain this execrable commerce.  And that this assemblage of horrors might want no fact of distinguished die, he is now exciting those very people to rise in arms among us, and to purchase that liberty of which he has deprived them, by murdering the people on whom he has obtruded them: thus paying off former crimes committed against the Liberties of one people, with crimes which he urges them to commit against the lives of another..”

The second Continental Congress, based on hardline votes of South Carolina and the desire to avoid alienating potential sympathizers in England, slaveholding patriots, and the harbor cities of the North that were complicit in the slave trade, dropped this vital statement of principle

The removal of the anti-slavery clause of the declaration was not the only time Jefferson’s efforts might have led to the premature end of the “peculiar institution.” Economist and cultural historian Thomas Sowell notes that Jefferson’s 1784 anti-slavery bill, which had the votes to pass but did not because of a single ill legislator’s absence from the floor, would have ended the expansion of slavery to any newly admitted states to the Union years before the Constitution’s infamous three-fifths compromise. One wonders if America would have seen a secessionist movement or Civil War, and how the economies of states from Alabama and Florida to Texas would have developed without slave labor, which in some states and counties constituted the majority.

These ideas form a core moral principle for most Americans today, but they are not hypothetical or irrelevant to modern debates about liberty. Though America and the broader Western World have brought the slavery debate to an end, the larger world has not; though countries have officially made enslavement a crime (true only since 2007), many within the highest levels of government aid and abet the practice. 30 million individuals around the world suffer under the same types of chattel slavery seen millennia ago, including in nominal US allies in the Middle East. The debates between the pursuit of non-intervention as a form of freedom and the defense of the liberty of others as a form of freedom have been consistently important since the 1800’s (or arguably earlier), and I think it is vital that these discussions continue in the public forum. I hope that this 4th of July reminds us that liberty is not just a distant concept, but a set of values that requires constant support, intellectual nurturing, and pursuit.

Muslim Welcome

Here is a nice little story, I think.

I was once a pretend hippie. It was only “pretend” because my drug consumption was moderate and limited and I never dropped acid. Also, I never dropped out as recommended. I attended graduate school and I even worked quite a bit.

At the end of a work interlude in France from graduate school in the US, I thought I deserved a reward. (I often think I deserve a reward; it does not take much.) I was a big-time free-diver (no SCUBA) for most of my life, not so much for the beauty of it but always in search of something good to eat. I decided to leave gray Paris for a diving vacation in sunny Algeria.

It was only nine years after the end of the bloody war by which Algerians won their independence from France. Practically, the whole French population was gone. There were tensions between the French and the Algerian governments although hundreds of thousands of Algerians were working and living in France. I thought my good manners and my smiling face would get me through any difficulty. Also, I thought that with the French gone, there must have been precious little spear fishing in Algerian waters. I half-believed that big groupers would practically jump at me

I packed my VW bus I had outfitted for camping and I put a small borrowed plastic boat on its roof. My then-future ex-wife (“TFEW”) and I drove to Marseilles where we checked in bus and boat. We spent the night-long crossing of the Med on deck. There was a moving moment in the middle of the crossing when all the portable radios on board suddenly tuned them selves to Arab music from Radio Algiers. The dolphins accompanied our ship into the light blue waters of Algiers Bay.

One thing the Algerians had learned from the French and had not yet forgotten was running a non-corrupt bureaucracy. (I believe corrupt is good, that it expedites bureaucratic processes.) It took hours to clear us because the TFEW had an American passport, something unusual then and there. Clearing the bus and the boat through customs took even more time. By the time we were out of the harbor building, the sun was setting. We did not want to spend the night in some shabby overpriced hotel in the big city so, we drove on out of town in a general eastward direction.

After a couple of hours in deep-darkness, we were on a dirt road climbing some hills which made me admit that it was probably not the main coastal highway. I couldn’t see much with the weak VW headlights and there was a little mist. The torchlight I had packed was not much more useful. I ended up stopping the bus more or less at random. We stepped outside for a leak. There were not house lights, not street lights, and no sound except the song of the cicadas. We figured we might just bed down in the van till morning.

The sun was fairly high in the sky when we woke up. I saw some blue through a window of the bus. I opened the door to take out the equipment necessary for a cup of Nescafé. I discovered we were parked right in the middle of a low farmhouse courtyard. And old man in a djellaba was quietly sitting on a rock outside our door with an earthenware jar of cool water at his side and a basket of figs on his lap. “Bonjour, Salaam” he said pleasantly.

Against Guilt by Historical Association: A Note on MacLean’s “Democracy in Chains”

It’s this summer’s hottest pastime for libertarian-leaning academics: finding examples of bad scholarship in Nancy MacLean’s new book Democracy in Chains. For those out of the loop, MacLean, a history professor at Duke University, argues in her book that Nobel-prize winning public choice economist James Buchanan is part of some Koch-funded vast right-libertarian conspiracy to destroy democracy as inspired by southern racist agrarians and confederates like John Calhoun. This glowing review from NPR should give you a taste of her argument, which often has the air of a bizarre conspiracy theory. Unfortunately, to make these arguments she’s had to cut some huge corners in her federally-funded research. Here’s a round-up of her dishonesty:

  • David Bernstein points out how MacLean’s own sources contradict her claims that libertarian Frank Chodorov disagreed with the ruling in Brown v. Board.
  • Russ Roberts reveals how out-of-context Tyler Cowen was taken by MacLean, misquoting him to attribute to Cowen a view which he was arguing against.
  • David Henderson finds that she did the same thing to Buchanan.
  • Steve Horwitz points out how wildly out-of-context MacLean took a quote from Buchanan on public education.
  • Phil Magness reveals how much MacLean needed to wildly reach to tie Buchanan to southern agrarians with his use of the word “Leviathan.”
  • Phil Magness, again, reveals MacLean needed to do the same thing to tie Buchanan to Calhoun.
  • David Bernstein finds several factual errors about MacLean’s telling of the history of George Mason’s University.

I’m sure there is more to come. But, poor scholarship and complete dishonesty in source citation aside, an important question needs to be asked about all this: even if MacLean didn’t need to reach so far to paint Buchanan in such a negative light, why should we care?

I admittedly haven’t read her book yet (so could be wrong), but from the way even positive reviewers paint it and the way she talks about it herself in interviews (see around 15:30 of that episode), one can infer that she is in no way interested in a nuanced analytical critique of Buchanan’s public choice models or his arguments in favor of constitutional restrictions on democratic majorities. Her argument, if you can call it that, seems to be something like this:

  1. Democracy and majority rule are inherently good.
  2. James Buchanan wants stricter restrictions on democratic majority rule, and so did some Southern racists.
  3. Therefore, James Buchanan is a racist, evil corporate shill.

Even if she didn’t need to establish premise 2, why should we care? Every ideology has elements of it that can be tied to some seedy elements of the past, it doesn’t make the arguments that justify those ideologies wrong. For example, the pro-choice and women’s health movement has its roots in attempts to market birth control to race-based eugenicists (though these links, like MacLean’s attempts, aren’t as insidious as some on the modern right make them out to be), that does not mean modern women’s health advocates are racial eugenicists. Early advocates of the minimum wage argued for wage floors for racist and sexist reasons, yet nobody really thinks (or, at least, should think) modern progressives have dubious racist motives for wanting to raise the minimum wage. The American Economic Association was founded by racist eugenicists in the American Institutionalist school, yet nobody thinks modern economists are racist or that anyone influenced by the institutionalists today is a eugenicist. The Democratic Party used to be the party of the KKK, yet nobody (except the most obnoxious of Republican partisans) thinks that’s at all relevant to the DNC’s modern platform. Heiddeger was heavily linked to Nazism and anti-Semitism, but it’s impossible to write off and ignore his philosophical contributions and remain intellectually honest.

Similarly, even if Buchanan did read Calhoun and it got him thinking about constitutional reform, that does not at all mean he agreed with Calhoun on slavery or that modern libertarian-leaning public choice theorists are neo-confederates, and it has even less to do with the merits of Buchanan’s analytical critiques of how real-world democracies function. In fact, as Vincent Geloso has pointed out here at NOL, Buchanan has given modern scholars the analytical tools to critique racism.

Intellectual history is messy and complicated, and can often lead to links we might—with the benefit of historical hindsight—view as situated in an unsavory context. However, as long as those historical lineages have little to no bearing on people’s motivations for making similar arguments or being intellectual inheritors of similar ideological traditions today (which isn’t always the case), there is no relevance to modern discourse other than perhaps idle historical curiosity. These types of attempts to cast guilt upon one’s intellectual opponents through historical association are, at best, another intellectually lazy version of the genetic fallacy (which MacLean also loves to commit when she starts conspiratorially complaining about Koch Brothers funding).

Just tell me if this sounds like a good argument to you:

  1. Historical figure X makes a similar argument Y to what you’re making.
  2. X was a racist and was influenced by some racists.
  3. Therefore, Y is wrong.

If it doesn’t, you’re right, 3 doesn’t follow from 2 (and in MacLean’s case 1 is a stretch).

Please, if you want to criticize someone’s arguments, actually criticize their arguments; don’t rely on a tabloid version of intellectual history to dismiss them, especially when that intellectual history is a bunch of dishonest misquotations and hand-waving associations.

James Buchanan on racism

McLean

Ever since Nancy MacLean’s new book came out, there have been waves of discussions of the intellectual legacy of James Buchanan – the economist who pioneered public choice theory and won the Nobel in economics in 1986. Most prominent in the book are the inuendos of Buchanan’s racism.  Basically, public choice had a “racist” agenda.  Even Brad DeLong indulged in this criticism of Buchanan by pointing that he talked about race by never talking race, a move which reminds him of Lee Atwater.

The thing is that it is true that Buchanan never talked about race as DeLong himself noted.  Yet, that is not a sign (in any way imaginable) of racism. The fact is that Buchanan actually inspired waves of research regarding the origins of racial discrimination and was intellectually in line with scholars who contributed to this topic.

Protecting Majorities and Minorities from Predation

To see my point in defense of Buchanan here, let me point out that I am French-Canadian. In the history of Canada, strike that, in the history of the province of Quebec where the French-Canadians were the majority group, there was widespread discrimination against the French-Canadians. For all intents and purposes, the French-Canadian society was parallel to the English-Canadian society and certain occupations were de facto barred to the French.  It was not segregation to be sure, but it was largely the result of the fact that the Catholic Church had, by virtue of the 1867 Constitution, monopoly over education. The Church lobbied very hard  in order to protect itself from religious competition and it incited logrolling between politicians in order to win Quebec in the first elections of the Canadian federation. Logrolling and rent-seeking! What can be more public choice? Nonetheless, these tools are used to explain the decades-long regression of French-Canadians and the de facto discrimination against them (disclaimer: I actually researched and wrote a book on this).

Not only that, but when the French-Canadians started to catch-up which in turn fueled a rise in nationalism, the few public choice economists in Quebec (notably the prominent Jean-Luc Migué and the public choice fellow-traveler Albert Breton) were amongst the first to denounce the rise of nationalism and reversed linguistic discrimination (supported by the state) as nothing else than a public narrative aimed at justifying rent-seeking attempts by the nationalists (see here and here for Breton and here and here for Migué). One of these economists, Migué, was actually one of my key formative influence and someone I consider a friend (disclaimer: he wrote a blurb in support of the French edition of my book).

Think about this for a second : the economists of the public choice tradition in Quebec defended both the majority and the minority against politically-motivated abuses. Let me repeat this : public choice tools have been used to explain/criticize attempts by certain groups to rent-seek at the expense of the majority and the minority.

How can you square that with the simplistic approach of MacLean?

Buchanan Inspired Great Research on Discrimination and Racism

If Buchanan didn’t write about race, he did set up the tools to explain and analyze it. As I pointed out above, I consider myself in this tradition as most of my research is geared towards explaining institutions that cause certain groups of individuals to fall behind or pull ahead.  A large share of my conception of institutions and how state action can lead to predatory actions against both minorities and majorities comes from Buchanan himself!  Nevermind that, check out who he inspired who has published in top journals.

For example, take the case of the beautifully written articles of Jennifer Roback who presents racism as rent-seeking. She sets out the theory in an article in Economic Inquiry , after she used a case study of segregated streetcars in the Journal of Economic HistoryA little later, she consolidated her points in a neat article in the Harvard Journal of Law and Public PolicyShe built an intellectual apparatus using public choice tools to explain the establishment of discrimination against blacks and how it persisted for long.

Consider also one of my personal idols, Robert Higgs who is a public-choice fellow traveler who wrote Competition and Coerciowhich considers the topic of how blacks converged (very slowly) with whites in hostile institutional environment. Higgs’ treatment of institutions is well in line with public choice tools and elements advanced by Buchanan and Tullock.

The best case though is The Origins and Demise of South African Apartheid by Anton David Lowenberg and William H. Kaempfer. This book explicitly uses a public choice to explain the rise and fall of Apartheid in South Africa.

Contemporaries that Buchanan admired were vehemently anti-racist

Few economists, except maybe economic historians, know of William Harold Hutt. This is unfortunate since Hutt produced one of the deepest and most thoughtful economic criticism of Apartheid in South Africa, The Economics of the Colour Bar This book stands tall and while it is not the last word, it generally is the first word on anything related to Apartheid – a segregation policy against the majority that lasted nearly as long as segregation in the South.  This writing, while it earned Hutt respect amongst economists, made him more or less personae non grata in his native South Africa.

Oh, did I mention that Hutt was a public choice economist? In 1971, Hutt published Politically Impossible which has been an underground classic in the public choice tradition. Unfortunately, Hutt did not have the clarity of written expression that Buchanan had and that book has been hard to penetrate.  Nonetheless, the book is well within the broad public choice tradition.  He also wrote an article in the South African Journal of Economics which expanded on a point made by Buchanan and Tullock in the Calculus of Consent. 

Oh, wait, I forgot to mention the best part. Buchanan and Hutt were mutual admirers of one another. Buchanan cited Hutt’s work very often (see here and here) and spoke with admiration of Hutt (see notably this article here by Buchanan and this review of Hutt’s career where Buchanan is discussed briefly).

If MacLean wants to try guilt by (inexistent) association, I should be excused from providing redemption by (existent) association.  Not noting these facts that are easily available shows poor grasp of the historiography and the core intellectual history.

Simply Put

Buchanan inspired a research agenda regarding how states can be used for predatory purposes against minorities and majorities which has produced strong interpretations of racism and discrimination. He also associated with vehement and admirable anti-racists like William H. Hutt and inspired students who took similar positions. I am sure that if I were to assemble a list of all the PhD students of Buchanan, I would find quite a few who delved into the deep topic of racism using public choice tools. I know better and I did not spend three years researching Buchanan’s life. Nancy MacLean has no excuse for these oversights.

The Old Deluder Satan Act: Literacy, Religion, and Prosperity

So, my brother (Keith Kallmes, graduate of the University of Minnesota in economics and history) and I have decided to start podcasting some of our ideas. The topics we hope to discuss range from ancient coinage to modern medical ethics, but with a general background of economic history. I have posted here our first episode, the Old Deluder Satan Act. This early American legislation, passed by the Massachusetts Bay Colonists, displays some of the key values that we posit as causes of New England’s principal role in the Industrial Revolution. The episode: 

We hope you enjoy this 20-minute discussion of the history of literacy, religion, and prosperity, and we are also happy to get feedback, episode suggestions, and further discussion in the comments below. Lastly, we have included links to some of the sources cited in the podcast.


Sources:

The Legacy of Literacy: Continuity and Contradictions in Western Culture, by Harvey Graff

Roman literacy evidence based on inscriptions discussed by Dennis Kehoe and Benjamin Kelly

Mark Koyama’s argument

European literacy rates

The Agricultural Revolution and the Industrial Revolution: England, 1500-1912, by Gregory Clark

Abstract of Becker and Woessman’s “Was Weber Wrong?”

New England literacy rates

(Also worth a quick look: the history of English Protestantism, the Puritans, the Green Revolution, and Weber’s influence, as well as an alternative argument for the cause of increased literacy)