Paid Labor vs. Slave Labor

Posted by PITHOCRATES - July 15th, 2013

Economics 101

Paid-Laborers are Rented as Needed while Slave-Laborers are Owned even when not Needed

There is a common misconception that slave labor was free labor.  The argument goes that the United States got rich because of all their free slave labor.  They’ll say this despite knowing of the immense suffering of African slaves on the slave ships.  Who came to the New World where slave traders auctioned them off.  This was the slave trade.  The key word in this is ‘trade’.  African slave traders sold them to European slave traders.  Who auctioned them off in New World slave markets.  To feed a labor-hungry market.

People bought and sold slaves.  And anything you buy and sell is not free.  So slave labor wasn’t free.  It was a capital cost.  Let’s explain this by comparing leasing and owning.  Businesses can buy buildings.  Or lease them.  If they buy them they own them.  And are responsible for them.  They add a large asset on their balance sheet that they depreciate.  And add new debt that they must service (making premium and/or interest payments).  They also must pay expenses like taxes, insurance, maintenance, supplies, utilities, etc.  Things owners are responsible for.  When they lease a building, though, they don’t add an asset to depreciate.  And they don’t pay any expenses other than a lease payment.  The owner, the lessor, pays all other expenses.  When you lease you pay only for what you use.  When you buy you pay for what you use now.  And what you will use for years to come.  We can make a similar comparison between paid-labor and slave-labor.

Paid vs Slave Labor 1 of 3

For this exercise let’s take a factory today with 125 employees.  We’ll look at the costs of these laborers as paid-laborers versus slave-laborers.  We assume that the total labor cost for everything but health care/insurance is $65,000 per paid-laborer.  And an annual health care expense of $5,000.  Bringing the total annual labor and health care/insurance costs for 125 paid-laborers to $8,750,000.  For the slave laborers we assume 47 working years (from age 18 to 65).  But we don’t multiple 47 years by $65,000.  Because if we buy this labor there are a lot of other costs that we must pay.  Slave traders understand this and discount this price by 50%.  Or $32,500 annually for 47 years.  Which comes to $1,527,500 per slave-laborer.  Bringing the annual total cost for all 125 slave-laborers to $4,062,500.  And, finally, because they own these laborers they don’t have to offer premium health insurance to attract and keep employees.  So we assume health care/insurance expense is only half of what it is for paid-laborers.

Slave-Labor Overhead included Food, Housing, Clothing and Interest on Debt that Financed Slave-Laborers

If we stop here we can see, though not free, slave-laborers are a bargain compared to paid-laborers.  But if they own these people they have to take care of these people.  They have to provide a place for them to live.  They have to feed them.  Clothe them.  As well as pay interest on the money they borrowed to buy them.  And the building to house them.  For if they are not fed and protected from the elements they may not be able to work.

Paid vs Slave Labor 2 of 3 R1

A slave-owner will try to keep these overhead costs as low as possible.  So they won’t be feeding them steaks.  They will feed them something inexpensive that has a high caloric content.  So a little of it can feed a lot of people.  In our exercise we assumed a $1.25 per meal, three meals daily, seven days a week, 52 weeks a year.  For a total of $170,625 annually.  We assumed a $500,000 building to house 125 slave-laborers and their families.  The depreciation expense (over 40 years), taxes, insurance, supplies (soap, toilet paper, laundry detergent, etc.) and utilities come to $24,100 annually.  For clothing we assume a new pair of boots every 5 years.  And 7 inexpensive shirts, pants, tee shirts, underwear and socks each year.  Coming to $10,094 annually.

Then comes one of the largest expense.  The interest on the money borrowed to buy these slave-laborers.  Here we assume they own half of them free and clear.  Leaving $95,468,750 of debt on the book for these slave-laborers.  At a 4.25% annual interest rate the interest expense comes to $4,057,422.  We also assume half of the debt for the housing still on the books.  At a 4.25% annual interest rate the interest expense comes to $10,625.

George Washington was Greatly Bothered by the Contradiction of the Declaration of Independence and American Slavery

These overhead expenses bring the cost of slave-laborers nearly to the cost of paid-laborers.  Almost making it a wash.  With all the other expenses of owning slaves you’d think people would just assume to hire paid-laborers.  Pay them for their workday.  Their health insurance.  And nothing more.  Letting them go home after work to their home.  Where they can take care of their own families.  Provide their own food.  Housing.  And clothing.  Which they pay for out of their paycheck.  Of course, this wasn’t quite possible in the New World.  There weren’t enough Europeans living there to hire.  And the Native Americans in North, Central and South America were more interested in getting rid of these Europeans than working for them.  Which left only African slaves to exploit the natural resources of the New World.  But that slave-labor could grow very costly over time.  Because when you own people you own families.  Including children and elderly adults who can’t work.  By the time of our Founding this was often the case as some slave owners owned generations of slave families.

Paid vs Slave Labor 3 of 3 R1

In our exercise we assume an equal number of men and women working in the factory.  Assumed these men and women married.  And half of these couples had on average 3 young children.  We’ve also assumed the current working generation is a second generation.  So their surviving parents live with them.  We assumed half of all parents are surviving.  These children and the surviving parents cannot work.  But they still must eat.  And require medical attention.  Using the costs for the workers these non-workers add another $845,469 to the annual labor cost.  Brining the cost of the slave-laborers greater than the cost of the paid-laborers.

George Washington was very conscious of history.  Everything he said or did was with an eye to future generations.  And their history books.  One of the things that greatly bothered him was the contradiction of the Declaration of Independence declaring all men equal while the institution of slavery existed.  But to form a new nation they needed the southern states.  And they wouldn’t join without their slaves.  So they tabled the subject for 20 years.  Sure by then that the institution would resolve itself and go away.  Washington believed this because he had many generations of slaves on his plantation.  And desperately wanted to sell them and replace them with paid-laborers.  Because he was feeding so many slaves that they were eating his profits.  But people wanted to buy only those who could work.  Not the children.  Or the elderly.  Unable to break up these families he did what he thought was the honorable thing.  And kept using slaves.  To keep these families together.  Making less money than he could.  Because slave-labor was more costly than paid-labor.  Contrary to the common misconception.

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FT176: “The left instigates and exacerbates discrimination to increase their power.” —Old Pithy

Posted by PITHOCRATES - June 28th, 2013

Fundamental Truth

The Institution of Slavery was Dying Out in the U.S. before Eli Whitney and his Cotton Gin

Discrimination is wrong.  And it doesn’t belong in a meritocracy.  Which is what the United States is.  Here it doesn’t matter who your father is.  There is no nobility.  No aristocracy.  Here everyone is equal.  It’s why people came here with pennies in their pocket.  So they could work hard and live the American dream.  Having the liberty to do whatever they wanted to do.  Which many did.  Starting out sweeping floors for a boss.  And going on to be boss in their own business.

The Founding Fathers weren’t perfect.  But they were as close to perfect as you can get.  Selfless.  Disinterested.  Principled.  And, yes, some were slave owners.  But they didn’t invent slavery.  Or bring it to the New World.  It was part of the times they lived in.  And already well entrenched in the colonies before they entered into the history books.  The southern economy was already dependent on slave-labor during the writing of the Declaration of Independence.  And the U.S. Constitution.  Some of the Founding Fathers wanted to get rid of the institution.  But to form a new nation they needed the southern states.  And they wouldn’t join without their slaves.  So they tabled the subject for 20 years.  Trusting that it would resolve itself by then.  But then Eli Whitney gave us the cotton gin.  And, well, the rest is history.

The institution of slavery was slowly dying out before the cotton gin.  George Washington wanted to replace his slaves with paid-laborers.  For he wanted to change up his crops.  Grow many different crops instead of one large cash crop.  Something paid-labor was ideally suited for.  As he could hire people with a particular crops’ skill-set and they could hit the ground running.  But when you had slaves working the same large cash crop year after year such as tobacco change didn’t come easy.  For you had to retrain your slaves.  And with training there is a learning curve.  It was just so much easier to hire well-skilled paid-laborers.  And the fact that they wanted to work for you helped, too.  For when forcing people to work for you against their will all you’ll get from them is the bare minimum that lets them escape brutal punishment.  Which does not bring out a person’s latent talents.  It just prevents these talents from ever seeing the light of day.  No.  Slave-labor as an economic model was a horrible one.  As well as being immoral.

Abraham Lincoln and the new Republican Party ended Slavery in the United States

Slavery in the United States was concentrated in the South.  On the plantations.  Where they had a single, large cash crop.  And thanks to Eli Whitney that crop was cotton.  Because the cotton gin could so quickly comb the cotton fiber to remove the seeds and stems the sky was the limit.  The only thing holding back your profits was the amount of land you put in production.  And the only limit on that was the number of slaves you had to make land productive.  Which is why the institution of slavery didn’t die out in 20 years time.  Which really wasn’t overly optimistic.  Because in the grand scheme of things there weren’t that many slaves in the United States to begin with.

Of all the slaves brought to the New World only about 6.5% ended up in British North America (according to Wikipedia).  Another 18% went to other British colonies.  Another 18% went to Spanish colonies.  About 14% went to French colonies.  While the vast majority of those slaves went to Portuguese colonies in the Americas.  Approximately 39% of all African slaves.  Most landing in Brazil.  Which is why the Portuguese language is one of the top ten most spoken languages in the world today.  Because Brazil is a very large country.  Thanks to all of those slaves the Portuguese brought there.

Slavery was wrong.  And it is America’s original sin.  But it wasn’t what made America great.  Or rich.  Contrary to what our public schools are teaching our kids.  If it was the South would have won the American Civil War.  But they didn’t.  The industrial North did.  With her factories filled with paid-laborers.  This was the New World.  The South that lost the Civil War was the last remnants of the Old World in the New World.  Where it mattered who your father was.  Abraham Lincoln and the new Republican Party ended slavery in the United States.  And the Republican Party would eventually put an end to Jim Crowe laws in the south.  And passed the Civil Rights act (a larger percentage of Republicans voted for it than Democrats).

The Racial Divide has never been Greater despite electing a Black President Twice

So the Republicans have done more to end discrimination in the United States than the Democrats have.  Who have actually spent more time opposing civil rights.  But you wouldn’t know that.  Not with all the disinformation the left puts out.  Today the left claims they are the party that fights discrimination.  When in actuality they instigate and exacerbate discrimination.  Because it gives them power.  For trying to end discriminations is very lucrative.  Some have made careers and have grown quite wealthy trying to end discrimination.  You know who they are so there’s no point in naming them here.  But these people never end discrimination.  For while there’s money in fighting discrimination there’s no money in ending it.

If there are always examples of discrimination in our society then there is always a need for those who fight it.  There’s always a reason for new legislation.  To right past wrongs.  And make things fair.  So the Democrats increased the size of the welfare state.  To make the discriminated dependent on the state.  To keep them on the plantation.  Concentrating them in housing projects.  In the inner city.  Away from the Democrats’ nice neighborhoods.  They broke up their families with AFDC.  Replacing fathers with the state.  Who failed these kids miserably.  They implemented affirmative action.  Where some game the system and get a free pass.  Because of lower standards.  Getting entrance to a college or a job over someone more qualified.  Fomenting new racial unrest.  As some complain about being passed over despite being more qualified.  Which the left jumps on as proof of overt racism.  And the need for them to do something more to end it.

But they never end anything.  Because ending it would take away their power.  Which is why despite everything they’ve done since the Sixties things have never been worse.  And more policies and legislation to end discrimination have never been needed more.  Because the racial divide has never been greater.  Despite this country electing a black president.  Twice.

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2012 Endorsements: Abraham Lincoln

Posted by PITHOCRATES - October 25th, 2012

2012 Election

The Slave Owners were the Social Elite and Holders of Political Power Similar to the Aristocracy in European Feudalism

General Motors (GM) required a government bailout and bankruptcy protection because of rising labor costs that prevented them from selling enough cars at a price to cover their costs while being profitable.  Their problem goes back to FDR.  During the Great Depression his government placed a ceiling on wages.  To encourage companies to hire more people.  By paying more people less money instead of fewer people more money.  So businesses had to do something else to attract the best employees.  And the employee benefit was born.  Pensions and health care benefits.  That were very generous when there was no competition and car companies could sell cars at whatever price they chose.  But that wasn’t the case in the 21st century.  Competition put great cost pressures on those companies with rising health care and pension costs.  And the job bank paying for workers who didn’t work.  Until they could be put back to work.  Adding a lot of costs to each car.  And sending GM into bankruptcy.

Slavery as an economic model had a similar problem.  High costs.  Which goes contrary to the public perception that slave labor was free labor.  George Washington wanted to sell his slaves and hire paid-laborers.  Because his slave families had grown so large.  So he had a growing slave population.  But they all weren’t working.  The young children could not do the work of a young man in his working prime.  Nor could the elderly.  Or the sick or infirmed.  (Who he couldn’t sell along with the healthier and stronger ones in their families.  So he kept his slaves, keeping those families together.  Freeing them upon the death of his wife.  And including provisions in his will to help them integrate into free society.  Giving them some job skills to help them find gainful employment so they could care for their young, elderly, sick and infirmed.)  Yet Washington was feeding them all.  While the growing amount of food they ate couldn’t go to market.  As the years passed his costs went up and his revenue fell.  Just like at GM.  For both had long-term labor commitments that became more inefficient over time.  Which is why slavery was a dying institution in the United States.  The industrial North was slave-free.  As they used more efficient paid-laborers.  Drawing a lot of immigrants to those northern factories.  And slavery was dying out in the South.  Until the cotton gin came along.  Allowing workers to comb (separating the seeds from the fiber) huge amounts of cotton at a time.  Greatly opening the market for that labor-intensive cotton crop.

The typical image of the South in 1860 is endless plantations each with hundreds of slaves working the fields.  Which is wrong.  Most people worked a small family farm.  In fact, most of the Confederate soldiers who fought in the American Civil War came from those small family farms and never owned a slave in their life.  The actual numbers of large slaveholders will probably surprise you.  Approximately 0.84% of the southern population owned at least 20 slaves.  Only 0.05% of the southern population owned at least 100 slaves.  And the number of big plantations owning at least 500 slaves?  Twelve.  So it was a very small population that had a vested interest in the institution of slavery.  Yet the South seceded from the union over the issue of slavery.  Why?  Because of who those slave owners were.  The social elite and holders of political power.  The Planter Elite.  People similar to the aristocracy in European feudalism.  An Old World nobility.  The very wealthy few who ruled the South.  And for awhile they ruled the United States thanks to an unfair advantage they had in the House of Representatives.  Where they determined their representation by not only counting the free population but by counting every slave as 3/5 a free person as well.  And this southern nobility was determined to maintain their aristocracy.

Popular Sovereignty created a Bloodbath in Kansas as ‘Free’ and ‘Slave’ People raced there to Settle the State

Which was easier said than done.  Because of that industrial growth in the north attracting so many immigrants that they swelled the northern population.  Transferring control of the House from the South to the North.  Which left only the Senate (and the presidency) for the South.  As each state got two senators the race was on to admit free and slave states to the union.  Which didn’t really solve anything.  It only made the differences between the North and the South greater.  And intensified the bad feelings between the North and the South.  The North was full of abolitionist busybodies trying to tell southerners how to live.  While the southerners were a bunch of immoral slaveholders.  Bringing shame to the nation that was supposedly a place where all men were created equal.   Words enshrined in the Declaration of Independence.  Words written incidentally by a southern slaveholder.  It was finally time to address the nation’s original sin.

Congress passed the Missouri Compromise (1820) after Thomas Jefferson bought the Louisiana Territory from the French.  Adding a lot of new land to form states from.  The compromise prohibited slavery north of the border between Arkansas and Missouri (except in the state of Missouri).  They added new states in pairs.  A free state.  And a slave state.  Maintaining the balance of power in Congress.  Then came Kansas and Nebraska.  Both above the Missouri Compromise line.  Well, that meant two new free states.  And a change in the balance of power.  Which the South couldn’t have.  So Senator Stephen Douglas introduced the Kansas-Nebraska Act.  And the idea of popular sovereignty.  The idea of letting the people in these new states decide for themselves if they should be a free state or a slave state.  Creating a bloodbath in Kansas as ‘free’ and ‘slave’ people raced there to settle the state.  Fighting and intimidating each other so they would be the ones to vote on making Kansas free or slave.  It was anarchy.

Abraham Lincoln had reentered politics in 1854 to campaign for fellow Whig Richard Yates.  Who opposed the Kansas-Nebraska Act.  Democrat Stephen Douglas was making a series of speeches in Illinois.  In response to one of Stephens’ speeches Lincoln gave his Peoria speech.  In commenting on letting slavery into Nebraska and Kansas Lincoln said, “I hate it because of the monstrous injustice of slavery itself.  I hate it because it deprives our republican example of its just influence in the world—enables the enemies of free institutions, with plausibility, to taunt us as hypocrites—causes the real friends of freedom to doubt our sincerity and especially because it forces so many really good men amongst ourselves into an open war with the very fundamental principles of civil liberty—criticizing the Declaration of Independence, and insisting that there is no right principle of action but self-interest.”

If Lincoln were Alive Today he would Likely Endorse the Republican Candidates Mitt Romney and Paul Ryan

The fallout from the Kansas-Nebraska Act splintered existing political parties apart.  Created new ones that disappeared later.  And gave birth to the new Republican Party.  The party of George W. Bush, Ronald Reagan and Abraham Lincoln.  Who became the leading spokesman of the party.  The Republicans lost the 1856 presidential election but won majorities in most of the northern states.  Tipping the balance of power further away from the South.  When Lincoln won his party’s nomination to run for senator in 1858 he gave his ‘House Divided Speech’ saying, “A house divided against itself cannot stand. I believe this government cannot endure permanently half slave and half free. I do not expect the Union to be dissolved—I do not expect the house to fall—but I do expect it will cease to be divided. It will become all one thing, or all the other.”

When slave Dred Scott traveled to a free state with his owner his owner died.  Scott said he was then a free man.  The Supreme Court thought otherwise.  Saying that Scott was still a slave because neither Congress nor any territory legislature had the authority to change that.  Which meant no one could restrict the movement of slaves because no one had the right to restrict the movement of private property.  Thus opening all the new territories to slavery.  Making the South very happy.  While infuriating the North.  Who refused to enforce slave laws on the books like the Fugitive Slave Law.  A provision included in the Compromise of 1850 for the states’ rights South.  That called for the federal government to force northerners to return slaves or face arrest and penalties.  States’ legislatures in the North passed laws saying a slave living in a free state was a free man.  The Supreme Court struck down these laws.  Favoring southern states’ rights over northern states’ rights.  So the states just refused to help the federal government in any prosecution of a violation of the Fugitive Slave Law.  Then abolitionist John Brown’s failed slave revolt at Harper’s Ferry, Virginia, further angered the South.

Then came the 1860 presidential election.  That Abraham Lincoln won.  Which was the last straw.  The South lost both Congress and the presidency.  Worse, the new president, though not an outright abolitionist, opposed the expansion of slavery.  Leaving the South with one last option.  Secession.  Which they did.  Leading to the American Civil War.  Which the South lost because of everything they believed in.  For an Old World nobility just could not defeat a modern industrial power.  Lincoln won because he had modern factories building whatever he needed.  The northern economy was large and diverse providing war financing.  Railroads crisscrossed the North.  A large navy controlled the interior rivers and blockaded the southern ports.  Cutting off the South from the outside world and starving it.  When the South desperately pursued the British for recognition Lincoln issued the Emancipation Proclamation.  Making it impossible for Britain to ally itself with a nation fighting for the institution of slavery.

No president entered office with a heavier burden than President Lincoln.  Standing on principle he made the hard decisions.  Becoming the most hated sitting president of all time.  He did not look for an easy solution like every other politician had up to his time.  Only making the inevitable solution more costly.  And more painful.  He would do what had to be done.  Regardless the price he would pay.  Politically.  Or personally.  A cost so high that it made him a one term president thanks to an assassin’s bullet.  He didn’t base his decisions on the polls.  Or populist movements.  But on principles.  Drawn from the Constitution.  And the Declaration of Independence.  As well as the Bible.  So if he were alive today who would he endorse in the current election?  He would, of course, support his party.  Out of party loyalty.  And because it tends to stand on principle more than the Democrat Party.  Which often used an activist Supreme Court to get what they couldn’t get in the legislature.  Which tends to use populist movements and character assassination to advance their agenda.  Such as the so-called war on women to scare women into voting Democrat because they can’t persuade them to based on a successful track record in office.  Also, the Republicans are more pro-business and more pro-military.  Which gives you the ability to win civil wars.  And other wars.  As well as protecting US security interests around the world.  Maintaining peace through strength.  For anything was preferable to the hell he went through during the four long years of the Civil War.  And to have so much blood on his hands.  The war being so horrific because of a policy of continued failed diplomacy when there was simply no common ground.  He said that there was only one of two possible outcomes.  All free.  Or all slave.  And he was right.  But it took someone willing to be the most hated sitting president to have the courage to act to bring about the inevitable.  So if Lincoln were alive today he would likely endorse the Republican candidates Mitt Romney and Paul Ryan.  Not the party that wants to delay the inevitable by refusing to address the systemic problems of Medicare and Social Security.  And a growing welfare state.  Systems a declining population growth rate can no longer fund.  Because aging populations bankrupt nations with expanding welfare programs.  Just like an aging workforce can bankrupt a car company like GM.

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Stages of Production, Free Market Capitalism, Civil War, King Cotton, Emancipation Proclamation, Southern Democrats and Jim Crow Laws

Posted by PITHOCRATES - July 17th, 2012

History 101

Free Market Capitalism maximizes Wealth Creation with Free Markets, Free Trade and Free Labor 

The whole point to a value added tax (VAT) is that we add value as we go through the stages of production.  Raw materials in the earth have no value.  They begin having value when we extract them.  Raw iron ore gains value when we process the iron out of the rock.  A Great Lakes freighter full of taconite pellets (processed from low-grade iron ore flint-like rock) is worth more than the same weight of the low-grade iron ore flint-like rock.  These taconite pellets gain value when we transform them into steel in a blast furnace.  That steel gains more value when we transform it into steel products (like a truck frame or a refrigerator).  The finished goods we incorporate these steel products into gain even more value.

The VAT tax applies a tax on the increased value at every stage in the stages of production.  It’s a way for government to collect a lot of tax revenue without using something obvious like a sales tax.  Because no one but the government knows all the tax collected on all that value created.  Which is a very important point.  Increasing value increases tax revenue.  And that’s because increasing value increases wealth.  Making economically advanced countries (with a lot of economic activity throughout the stages of production) wealthy countries.  Giving them an advanced industrial base.  An extensive infrastructure.  And a high standard of living.

Free market capitalism maximizes this wealth creation.  Free markets.  Free trade.  And free labor.  Where people can work hard to learn a skill that will give them more value.  And the ability to create more wealth with their labors.  Allowing them to earn a nice paycheck.  That they can use in the market place to buy things.  Contributing to economic activity.  And the wealth creation in the country.  As well as the tax base.  The greater the population the greater the number of people engaging in economic activity.  The greater the number of retail stores.  The greater the wholesale industry.  The greater the manufacturing base.  And the greater amount of raw material extraction.  All of this activity producing an advanced nation.  That can build whatever it needs.

Lincoln’s Emancipation Proclamation made it Impossible for the Europeans to Support the Southern Cause

There were two Americas in the mid 1800s.  An industrial North.  And an agricultural South.  An advanced nation in the north based on free labor.  And medieval economy based on slave labor in the south.  In the north they had factories, shipyards, railroads and everything else a modern industrial nation had.  In the south they had cotton.  In the north they had a growing population of free men.  In the south they had a growing population of slaves.  In 1861 the North had a population of about 22 million.  The South had a population of about 5.5 million free men.  And about 3.5 million slaves.  So the North enjoyed explosive economic activity creating great wealth.  While the South enjoyed great wealth from their cotton.  For the few plantation owners.  The slaves didn’t enjoy any of that wealth.  While the majority of the white population struggled to scratch out a living on small family farms.

When the American Civil War broke out the South was at a distinct disadvantage.  For technology wins wars.  And the North was far more technologically advanced than the South.  As Rhett Butler said in Gone with the Wind, “They’ve got factories, shipyards, coal mines…and a fleet to bottle up our harbors and starve us to death.  All we’ve got is cotton, and slaves and…arrogance.”  Which was true.  But in their arrogance they thought that King Cotton would trump all of the North’s advantages.  By bringing in the British on the South’s side.  Because Britain bought a lot of that southern cotton.  And the South was sure that Britain would support their cause to maintain that cotton flowing to their textile and garment industries.  They thought wrong.

Cotton was a raw material.  And other people could grow it just as well as the southern plantations.  Yes, the self-imposed cotton embargo by the South on Britain hurt the British.  Causing a major interruption to their textile and garment industries.  But it didn’t take long to replace that Southern cotton with Egyptian and Indian cotton.  And in no time the British industries were up and running again as if nothing had happened.  Creating higher orders of wealth than the raw cotton resources of the South.  Which was a problem for the South.  For there was no way for them to break the blockade of their harbors without European help.  But that help would never come.  Because the only thing they had to offer, cotton, was available elsewhere.  Not to mention the fact that Britain had emancipated her slaves.  And was working diligently to interdict the Atlantic slave trade.  So they weren’t coming to the South’s aid.  And if Britain wasn’t going to help then neither were the French.  And Lincoln’s Emancipation Proclamation was just the icing on the cake.  Making it impossible for the Europeans to support the Southern cause.  It then became a matter of time for the technologically advanced north to defeat the medieval South.

The South’s Old World Economy was just no Match for the New World Economy of the North  

Outmanned, out manufactured and with no foreign recognition the South learned the lesson that an economy based on slave-labor was no match for an economy based on free market capitalism.  For the slave-based agricultural economy was little different than the feudalism of the Middle Ages.  A system long since abandoned in Europe but clung on to in the Confederate South.  Concentrating the wealth in a few hands.  The landed aristocracy.  And a small middle class of artisans and business owners primarily to serve the planter class.  While everyone else, whites and slaves, worked hard and barely survived.  The blacks of course suffering more than the whites.  But they both lived in poverty.

The advanced economy of the industrial North built ships, cannon, rifles, bullets, locomotives, track and everything else a modern industrial economy has.  Their ships commanded the rivers and the southern coast.  The South was cut off from the rest of the world.  Their valuable cotton sitting worthless in warehouses because there was no one to sell it to.  Not even in the South.  For while the North had a textile industry the South did not.  With no way to add value to this cotton this cotton lost all value.  And the Southern economy collapsed.  Because cotton was all they had.  Well, that, and arrogance.  But when that cotton became worthless the South had nothing.  And little choice but to surrender.  And they did.  First General Lee to General Grant.  Then General Johnston to General Sherman.  And soon the war was over.

It took some 4 years and about 600,000 dead.  Which is especially sad considering the South never had a chance.  Their Old World economy was just no match for the New World economy of the North.  With the thing they were fighting for, slavery, being the cause for their defeat.  For slavery may have worked in a medieval agricultural-based economy.  Where there were no stages of production.  Just procurement of raw material.  But it was no match for free men working in free market capitalism.  Which is why the North prevailed in the Civil War.  And why the United States went on to be an economic superpower.  And leader of the free world.  Thanks to President Lincoln.  Who freed the slaves.  And the South from its Old World past.  Unleashing human capital everywhere throughout the United States.  And allowing all people to engage in economic activity.  Though the freed slaves would suffer discrimination for decades under the Southern Democrats.  And their Jim Crow Laws (separate but equal).  But the Republicans would eventually usher in civil rights legislation ending that.  Just as they ended slavery.  Allowing all people to live a better life under free market capitalism. 

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FUNDAMENTAL TRUTH #61: “The political elite has always exploited blacks.” -Old Pithy

Posted by PITHOCRATES - April 12th, 2011

Mercantilism brought Slaves to the New World

Slaves were useful in more ways than one.  As a source of labor.  And a political pawn.  The political elite has oppressed and exploited them for a couple of centuries in the New World.  Though the oppression has stopped, the exploitation continues today with their descendants.

Colonization isn’t easy.  It takes a long time.  Longer in a hostile land.  You start out by establishing colonies.  The colonists first figure out how to survive.  Then they sow the seeds of future generations.  But there was a problem with this in the New World.  A hostile environment.  And the long time it took to raise a generation or two.  And this was a big problem.  For the European monarchies that were supporting these colonists did so for economic reasons.  And time was money.  They were to exploit the New World’s resources and ship these raw materials back to Europe.  That’s how mercantilism worked.  You raced around the world to find sources of raw material, establish colonies and then ship the raw material back to Europe.  Where the Europeans processed them into finished goods.  These goods were then sold back to the colonists.  Or other export markets.  To establish a positive balance of trade.  Finished goods out.  Gold, bullion, silver, etc., in.

That was the European model then in use.  So unskilled labor was in great demand in these new colonies.  Enslaving the local indigenous populations didn’t prove too successful.  They could escape and disappear into a familiar environment that was friendly to them.  So that’s why they imported Africans into the New World.  They were a long way from home.  And the local environment was just as hostile to them as it was to their white slave owners.  With these Africans, the colonists were able to exploit their resources far quicker than they could have had they waited for their own numbers to multiply sufficiently to do the same work.  Of course, this lead to a skewed population.  Where a white minority ruled over a black majority.  Worse still, slavery was only growing in the South.  And that created a problem in the distribution of political power in the new federal government.  Slaves didn’t vote or pay taxes.  But there were a lot of them.  If they were not counted to determine congressional representation, the non-slave holding North would dominate the new federal government.

The Planter Elite gets the 3/5 Compromise and an Unfair Advantage

First the African slaves were used as pawns by European monarchs to enrich their mercantile empires.  Then they were used by politicians in a fledgling new nation to obtain an unfair advantage in political power.  These Africans just couldn’t catch a break.  Slavery was concentrated in the Deep South.  In the hands of the planter elite.  Though few in numbers they dominated political power in their states.  And they planned on doing the same in the new federal government.  To protect their interests.  Wealth.  And power.

But to do that there was that pesky problem getting in their way.  The fact that the planter elite was a small minority of the population.  It was different in the north.  Political power was representative of the population.  Where most of the population paid taxes and voted.  And they were going to extend this theory of representative government to the new federal government.  The North wanted to count all people (including slaves) in determining the states’ tax obligations.  The South didn’t.  The South wanted to count all people (including slaves) in determining representation in the House of Representatives and the Electoral College (that elected the president).  The North didn’t.  So they compromised.  They would count slaves as three-fifths of a person.  This compromise favored the North on the tax obligation issue.  But it favored the South on the political representation issue.  As a result of the compromise, the South would dominate the House of Representatives and the presidency until the Civil War.

So you see why slavery was so important to the South.  It gave them an unfair advantage in the new federal government.  Thus empowering them to protect their peculiar institution of slavery.  Their interests.  Wealth.  And power.

The Founding Fathers had to Accept Slavery to Establish a Nation based on Liberty

The Founding Fathers saw the inconsistency of slavery and their founding ideal.  Liberty.  Benjamin Franklin, John Adams, John Jay and Alexander Hamilton were northerners.  Some were already abolitionists.  Some would eventually join that movement.  George Washington, Thomas Jefferson and James Madison were southerners.  They owned plantations.  Worked with slave-labor.  Washington actually looked into converting to paid-labor but the realities of the day made the continuation of slave-labor the humane thing to do on his plantation (changing to paid-laborers would have broken up the slave families).  He is the only Founding Father that freed his slaves (after the death of his wife Martha).  And his will stipulated that his heirs help the newly freed people integrate into free society.

Jefferson and Madison clearly prospered on the institution of slavery.  (Well, the Jefferson family had.  Jefferson was a genius in so many ways.  Except in the way of making money.)  Their wealth came from the plantations.  And their political power rested with their brethren planter elite.  Should they move against them they would fall from power.  And should these ‘moderates’ fall from power, southern extremists would replace them.  Who wished to see no restrictions on slave owning or on the slave trade.  They were expansionists.  They wanted to see their way of life, and their slavery, expanded into the new territories.  They would never have gone to the Constitutional Convention in Philadelphia in 1787.  They would never have ceded any power to the northern interests.  There would have been no compromise between North and South.  And the new nation might never have been born.   

Jefferson and Madison were tainted by America’s original sin.  There’s no disputing that.  But there would have been no America without them.  They were the bridge to the Deep South.  So to make this new nation based on liberty possible, the Founding Fathers had to accept that keeping some of the people in bondage was necessary.  For awhile, at least.  The North promised the South they wouldn’t talk about the issue again for twenty years.  And Jefferson and Madison reassured the planter elite that their way of life would not change.  In more private conversations, they assured them that the new federal government would forever speak with a Southern accent.  In 20 years time, the North hoped the southerners would have fixed this southern problem.  Or that the institution itself would just fade away.  While the Deep South hoped it would become so entrenched that it would be impossible to have these discussions again.

The Cotton Gin, the Fugitive Slave Act and Civil War

As it turned out, events would favor the South.  Thanks to an ingenious invention called the cotton ginEli Whitney unwittingly gave the Deep South what they needed.  For slavery was on the decline.  The big slave crops were not very profitable crops (rice, tobacco, indigo and cotton).  Planters were diversifying.  Requiring farm workers with multiple skills.  Which favored the paid-laborer.  But the cotton gin took one of those unprofitable crops and made it profitable.  By turning a labor-intensive chore (separating the seed from the cotton) into an automated process.  And King Cotton was born.

This fanned new life into a dying institution.  The Southern economy became a cotton economy.  And the decline in slave-labor did an abrupt reversal.  Fortunes were built on cotton.  As was political power.  And thanks to the unfair advantage given to the Deep South by the Three-Fifths Compromise, the Southern way flourished.  Until immigration flooded into the industrialized north, that is.  Even their unfair advantage could not stop the inevitable.  The political power in the House of Representatives shifted to the North.  And this spelled the beginning of the end for the planter elite.   Compromise no longer favored the Deep South.  And there was a lot of secession talk down there.  A series of compromises followed in an attempt to keep the Union together.  Such as the Fugitive Slave Act that forced the federal government to interfere with states’ rights.  In the North.  Forcing these states to return runaway slaves to the plantations from whence they came.  The 1850s saw a march towards Civil War.  And in April of 1861, General P.G.T. Beauregard ordered his cannon to commence firing on Fort Sumter in Charlestown’s harbor.  Some four bloody years later with over 600,000 dead, the South lost.  The slaves were free.  And the Southern economy collapsed.

The great Republican, Abraham Lincoln, saved the Union.  And freed the slaves.  A fact not lost on the slaves.  The planter elite were Southern Democrats.  The party of slavery.  So you can guess how the newly freed slaves voted.  That’s right, the freed slaves voted Republican.  Because Republicans ended slavery.  Despite the Democrats best efforts to maintain their peculiar institution.  Which makes one scratch his head today.  Today, blacks vote predominantly Democrat.  This same party that oppressed and exploited them throughout American history.  So what changed?  Well, the truth is, not much.  Liberal Democrats continue to exploit the blacks.  But with a little political sleight of hand, the exploiter becomes the protector.  Champion of civil rights.  And the corrector of past wrongs.

Liberal Generosity Destroys the Black Family

You see, liberal Democrats have the same problem the planter elite had.  They’re a minority of the population.  Yet they covet political power.  So how do you get political power in a land with free elections?  Without slavery and the unfair advantage of the Three Fifths Compromise?  Simple.  You have to figure out some other way to exploit these slave descendants.  Their answer?  Enslave them to government. 

Government has the power to tax.  Which gives them a lot of money.  And power.  So the liberal Democrat solution is to tax and spend and bestow government benefits in exchange for votes.  And the liberal welfare state was born.  Gave so much to the black family that they soon become dependent on this liberal generosity.  And the black family who survived slavery.  Reconstruction.  Rampant and systemic discrimination.  Was destroyed.  A helping hand (welfare) became a way of life.  Aid to Families with Dependent Children encouraged single women to have children.  And men to abandon these children.  For the state would step in and be father.  Turns out the state was a horrible father, though.  Kids grew up lacking fatherly discipline and guidance.  And they drifted into trouble.  Public housing grouped these fatherless children together.  And sent them to school together.  Spreading that trouble and bad behavior to the schools.  So both the schools and public housing suffered from the new inner city disease.  Blight.  Spawned by the liberal welfare state.  Leaving no escape for these inner city kids. 

Or so says conservative economist Thomas Sowell.  Born in 1930, he lived through much of that rampant and systemic discrimination.  And the creation of the liberal welfare state and its affect on the black family.  He has firsthand experience as a black man.  And a lifetime of academic research and published works on the subject.  The liberals reject him and accuse him of racism.  Because he dares to say the liberal welfare state has done more harm than good.  Worse, he backs that up with some compelling research.  Unable to attack the message, they attack the messenger.  Which is what people usually do when they have lost the argument.

Though their programs proved a failure, all was not lost.  Sure, they destroyed the black family, but they destroyed them with an addiction.  Addiction to the welfare state.  And one thing addicts can’t do is walk away from their addiction.  So they keep voting to maintain their fix of government benefits.  They keep voting Democrat.  Which was the goal all along.  Not to alleviate any of their suffering.  And unlike the planter elite, the liberal Democrat is not getting only three-fifths of a vote from their black population.  They’re getting the whole thing. 

The planter elite would no doubt be impressed by this political sleight of hand.  And kicking themselves for not thinking of it themselves.

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LESSONS LEARNED #60: “Fool me once shame on you. Fool me twice shame on me. Fool me again shame on public education.” -Old Pithy

Posted by PITHOCRATES - April 8th, 2011

Slaves were Costly and Inefficient

George Washington made a profit on his plantation.  Better than some of his fellow Founding FathersThomas Jefferson couldn’t make a profit and was forever in debt.  But Washington could.  And did.  And would have been more profitable had he split up his slave families.  You see, he wanted to sell his slaves and use paid-laborers instead.  Why?  Because paid-labor was more profitable than slave-labor?  “What?!?” you ask.    Yes, that’s right.  Paid-labor was more profitable than slave-labor.  For a couple of reasons. 

First of all, slaves weren’t free.  People bought them at auction.  And anyone familiar with an auction knows that people sell to the highest bidder.  So there was an initial ‘investment’ in a slave that you didn’t have with a paid-laborer.  Think of this as the difference of buying or renting a house.  If you buy you pay a lot of money to own the house.  And you are responsible for all of the maintenance and upkeep on the house.  It’s different with renting.  You pay just a little bit each month for as long as you stay in the house.  It’s similar with paid-labor.  You rent people for the time they work.  Then they go home and feed and house themselves.  Slaves didn’t go home.  Because they were home.  And planters had to feed and house them.  And attend to their other needs.  These costs added up.  Especially if you had a lot of slaves out of their working prime (old men and young children) that you still had to feed and house.  And these are what Washington had a lot of.  Many generations of non-working slaves that he had to feed and house.  Which is why he wanted to sell them.  But people only wanted the workers.  Not the rest of the family.  But he refused to break up the slaves families.  So he kept them.  Even though it was a poor business decision.

Now Washington was no abolitionist, but he saw the conflict between the institution of slavery and the American ideal.  But his motives were financial at first.  His large crop of tobacco was not a money-maker.  So he wanted to diversify his crops.  And his risks.  Which meant different labor skills for different crops.  And this favored paid-labor.  Because you can always hire skilled laborers to grow these different crops.  Which was the great disadvantage of slave-labor.  Their advantage was in the large, single-crop plantation where a diverse skill-set was not required.  Trained in one skill, they kept repeating that single skill on a grand scale.  It was the best you could hope for from slave-labor.  Where people did the minimum to avoid punishment.  For that was their only incentive.  Paid-laborers, on the other hand, you can fire them.  Or reward them for bumper crops.  So they have an incentive to hone their skills and become the best at what they do.

King Cotton Abdicates

But Washington couldn’t break up the slave families.  And there was no way to give them the many years of farming skills overnight in these new skill areas and turn them into proper paid-laborers.  Who could take care of themselves and their families while integrating them into free society.  Unless he gave up his day job.  So he continued to use slave-labor.  However, his will freed his slaves after his wife passed away.  He and his wife were the last generation to live the old way of life.  His successors were to live the new way of life.  His will further instructed to teach the newly freed slaves trade skills and help them integrate into free society.

Many critics of the United States like to point to the institution of slavery and say that is why we became a great nation.  That we grew rich on slave-labor.  That we reaped huge profits because slaves were free.  Nothing could be further from the truth.  First of all, as noted above, slave-labor was not free labor.  It was costly.  And inefficient.  It was such a bad business model that it had almost died of its own accord.  As many of the Founding Fathers had earnestly wished.  But something happened.  Eli Whitney invented the cotton gin.  Now machines could separate the seeds from the cotton faster than they could pick it.  All of a sudden the large, single-crop, cotton plantations in the south needed to plant, grow and pick more cotton than ever before.  To feed these new, hungry machines.  Cotton was the new high-demand fabric.  The textile markets in Great Britain couldn’t buy enough of it.  And the Southern economy flourished like it had never did before.  Southern planters grew rich.  As did the Southern economy.  King Cotton they called it.  Because cotton was king.

And that is why the South lost the Civil War.  For if cotton was king that meant the South was a monarchy.  And for all intents and purposes, it was.  Most Southerners didn’t own slaves.  Most were poor.  Working on family farms.  The institution of slavery didn’t tarnish them.  No.  The rich planters owned the vast majority of the slaves.  The planter elite.  The planter aristocracy.  And it was an aristocracy in every sense of the word.  Just watch the classic Gone with the Wind and tell me what that world reminds you more of.  America?  Or European feudalism?  That wasn’t America.  America was the poor southerner working the family farm.  And the poor northerner working the family farm.  It was not inherited wealth passed from generation to generation.  Wealth created by labor bonded in servitude attached to the land (serfs in Europe, slaves in America).  No, this was not America.  It was a charmed life for the privileged few.  But only the privileged few.  Because it mattered what your last name was.

Laissez-Faire Capitalism wins the Civil War

The North won the Civil War because it was more laissez-faire capitalism.  The South had the better generals at the beginning of the war.  And the Southern soldier was a formidable foe in combat.  But factories in the North fed Northern shipyards.  Which built a navy that blockaded southern ports.  Making all that cotton worthless.  Great Britain would then turn to India for her cotton needs.  So much for King Cotton. 

The Southern economy was a cotton economy without a market.  They had factories and shipyards, too, buy not like the industrialized North.  The South never had a chance.  Unless she could strike a winning blow early.  Because they could not win a war of attrition.  Which is what the Civil War became.  Especially after the Confederate ‘high water’ mark.  Gettysburg.  The Confederacy shrank as the Union Army advanced.  Fed by a growing network of railroads.  This relentless advance of man and material made possible by the prudent investment of capital by savvy investors.  The genius of entrepreneurs.  And the drive of industrialists.

This miracle of capitalism would tip the scales again in World War I.  And in World War II.  The Arsenal of Democracy.  Laissez-faire capitalism.  Paid-laborers.  Incentive.  And profit.  The best things in life.  They gave us the comforts we now take for granted.  And they took us from a new nation to a superpower in little over one hundred years.

Pliant, Subservient Students grow up to become good Democratic Voters

So that’s history.  But people today still think slavery made us great.  They attack capitalism.  Incentive.  Profits.  And just about everything else that built and made this country great.  Why?  Because they learned somewhere that slavery made us great.  That capitalism is bad and unfair.  That incentive and profits exploit the working class.  Where?  In our public schools.  And our public universities.  Kids in our public institutions learn these things.  Not the things that made us great.  Because these schools indoctrinate.  They don’t educate.  Why?  For the same reason the planter aristocracy fought in the Civil War.  To protect a privileged class.

Today, the liberal Democrats are the descendants of the planter aristocracy.  Not literally.  But figuratively.  Liberal Democrats are not capitalists.  Or industrialists.  They don’t like incentive or profit.  They prefer patronage.  They like rewarding their friends.  And punishing their enemies.  And to have this power they need to have the people vote for them.  So they come across as the champion of the poor and friend of the working man.  Or any other minority or class of people whose vote they need to buy.  But they’re anything but.  For an example just look at one of their favorite cause célèbre.  The black family.  These white liberals want to ease other whites’ guilt over slavery by doing as much as they can for the black family.  To make up for all those years of injustice.  And they dropped a neutron bomb.  Aid to Families with Dependent Children.  AFDC.  A real feel-good thing to do.  But it led to an explosion of single-mother families in the black community.  Because of the incentives of the program.  It encouraged women to have more children.  Stay unmarried.  And not work.  For a young woman with no working skill this was a godsend.  The state would replace the father and provide for her and her children.  But as it turned out, the state was a very poor father figure.  Children need fathers.  We all know this.  That’s why there are big brother programs.  To provide a father figure for these fatherless children.  For they will stray without this strong role model in the family.  And have.  Economist Thomas Sowell blames AFDC for greatly destroying the black family.

But the liberal Democrats don’t look at the destruction they cause.  They look at the political power they’ve gained.  Much like the planter elite.  So they need to tweak history a bit.  To mask their failures.  And accentuate the good they meant to do.  But never did.  And what better way to do that than in our public schools?  So they take care of our teachers.  Pull them into their aristocratic class.  Help them get favorable contracts without allowing the taxpayers a say.  Feed them big salaries.  Some of which is returned to them via their union dues.  Quid pro quo. They live the good life.  The politicians get ‘campaign’ contributions.  And pliant, subservient students grow up to become good Democratic voters.

And thus the lie is sustained.  Those who destroy are portrayed as nurturers.  And those who nurture are portrayed as destroyers.  A political sleight of hand.  That pays dividends in the voting booth.

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LESSONS LEARNED #51: “The longer you wait to balance your books the harder it will be to balance them.” -Old Pithy

Posted by PITHOCRATES - February 3rd, 2011

Almost half of a Plantation’s Value was its Slaves

Slave labor wasn’t cheap.  First there was the capital expenditure to purchase the slaves.  Then you had to feed them, clothe them, house them, etc.  It took money.  But that money made money.  Mostly on the big plantations.  Where the division of labor was minimal.  And large labor gangs could work a single crop profitably.

The more slaves on a plantation the more land they could work.  So the more slaves on a plantation the more valuable the plantation was.  Like a dairy farm with many dairy cows is worth more than one with fewer cows.  A productive dairy farm makes money.  And it can borrow money to grow.  Ditto for a cotton plantation. 

Now suppose we free dairy cows everywhere.  They’re free to walk off of their farms and pursue their own lives.  What will become of the dairy farm?  It won’t make money.  It won’t be able to pay back its loans.  The farm will lose value.  Because no one will buy it without the cows to make milk.  Dairy farmers everywhere will go broke.  And they will lose their farms.   

If not for the Civil War, Abolition would have been the Greatest of all Bailouts

When we discuss slavery, we focus more on issues of morality.  But the reason we had it for so long is partly due to the economics.  There was a large price tag attached to abolition.  And the question was who was going to pay?  Slavery, though immoral, was legal.  The plantations grew.  They purchased more slaves.  Worked more land.  Incurred debts to grow further.  All based on the collateral of their plantation.  Much of which was their slaveholdings.

Based on the 1790 census, there were just fewer than 700,000 slaves in America.  At the time, the nation’s finances were in a mess.  We were begging Europe to loan us money.  There was no money available to reimburse the slave owners.  And the North didn’t want to pay for this ‘southern’ problem.  There was no easy way to free the slaves without a huge financial hit.  For someone.  So we tabled the issue.  For another generation to consider.  And resolve.

But we didn’t.  By 1860, the slave population topped 3.8 million.  That’s over 5 times the number from the 1790 census.  The cost to reimburse these slave holders had grown to over $3 billion dollars.  That was almost 70% of the 1860 GDP.  In comparison, the total budget of George W. Bush reached as high as 69% of GDP.  Clearly, the cost of freeing the slaves was huge.  It dwarfed all other federal spending.  And this is one of the reasons that it took a war to finally resolve.  And it was our nation’s bloodiest conflict.  More died in the American Civil War than did in WWI and WWII combined.  And the war devastated the southern economy.  Besides the direct war damage, the South was impoverished.  And easy pickings for northern carpetbaggers.

The issue of slavery was less costly to resolve sooner than later.  But the price was always so great that the institution continued on because no one was willing to bear the costs at any time.  This only guaranteed that the final reckoning would be greater.  Which it was.  The final cost was so great it nearly destroyed the nation.  And bitter feelings linger to this day.

Never Let a Good Crisis Go to Waste

Woodrow Wilson and his fellow Progressives were going to change the world.  But that didn’t work so well.  In fact, a lot of their meddling just crashed the economy.  Secretary of the Treasury Andrew Mellon helped President Warren Harding fix the economy.  And we got the Roaring Twenties.

But the Progressives kept tinkering.  And Republican Herbert Hoover was even a bit of a Progressive himself.  Anyway, some government mismanagement (and inept Federal Reserve actions) gave us the Great Depression.  Our nation’s greatest crisis.   Which Franklin Delano Roosevelt (FDR) would exploit to transform the nation with his New Deal.

FDR’s economic policies failed.  Only capitalism re-unfettered for the war effort brought the nation back.  Even though he failed he is still remembered fondly by most Americans.  He stood fast with our allies and defeated Nazi Germany.  And he gave us Social Security.  Which, financially speaking, will cost the nation more than defeating the Nazis did.

The Great Ponzi Scheme Social Security

Social Security was originally intended to help poor widows who had struggled through the Great Depression.  It has subsequently grown to cover retirement and disabilities.  Not a big deal then.  The actuaries crunched their numbers.  They took into account immigration, birthrates, life spans, death rates and other important stuff.  Like actuaries are wont to do.  And they figured it would work.  Because we had a growing population.  With a lot more younger people entering the workforce than there were old people retiring and collecting benefits.

So, like a Ponzi scheme, Social Security was as sound as a pound.  As long as their assumptions held.  But they didn’t.  Immigration slowed.  Our life spans increased.  And worse, we just weren’t having as many babies as we once did.  Now we had more people retiring and collecting benefits.  And fewer entering the workforce to pay for these retirees.  The pyramid inverted itself.  The base was smaller than the tip.  And that just ain’t good for a Ponzi scheme.

Everyone predicts Social Security will go bankrupt.  They’ve been trying to fix it through the years.  To extend the solvency.  By reducing benefits.  Raising taxes.  And raising the retirement age (to decrease the years retirees collect benefits).  These ‘fixes’ have pushed insolvency out a few more years.  But it hasn’t addresses the elephant in the room.  Old people.  They’re living longer than the actuaries ever imagined.  Worse, because they’re living so long, they’re getting all kinds of medical problems that are costing Medicare and Medicaid a lot of money.  And, you guessed it, they’re going bankrupt, too.

Why Fix something Today that we can Leave for Future Generations?

Because there are so many seniors in these programs no politician wants to touch them.  They’re the ‘third rails’ of politics.  Seniors vote.  And if you cut their benefits, they’re probably not going to vote for you.  Every politician knows this well.  So, like slavery, they table the issue for a later generation to address.  But every day that passes, more seniors join the ranks of the retired and begin collecting benefits.  While fewer people enter the workforce to pay for their retirement.  Which guarantees that the cost to fix these problems will grow ever larger.

The day of reckoning will arrive.  It always does.  For the issue of slavery it was civil war.  Over in Europe as they struggle to control their out of control spending they’re having riots.  Which sometimes happens when you take away stuff from large numbers of people.  Let’s hope it doesn’t come to that here.  But one thing that we can be pretty certain about.  Fixing this problem is going to hurt someone in the wallet.  And the longer we wait, the greater that someone will hurt.

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FUNDAMENTAL TRUTH #33: “The founding fathers weren’t perfect but they were closer than most.” -Old Pithy

Posted by PITHOCRATES - September 28th, 2010

George Washington

George Washington owned slaves.  We all know this.  Whenever we try to revere our Founding Fathers, someone on the Left will speak up and remind us of this fact.  Of course, the context of the times means nothing to them.  We’ll forgive Robert Byrd’s racist and KKK past because of the context of his times.  But not the father of our country. 

Washington inherited his slaves.  With the property he inherited.  He wasn’t a huge fan of slavery.  In fact, he wanted to replace his slaves with paid laborers.  Because he wasn’t making a lot of money with his slaves.  There were large families.  Many old who could no longer work.  And lots of children.  This large slave holding consumed a good percentage of his crops for their subsistence.  While a smaller percentage of them contributed labor to produce those crops.  He tried to sell them.  But others were only interested in the workers.  Not the old and the young.  But he didn’t want to break up the families.  So he didn’t sell.  He continued to use slave labor.  Made less money than he could.  Because it was the decent thing to do.

His will freed his slaves after his wife’s death.  It also provided for them.  His heirs were to provide sufficient training to help these former slaves get a job.  To help them integrate into the community.  But you don’t hear that part from the Left.  Just that he owned slaves.

In the context of his times, he was a great man.  And he still is.  Despite what the Left will remind us of.  He was the father of our country.  The indispensable one.  Without him, there would have been no nation.  For he truly was “first in war, first in peace, and first in the hearts of his countrymen.”

Ben Franklin

Ben Franklin lived a long life.  So long you could say he lived a couple of lives.  Printer and entrepreneur.  Writer and publisher.  Inventor and scientist.  Diplomat, peacemaker and Founding Father.  A great man.  And, yes, with a few flaws.  He saw a prostitute or two in his youth.  Sired an illegitimate child.  William (who would go on and father his own illegitimate child).  He wasn’t the greatest husband.  He could have been a better father.  But he did a lot for this country.  Few did more.  So we can forgive him these few trespasses.  Most did.  Even John Adams would speak kindly of him.

Franklin and Adams were very different people.  Yes, Franklin wrote, “Early to bed, early to rise, makes a young man healthy, wealthy and wise.”  But as an elder diplomat in Paris, he came to see the pleasures in staying up late.  Enjoying the company of the ladies in the Paris salons.   And drinking Madeira.  He was a social butterfly.  And the people of France loved him.  The great American scientist and inventor.

When Adams joined Franklin in Paris, their personalities clashed.  Adams went to bed early.  Got up early.  And didn’t enjoy the company of the very forward (for the time) salon women of Paris.  Only one woman interested him.  His beloved Abigail.

Adams resented Franklin’s celebrity.  And had difficulty working with him.  Especially with the hours he kept.  But Franklin’s style worked.  Paris preferred him over Adams.  And they made it known to the Continental Congress.  This strained their relationship.  Adams was concerned the French were playing Franklin, for the French were very adept at diplomacy.  But in the end Franklin proved to be no slouch himself.  He maintained French funding, arms and supplies for the American cause throughout the Revolutionary War, promising all along there would be no separate peace with Great Britain (France was, after all, in it for the spoils a British defeat would provide).  But we made a separate peace.  France got little for all her efforts (other than her own revolution).  And Franklin minimized the damage to the Franco-American friendship.  Not bad for a naughty old drunk.

John Adams

John Adams is the most unappreciated of the Founding Fathers.  There’s no memorial for him in our nation’s capitol.  And yet there probably wouldn’t have been a nation without him.  So why is he the Rodney Dangerfield of our Founding Fathers?

Adams was a flawed man who knew his flaws.  He didn’t try to hide them, though.  He tried to fix them.  But he wasn’t very successful.  He was a very religious man.  And he was oh so pious.  But irascible.  And vain.  It always bothered him that others got so much credit.  For doing far less than he did.  Especially Jefferson.  These were his flaws.  Which could make him hard to like at times.  And bitter.  The story that Adams often told about the writing of the Declaration of Independence went like this.  He said Jefferson should write the Declaration of Independence, not him.  First of all, Jefferson was a Virginian.  With all the trouble in the North, it was important to show a united front.  All the colonies.  Even those not facing the wrath of the British army and navy.  Second, no one liked him (Adams).  So no one would like anything he wrote.  (Which was not true as he did help some colonies write their state constitutions.)

And sometimes he could come across as kind of an elitist.  Because he was so well learned and so well disciplined.  He was part of that old school who thought that the best and brightest should serve in government.  And some thought he was too British.  Yes, he represented the British soldiers implicated in the Boston Massacre and supported the Jay Treaty, but he was no British toady.  At a last attempt at peace and reconciliation, King George was willing to forgive many who rebelled against the crown.  But not Adams.  He was ‘too’ responsible for all that independence trouble.  He would hang.

Anyway, that’s about the extent of Adams’ flaws.  A bad personality trait or two.  Nothing scandalous.  He had a loving marriage.  He was a good father.  Highly principled.  Honest.  And just.  One of the best of the best.

James Madison                                                        

James Madison was the most erudite of the Founding Fathers.  Jefferson may have thought big thoughts.  But Madison could, too.  As well as master the details.  When it came to constitutionality in the inaugural administration, Washington didn’t turn to his Secretary of State (Jefferson).  He went to the Speaker of the House.  James Madison.

Washington had no children.  But he admired and loved Hamilton, Jefferson and Madison like sons.  And then the fighting started between his ‘children’.  Especially between Hamilton and Jefferson.  Who saw two different Americas.  This animosity would extend to the president.  And the entire Federalist ‘party’.  Jefferson and Madison saw Washington as a senile old man manipulated by a puppet master.  Hamilton.  So Jefferson and Madison led an opposition party against the Washington administration.  While Jefferson was still a member of the administration.  The Jefferson-Hamilton feud got so bad that Jefferson would eventually leave and ‘retire’ to Monticello.  Madison would carry on the opposition, taking his orders from Monticello.  Sort of a Jefferson toady.

The Jefferson-Madison hatred of the Federalists bordered on the ridiculous.  They saw everything through a prism of conspiracy.  That the Federalists were trying to reunite America with Great Britain.  Thus making them, the Republicans, fiercely pro-France.  Even during the height of the Terror of the French Revolution.  Jefferson once advised the French ambassador not to worry about Washington.  He was old and senile.  Those of right mind were clearly on France’s side.  When Washington learned of this, he never would talk to Jefferson again.

Madison kept up the hysteria.  Even during the Adams administration.  He was sure Adams wanted war with France.  And when the French insulted the Americans in the XYZ Affair (you want to talk to us French?  First you give us French a lot of money), Madison said Adams fabricated the whole thing.  So he could declare war on France.  Well, he didn’t make it up.  It happened.  And while war fever gripped the nation, Adams tried one last time.  And got peace.

Despite this Hamilton/Federalist paranoia, Madison was one of our best.  He was the father of our constitution.  He (and strangely enough Alexander Hamilton) led the ratification process.  And Madison led the fight to add the Bill of Rights.  Few men have been so instrumental in the founding of a nation.

Thomas Jefferson

Thomas Jefferson may have had an intimate relationship with a slave.  Some may call it rape.  But, in the context of the times, it was no big deal.  Others were doing it.  Just like we forgive the Aztec for their human sacrifices.  In the context of their times, it was no big deal.  A lot of less-advanced people were doing it. 

Jefferson was a complex man.  Some would call him a sphinx.  He could tell lies that even he believed.  Quiet and shy, he was not the ladies man.  He looked like one, but he wasn’t.  Rejected once while in college and he was ready to live a life of celibacy.   But he did meet another woman.  Who he loved and married.  She was a frail thing, though.  And a couple of babies later, she died.  This just devastated Jefferson.  Shook him to his core.  It took months before he emerged from that deep depression.  He would never marry again.  And the female company he kept after that was often with married women.  His daughters.  Or, perhaps, a slave.  He no doubt yearned for female companionship.  But he would never open his heart again to another woman.

Perhaps he did, though.  With Sally Hemings.  His slave.  His concubine.  If the allegations are true (DNA evidence cannot conclusively prove but indicates a high probability).  She looked after his daughters.  Sort of a mother role.  Perhaps she was a surrogate wife.  If so, perhaps it was less than rape.  Maybe there were mutual feelings.  Anything is possible.  But we’ll never know.  What we do know is that if anything did happen, they hid it.  Out of shame on one part.  Perhaps fear on the other.  She was, after all, only a concubine.  Property.  And being a concubine is not being a wife, wedded or common-law.  No doubt it was a complicated ‘relationship’.  If there was a ‘relationship’.

That said, he did do a lot of good.  He was one of the greatest champions of limited government.  He was one of the gentlemen of the Enlightenment.  And there was little to fear from them.  But some of these gentlemen wanted to give the new central government great power.  Because it was the dawn of a new era.  Where like-minded gentlemen would follow them and continue to govern with disinterest.  But Jefferson had his doubts.  He didn’t trust men with power.  He didn’t trust government.  And because of him, they’d keep the beast of Big Government at bay.  For a little while.

Alexander Hamilton

Alexander Hamilton had illusions of grandeur.  And this from a man who had done some fantastic things.  Still, he always wanted more.  He was a driven man.  Probably goes back to his illegitimate birth and abandonment.  He always had something to prove.  To himself.

Some feared him.  First Jefferson.  Then Madison.  They thought he was pulling the strings in the Washington administration.  When he proposed his funding, assumption and banking plans as Treasury Secretary, Jefferson & Madison were frightened by what they saw.  A way too powerful central government.  So they formed the opposition.  Thus American party politics was born.  But neither side was as bad as the other side thought. Still, it didn’t stop Jefferson from trying to destroy Hamilton. 

Hamilton had money from a successful law practice.  And he ran the treasury department.  Someone took notice.  A guy named James Reynolds.  A con man that was in Philadelphia preying on veterans.  His wife, Maria, was beautiful.  And quite the actress.  One sob story of an indebted husband who abandoned her with his debts later, she lured Hamilton into her home.  He brought money to help her settle her debts.  But they soon ended up in her bedroom.  Once they consummated their affair, Mr. Reynolds stormed in on cue and began the extortion of Alexander Hamilton.

Well, when Jefferson learned of this juicy little morsel, he leaked it to the press.  The newspapers attacked him.  Said he was stealing money from the treasury to pay his blackmailer.  He wasn’t.  They did look, though.  And how they looked.  When they couldn’t find the evidence they wanted to find, Jefferson said that was proof positive of what a good thief Hamilton was.

But Hamilton was no thief.  Say what you will about him, but he was a man of integrity.  And the father of American capitalism.  The American dream took root and grew largely because of him.  And his financial acumen.  You know what they say.  Money talks and bull [excrement] walks.  Jefferson could write and he wrote some good stuff.  But words don’t build a nation.  Money does.  Foreign credit.  And Hamilton delivered.

Flawed but Great

Flawed men, yes.  But compare them to our contemporary politicians.  To their flaws.  To their accomplishments.  Who were/are better?  And who were/are more flawed?  More corrupt?  The comparison is ridiculous.  For there is no comparison.  Our Founding Fathers, with all of their flaws, are THE greatest generation.

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