The easiest way to dispel this notion is to show that the vast, vast majority of American wealth (>99%) came about long after slavery had ended. Indeed, if we could return to the economy at the time slavery was in full swing (even disregarding morals), not one rational person would choose to do so. Another way is to compare the US economy to those that didn't discontinue those practices. Or to show that even in current circumstances the US economy continues to grow rapidly, after hundreds of years of doing so.
So, please don't forget the atrocities caused by the United States. But also don't attribute everything that ever happened in the United States to those atrocities. It may be a cheap way to brush aside the success of the United States, but it isn't an honest argument. Clearly there's something else going on that has made the United States the most wealthy country in the world (per capita).
Its misleading to say that 99%+ of american wealth occured long after slavery etc ended, because it still started there.
If the American system only works as a result of slavery then it should be discounted. If not, however, it should be understood and replicated where possible.
And we should all study history regardless.
This is the original quote. The issue is with "starting from scratch." You're not starting from scratch if you obtained the land through genocide, assisted by free labor. You are starting with quite a lot. America did not start in 1776. European powers had been investing in the new world for hundreds of years at that point. The whole issue is calling the economy of America at 1776 "starting from scratch." It's ahistorical.
The point Buffett and Munger were making is that the current American system works very well and creates enormous amounts of wealth. Doss the fact that there was slavery for centuries all over the world somehow refute that? I can't see how it does.
If you mean "what if time went on without Europeans in the US", that's a big what if. The indigenous peoples would have carried on in the Bronze Age, and would have been wiped out later by a different collection of foreigners.
The reality is that the US benefited from the culture and know how of Europe without the baggage of supporting useless aristocracy.
Remember that atrocities like that happened in many places that did not grow into giant economies. Stealing land and enslaving people may have given a head start, but clearly something else delivered the big gains.
If you look at the history and the economic charts, the big boost was started by the industrial revolution.
Exactly. Now, lets look at some of the causes of the first Industrial Revolution
First, large tracts of lands in Britain, largely held in the commons, were stolen from the peasantry and given to private individuals and landlords, as part of the Enclosure movement. This forced the peasants to look for work in cities en masse, providing cheap labor for the capitalists.
Second, Britain's African Slave trade constituted a big part of the early accumulation of capital that made the revolution possible.
Cheap cotton from the colonization of India as well that produced by the slave labor in North America fueled the textile industry, which was at the heart of the industrial revolution. India's share of the world economy fell from 20% to less than 5%, chiefly because the capital required for industrialization was siphoned off to England
I'm not convinced by your second one. Why didn't states like Portugal industrialise equally quickly? Or within America, why didn't states with more slaves grow faster? Germany has no history of slavery, and the same is true for modern industrialisation transitions like South Korea and China.
The topic has been studied in great detail in economic history. The consensus seems to be that however horrible slavery was, it wasn't fundamental to industrialisation.
If you are making profit to support a lavish lifestyle relative to your local peers and (crucially) there is no free market value of your laborers' labor, then what incentive do you have to apply innovation?
Some (cotton gin), but certainly less than a free (in all senses of the word) labor market where a shortage of workers leads to increased wages and a push towards mechanization.
I agree. It is my understanding that the Romans were in a good position to develop a usable steam engine, but never had enough motivation to do so, because slave labor was cheaper.
Germany has no history of slavery
Also take a look at what happened in the Sud west if you think Colonial Germany didn't have slaves
A very interesting related book that I've read about that period and which I'd recommend to everyone generally interested in economic and social history is E. P. Thompson's "The Making of the English Working Class" (https://en.wikipedia.org/wiki/The_Making_of_the_English_Work...). I'm generally leaning on the right side of politics and economics (I'm a sympathizer of both Bentham and Benjamin Constant, who are not receiving very kind words in this book), but I found it super interesting and I find it intellectual honest to try and and understand opinions (and related facts) coming from multiple sides of the story.
It's always been my understanding that _wool_ had been the early carrier of the industrial revolution? That by the time cotton entered that picture, the revolution was well underway?
Two hundred years of slavery was not a major driver of economic growth?
Edit: Serious question, rephrased: do economic historians really not consider slavery a major driver of growth? If so, that would be highly counterintuitive. We're talking about the free labor of ~10 million people over two centuries, in an economy that was almost entirely agricultural.
Rule of law (contracts, low official corruption), absence of arbitrary confiscation risks (ie the King is not going to suddenly come and grab your stuff), unfettered movement of goods/people/ideas. Generic ideas that allow you to compare across societies.
I actually studied economics, and the explanation of how growth arrived does not normally rely on slaves. It tends to focus more on the advent of early parliamentary government (Glorious Revolution), presence of coal in northern England, and advancement of science and technology.
There's no absolutes in economic history though, and you might well find an argument that the triangular trade aided the industrial revolution. That's more of a vignette that explains why England in particular might have prospered, rather than an explanation of how growth gets started in general.
Quite relevant as a set of innovations in the time when people started having to do business with strangers, particularly ones with different ecological positions. You can imagine having lived in agricultural societies there would be a big question of how exactly you're going to have a business relationship with say a factory owner or delivery company.
JSC, exchanges, (perhaps central banking as well) and various encounters with credit issues worked out a certain way in the UK, and innovations were copied across many other societies.
- Mass production: Venetian arsenal
- Central Bank: Sweden
- The word Bourse: a certain family in Belgium
- Political philosophy: lots of places
- Coal and steel production, factories: Northern France, Belgium
- Religious freedom: rather bloody wars still in living memory
While a large number of, not free but very low cost, laborers will build individual wealth for the small percentage of the population who use them, those same laborers do not participate in the economy. So you end up with very large supply and very little demand, little or no reason to innovate, and a stalled engine of growth.
Slavery, or even low wage workforce is bad even from the point of view of entirely selfish actors. It erodes the market eventually killing the entire economy.
The lesson is, if you want to get rich don't reduce the cost of your labor force, increase the value of your production.
I don't think that there is any doubt that slavery provided a great deal of the early economic growth in the American south. (Weirdly, I was just reading an article that suggested that slavery itself did not catch on in the Virginia colony until like 60 years after it was founded because slaves cost more than indentured servants, but didn't live any longer.)
However, if you combine the fact that the southern economy was based on labor intensive agriculture (indigo, tobacco, and cotton) with the presence of cheap slave labor prevented the southern economy from industrializing, which limited its growth during and after the industrial revolution.
An amusing note from the chapter: between 1620 and 1660 (?), the Virginia government continually re-passed laws requiring everyone to plant at least two acres of corn. Apparently, most didn't want to take the minimal time away from their tobacco crops, in spite of the fact that they were frequently starving.
The correlation between historical slavery and industrialization/modern wealth is negative.
Not really difficult to disentangle.
And theres Canada.
Whereas claiming they can't be disentangled is obviously disinterested.
Slavery was the rule, not the exception in the world at the time. The African kingdoms mostly practiced it, the Arabs were infamous for it, Mexico ended slavery in the 1830s after American industrialization was well underway, Russia didn't truly end serfdom until around 1900 as I recall, and then you have India's caste system, so only China is left without slavery in some form? But were they? And why didn't all of these countries industrialize?
However, you'll note that in the absence of southern cotton during the Civil War, these textile mills did not shut down or become unprofitable, they switched to alternate sources of cotton.
From this [0] I can only conclude that owners were paying for value and the price did go up over time, as did the price of cotton, but it looks like it was a good deal.
To be fair, there are few if any countries with the scale of stolen/free land and enslaved labor as in US history.
You'd have to look at the European 'colonies' for both. The US of course was the first colony to become independent -- meaning an end to it's profits being extracted for the home country, and instead re-invested locally.
So I'd say there are basically no other countries with close to the scale of profits built from stolen land and enslaved labor, and then not extracted for a colonial home country overseas.
It also doesn't hurt that the allies gave the US its best technological secrets during the war and the best minds from both sides emigrated to the US during and after the war.
You just described the history of Humanity.
edit: Yo guys I'm not saying we need to give it all back. History is stained in blood.
America achieved massive wealth in spite of a violent history, not because of it.
Life back then was short, nasty and brutish. If the population continued to grow with corresponding progress, we'd be fighting even more over the limited resources available.
On the larger scale of history, yes. I don't think working class people are necessarily doing better than a few decades ago, when they had stronger unions and more power, and before wages stopped rising (which seems likely related to the loss of power).
But an important note, and I don't mean to pick on the parent. In these discussions, the working class is almost always described as "they" and not "we". What do we really know? Input from people with real experience is necessary.
Slaves had to be fed and housed and nominally cared for. After all, they cost money and you didn't want to throw away your investment.
The slavery economy, which is what the South fought to preserve in the American Civil War (let's face it: those who like to hide behind "states rights", it all comes back to "states rights to buy and have slaves"), was a last gasp to try to preserve what was left of feudalism. It was doomed before it began.
Please don't misconstrue this as being "pro slavery". Treating humans as property is an abomination. Even the Romans believed this and enshrined it into their legal codes even though they kept slaves.
This is an idiotic strawman. That's the equivalent of saying that people who think countries in the European Union should be mostly free to implement their own laws are pro slavery.
Smaller localized government control vs one rule for everyone has little to do with slavery. There is no reason that slavery couldn't exist in a strong central federal government system either.
If you look at historical documents, protecting the institution of slavery was clearly the main driver for the Southern states to secede. It relatively recent years, Southern apologists have tried to rewrite this as "No, they were just for States' Rights", because this is currently less offensive than saying they just wanted to own slaves.
And until very recently the former slave owning states were and in some ways remain sleepy backwaters dependent on the largess of the military and welfare to remain viable.
Seeing as how you are saying that the growth of America was dependent on 'stealing' land you must be implying that the success is dependent on the stealing of resources.
Which is trivially proven false by simply looking at South America.
> forcing Africans to work that land
Forcing Africans to work the land stunted American growth. It's not a coincidence that the richest parts of the countries are the ones that industrialized.
http://www.pbs.org/wnet/african-americans-many-rivers-to-cro...
I'm not an American, but if you feel quilty because of the past, I'm more than welcome to get a little financial contribution to my life. I'm from small and poor country, no great history or privilege.
I'm curious, do you include Hong Kong in that classification? How about Estonia? I'm curious what 'power' you consider those countries have, or exert, over others.
Please elaborate, I'm genuinely interested in why you consider them an, exception(?), or example, to your blanket rule that successful countries have power over others.
> While Estonia is successful considering its past , they are nowhere on the level of other developed Western countries.
So Estonia hasn't met your criteria for a 'successful' country (what is your criteria btw?). Is their relative success compared to neighbouring baltic states a result of them exerting force or power over their neighbours or others? Or something else?
> (yet)
Is the only thing stopping them from becoming successful, exerting force or demonstrating power over others, or are they currently suffering from an oppressive regime doing likewise to them (which is holding them back)?
But isn't it obvious that neither of these things created the wealth we have today? To my thinking, our current wealth derives from technological innovation, process engineering, psychological insight, most of which would not have been possible without welcoming people from other lands, and being willing to work with those who are different than we are.
Besides there cost / benefit of the pipeline only really makes sense to those who profit from it directly.
This is not to minimize the genocide of the Native Americans that occurred, or the horrors of slavery. But in an economic report looking at compounded returns over the history of the US, starting from scratch is a fairly reasonable assessment.
Not to say they didn't deserve it, but the entire American south basically had to reboot. Some states figured it out (Virginia, North Carolina, Georgia), and others haven't done as well (Mississippi, Alabama, Tennessee).
I don't follow. Certainly the current farming system in the American mid-west is orders of magnitude more productive. But even if we're focussed on pre-industrial history, are you sure that the ancient South American agri-economies weren't better? And for productive land use, what about Japan and south-east Asia, where every square inch ran like clockwork.
Tennessee and much of Appalachia has been historically on the side against slavery and corporate interests until somewhere around 60 years ago. I don't know how it happened besides hand-waving "Southern Strategy."
Funny how that's not accounted for much these days, but America's historic success as a direct result of African slavery and Native Indian genocide, is.
Right, which is also the same thing many native americans tried to do to the immigrant settlers in the West as well.
One of the hard lessons our society has learned is that putting so much energy into holding a group of people back hurts both those people and society as a whole. Of course, lately I'm wondering whether we need to relearn that lesson.
It's incredible. As a foreigner, I feel like I'm witnessing the payoff some absolutely top-notch patriotic propaganda.
This was a gain that was achieved not by starting from scratch but by stealing lands from indigenous people and forcing Africans to work that land. I'm not sure if you can describe the kidnapping, murder, rape and ultimately genocide of multiple people groups as miraculous, unless one subscribes to the idealogy of manifest destiny.