27
Aug
2019
Triple Play
==> My latest episode on the Bob Murphy Show goes after the Left and the Right.
==> Someone asked me if there were a good article explaining the economics of remittances (when migrant workers send money back home), and I couldn’t find one. So I was the change I wanted to see in the Internet.
==> Tom is auditioning to have me replaced. 🙁
In the episode about slave labor you ask the question, was slave labor good for the US economy. You compare it against the slaves being free, and conclude it would have been much better for everyone if they had been free in the US. I agree with this analysis. But surely this is the wrong comparison. Surely the right comparison should be, what would the US economy look like if no slaves had been brought from Africa. The acquisition and transportation of the slaves to the US didn’t happen for any other reason other than for slavery, and cannot be held constant in all comparison scenarios. While it’s clear the US would have been better off if the slaves had been free once in the US, it’s not as clear that the same is true if they remained outside the US.
Thoughts?
Steve, in the forthcoming episode of Contra Krugman (#203), Tom and I tackle that question. It should be posted by the weekend or Monday at the latest.
Thanks – I’ve now listened to the Contra Krugman episode (#203).
Here’s my take…
I don’t think you do a good job of evaluating the impact to the US economy of bringing Africans to the US. You complicate the issue by bringing up reparations. That’s not what we’re debating and conflates the issue. The question is, did the US economy benefit from bringing slaves into the US? This boils down to, was the cost of capturing and bringing slaves to the US more or less than what they produced? IMHO, since the trade went on for many years it would seem to be a net positive for the US economy. Did it “make” the US? Certainly not, since other countries that had slaves did not thrive.
When it comes to the question of reparations my position is clear: anyone who was an actual slave deserves reparations from their “owners”. But descendants of slaves are not entitle to reparations since this would imply a crime has been committed against them personally, and I don’t believe a crime can be committed against someone who doesn’t exist i.e. who hasn’t been born at the time of the “crime”.
Steve
I want to question Dr. Murphy’s analysis of remittances sent abroad by recent immigrant workers. Consider two cases:
Case A) All workers in the US receive dollars for their labor and exchange them for goods, 20% of which are produced outside the US.
Case B) All workers in the US receive dollars for their labor. Some workers exchange their dollars for goods, 20% of which are produced outside the US. Other workers (the recent immigrants) exchange their dollars for goods, 50% of which are produced outside the US. The larger percentage of foreign goods for the recent immigrants is the net result of their sending remittances to relatives outside the US. To buy the foreign goods all workers, in effect, enter the foreign exchange markets and exchange their dollars for foreign currency. In case B the demand for foreign currency is higher than in case A so in case B the price of foreign currency is higher. I conclude from this that in case B all workers in the US suffer from a higher price for their desired mix of consumer goods and this higher price is the end result of the remittances sent abroad by recent immigrant workers.
Now, I know there is no law of economics that says the mix of US made vs foreign made goods bought by recent immigrants earnings must be higher than other US workers. And, too, is the fact that $148 billion in remittances is only 10% of the $1.4 trillion in imports to the US so the effect of remittances on foreign exchange markets is likely small. But, my point remains: It is not the case that the negative economic consequences of immigrants sending remittances home must as a rule be zero or less.