Constantinople, Byzantine Empire, Ottoman Empire, the New World, Tobacco and Slavery

Posted by PITHOCRATES - July 16th, 2013

History 101

With the Fall of Constantinople to the Ottomans in 1453 Islam spread Unchecked into Christian Lands

Constantine the Great moved the capital of the Roman Empire to a place on the Bosporus.  Where the ancient city of Byzantium once sat.  Where Asia met Europe.  Where the Mediterranean Sea met the Black Sea.  And the great rivers beyond.  The Danube.  Dnieper.  And the Don.  Constantine named his new city Constantinople.  And made it a jewel.  With great Christian churches.  To celebrate his new conversion to Christianity.  Which started following the Battle of the Milvian Bridge.  Where on the eve of battle Constantine and his soldiers had a vision of the Christian God.  Promising them victory if they placed His symbol on their shields.  Which they did.  And they won.

Constantine spared no expense in his new city.  Which was easy to do because it was a very wealthy city.  For the greatest trade routes went through the Bosporus.  Which is why when the western half of the Roman Empire fell the eastern half, or the Byzantine Empire, carried on for another thousand years.  Give or take.  As it thrived on that trade pouring through it.  Especially from the Far East.  Along the Silk Road.  Which peaked during the Byzantine Empire.  Bringing the exotic goods of the Far East west.  From silk to porcelain to spices.  Which flowed unhindered to Christian Europe while the Christians still controlled the Byzantine Empire.

But all good things must come to an end.  Thanks to the Seljuk Turks.  And the rise of the Ottoman Empire.  Islam had united the Arab people.  And with the fall of Constantinople to the Ottomans in 1453 Islam spread unchecked into Christian lands.  Up through the Balkans into southern Europe.  Lands they would contest for time and again.  Making for some bitter Christian-Muslim animosity that continues into modern times.  But more crucially at the time was the loss of control over that trade from the Far East.  Making those goods not as reasonably priced as they once were.  Which proved to be quite the problem.  As the European Christians had grown quite fond of them.  Luckily for them, they could do something about that.  Thanks to all of those wars they fought with the Muslims.  The Crusades.  Which brought back a lot of Greek books of science that were collecting dust in some of the old great Greek cities all around the Mediterranean.  Founded during the Hellenistic period.  Which came before the Roman Empire.  Thanks to a fellow by the name of Alexander the Great.  Who spread Greek learning throughout the known world after he conquered it.

Christopher Columbus sailed West to establish Far East Trade without going through Muslim-Controlled Constantinople

From those books the Europeans were able to become better sailors.  On ships that could catch the wind and navigate their way great distances.  Portugal and Spain led the way.  Prince Henry (1394-1460), the Navigator, trained navigators in Portugal.  His students pushed further and further down the African coast until Bartholomeu Dias rounded the Cape of Good Hope (1486).  Vasco de Gama would round the Cape of Good Hope and sail up the eastern coast of Africa all the way to India (1498).  Pedro Álvares Cabral was heading south to round the Cape of Good Hope in (1500).  Swung out too far west.  And ran into Brazil in South America.

Spain then financed the voyages of Christopher Columbus.  Who had read that the earth was round.  And wanted to prove it.  As well as spread Christianity.  Columbus wanted to find a way west to the Far East.  Sure it was just beyond the horizon of the Atlantic Ocean.  After a voyage longer than his near mutinous crew expected they finally landed on San Salvador Island in the Bahamas (1492).  Thinking he found an ocean passage to the Far East.  Around the Muslim controlled land route.  He would later understand that he had found the New World.  Which we would be calling Columbia.  Had his dispatches beat a Florentine passenger’s on a Portuguese ship who wrote about what he saw.  Amerigo Vespucci.  Which is why there is not a North Columbia, a Central Columbia and a South Columbia.  Instead, there is a North America, a Central America and a South America.

With Columbus’ success Spain financed others.  Vasco Núñez Balboa.  Who crossed the Isthmus of Panama and reached the Pacific Ocean (1513).  Ferdinand Magellan.  Who sailed around South America through the Straits of Magellan and into the Pacific Ocean.  Sailing on to the Far East.  And back home.  Being the first to circumnavigate the globe (1519-1522).  Hernán Cortés.  Who conquered the brutal Aztec regime in Mexico (1521).  Eventually the Spanish would bring great riches of gold and silver back to the Old World.  Meanwhile France financed Jacques Cartier in his attempt to find a Northwest Passage to the Pacific.  Who sailed up the St. Lawrence River to Montreal (1534).  Then Samuel de Champlain founded Quebec (1608).  Where they established a lucrative fur trade with the native Indians.

Cultivating Tobacco took Large Tracts of Farmland which required more Laborers that they had in the Colonies

Queen Elizabeth of England financed Walter Raleigh.  Who explored the coast of North America (1584).  Looking for a place to settle a colony.  On a subsequent voyage he brought 100 settlers with him.  And settled a colony at Roanoke, North Carolina (1585).  Which became the Lost Colony of Roanoke (1591).  The Virginia Company of London, a joint-stock company, would have better luck.  They raised financing by selling stock shares to investors who would share in any profits of the colony.  Christopher Newport led a voyage that established the first permanent English settlement in the New World.  At Jamestown (1607).

Though the Americas were not the Far East it was a vast landmass with inexhaustible resources.  And endless tracts of fertile soil.  The possibilities were endless.  The marriage of John Rolfe to Pocahontas (1614) provided an uneasy peace between the settlers and their Indian neighbors.  Then Rolfe figured out how to cure tobacco (1612).  Something the English began smoking after Columbus observed the Cubans sticking burning rolls of tobacco in a nostril.  The English refined smoking with a pipe.  And they really enjoyed it.  Importing vast quantities from the Spanish colonies in America.  Thanks to Rolfe, though, the English could produce their own tobacco.  Once they worked out a few problems.

Cultivating tobacco took large tracts of farmland.  But to put large tracts of farmland into production you needed laborers.  And in 1612 Virginia there just weren’t a lot of colonists living there yet.  The demand for labor far outstripped the supply.  So they tried to satisfy that demand with indentured servants.  Preferably from Europe.  Even criminals from English jails.  As well as from Africa.  Who worked in bondage during their indentures.  Then went free.  Until around the 1660s.  When things changed.  Starting in the southern colonies.  Where slavery became hereditary.  For Africans, at least.  Like it was in the Old World.  Where peasants and serfs were bonded to the land.  Once a slave.  Always a slave.  And if your parent was a slave so were you.  Like it was in ancient Athens.  At the end of the Western Roman Empire.  And in the Muslim world.

Muslim didn’t only enslave Christians.  They also established slave markets with African slave traders.  Who opened their markets to the Portuguese, the Spanish, the French and the English.  To help them meet that soaring demand for labor during the early days of the New World colonies.  When there were so few colonists.  Who found their way to the New World in the first place because of the Muslim conquest of Constantinople.  Which sent the Europeans to the seas to find a western way to the Far East.  And when they did they discovered the New World.  Creating the largest market ever for African slaves.  And the greatest convulsions in the New World as they struggled to end slavery in the Americas.

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Monetarism, Laissez-Faire Capitalism, Augusto Pinochet, Chile, Hyperinflation, El Ladrillo, Chicago Boys, Milton Friedman and Miracle of Chile

Posted by PITHOCRATES - March 6th, 2012

History 101

During the 19th Century Mercantilism gave way to Laissez-Faire Capitalism and Free Trade

Portugal and Spain were superpowers around the 16th and 17th centuries.  Great monarchies with mercantilist economic policies.  Which was all about trade.  Maximize exports.  Minimize imports.  Settle colonies to mine/harvest raw material.  To ship back to the mother country.  Where they manufactured goods from the raw materials.  And exported them to other countries.  Selling them for gold and silver.  Which was key.  Maximizing the trade surplus in the balance of trade.  Finished goods going out.  Gold and silver coming in.  For the nation that gathered the most gold and silver won in the zero-sum game of mercantilism.  Where the monarchy works with business.  Picking winners and losers.  And rewarding the winners who help enrich the monarchy.

Of course, these policies force a kingdom’s subjects to pay higher prices.  By keeping out lower-priced imports.  And with special deals favoring some domestic industries so they can sell at monopoly prices.  They nationalized their Industries.  Creating an aristocratic class.  Composed of government officials.  And their partners in the nationalized industries.  Living the good life on the backs of the poor.  Who paid high taxes.  And high prices.  To support those mercantilist policies.  And it was these policies that settled South America.  Taking all of their gold and silver (bullion).  Shipping it back to the mother country.  The surge in bullion in Europe made it less scarce.  And less valuable.  Meaning it took more of it to buy the same things it once did before this surge.  Resulting in higher prices.  And inflation.  Hurting the consumer more.  And leading to the development of the quantity theory of money.  And monetarism.  Which held that the amount of money in circulation had a direct impact on prices.  The more money the higher the prices.

With the rise of Parliament in Britain power shifted from the king to the people.  Via their representatives in Parliament.  Instead of rule by dictate there was rule by consent.  Which made the business of choosing winners and losers more difficult.  Parliament had the power.  But Parliament was more than one person.  It was full of special interests.  Which made it more and more difficult to choose any one special interest over another.  Unable to curry favor for one’s own interest one didn’t support another’s interest.  At least not when that support came at the expense of your interests.  So there was another power shift in addition from the king to parliament.  There was also one from the king to the markets.  So during the 19th century mercantilism gave way to laissez-faire capitalism.  And free trade.  An economic system that let the British Empire dominate the world during the 19th century.  Making it rich.  And powerful.  Thanks to that vigorous economic activity that could build the world’s most powerful navy.  And pay for an army to garrison an empire.  Meanwhile the old school mercantilist empires fell from superpower status.  And became shadows of their former selves.  Soon the Spanish and Portuguese colonies would gain their independence from these dying empires.

Milton Friedman’s Monetarism turned the Chilean Economy Around

The South American nations may have hated their European masters but they liked one thing about them.  Their mercantilist policies.  Which survived into the 20th century.  Where government partnered with business.  In the worst of crony capitalism.  Where special interests that favored the ruling powers received government favors in return.  Usually protected markets.  And favorable legislation.  That allowed them monopoly prices.  Giving them great profits.  Generous union wages and benefits.  And generous health care and pensions.  At least, for those politically connected.  So the government rigged the game for them.  And they made it worth the government’s while to rig the game.  All of this paid for on the backs of the poor.  Who paid high taxes.  As well as high prices.  And suffered abject poverty.  Which made for an unhappy people.  And a large amount of government turnover through revolution as dictatorships and military juntas overthrew other dictatorships and military juntas.

In 1973 it was Augusto Pinochet’s turn in Chile.  Who came to power in a military coup.  At the time the country wasn’t doing so well.  And in full mercantilism.  The economy was in the toilet.  There was abject poverty.  And hyperinflation (peaking at 1000% or so) as the government printed money to pay for its out of control spending.  To try and bribe the angry mob and keep them from overthrowing the latest dictatorship.  Pinochet was the guy to fix that.  Like everybody that came before him.  And after his military junta failed as the previous military juntas failed, he tried something new.  Thanks to something called El Ladrillo.  And economic plan so thick and heavy they called it ‘the brick’.  A plan prepared by the Chicago Boys.  Chilean economists schooled in the Chicago school of economics.  Pinochet even met with Milton Friedman.  Prominent economist of the Chicago school.  And monetarist.  Who came down to give a speech.  (Interestingly, for the American left roundly criticized Friedman for giving a speech in a right-wing dictatorship.  Though he received no such criticism for giving the same speech in a left-wing dictatorship – communist China.  Showing that the political left was okay with human rights violations as long as they were committed in the left-wing dictatorships they so admired). 

Pinochet asked for some economic advice.  Friedman gave it.  And Pinochet followed it.  He ditched the mercantilist policies.  Embraced laissez-faire capitalism.  Privatized the state industries.  Established free trade.  Cut government spending.  And stopped printing money.  Ending the hyperinflation.  Replacing it with a strict monetary policy.  This didn’t please the politically connected as they lost their privilege.  But Friedman’s monetarism turned the Chilean economy around.  Creating a prosperous market economy.  With a growing middle class.  The strong economic growth led to some healthy tax revenue.  Which in later years funded antipoverty programs.  The Miracle of Chile even replaced the military junta with a democratic government.  Chile now has one of the healthiest and freest economies in the world.  An economy better and stronger than their former colonial master.  Spain.  Who maintained enough of their mercantilist policies to pull them into the Eurozone debt crisis.  And probably could learn a thing or two from their one-time colony.  Who is doing very well these days.  Thanks to the Miracle of Chile.  Milton Friedman.  And the Chicago Boys.  Those great Chilean economists given a chance by of all people a military dictator.

Everyone does Better under Free Market Capitalism, not just the Politically Connected

In 2010 a 7.0 earthquake hit Haiti.  A country rife with political corruption.  With little, if any, free market capitalism.  And even less rule of law.  Where most people live in abject poverty.  In ramshackle housing.  This earthquake claimed 230,000 lives.  A heart-wrenching loss of life.  Especially sad because the impoverished masses suffered the most.  As is often the case in countries with poor economic and political institutions. 

Later that same year, an 8.8 earthquake hit Chile.  Thanks to the economic reforms that rebuilt Chile into a healthy and prosperous democracy, Chileans did not live in ramshackle housing.  The higher standard of living created by the Chicago Boys’ economic reforms created better housing.  And safer cities.  Because of this the far stronger earthquake in Chile killed far fewer people than the lesser earthquake in Haiti.  The death toll in Chile was less than 1,000.  Which is impressive considering that was one of the most powerful earthquakes in recorded history.

Economics matter.  Say what you want about free market capitalism.  Malign it all you will.  But you can’t change some facts.  In particular, everyone does better under free market capitalism.  Including the poor.  For if this wasn’t the case Chile would have seen the loss of life Haiti saw.  But they didn’t.  Because there were no impoverished masses living in ramshackle housing in Chile.  Because those economic reforms improved the standard of living for all Chileans.  Not just the politically connected. 

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