One of the many economic questions that I am fascinated by is the debate over whether or not slavery was profitable for the South. As this subject was fought over considerably before the Civil War started and continues to be fought over to this day, it is vain to expect that any short essay such as this one would be competent to address the question of whether or not it was such. What I would like to do, though, is to look at the way that a debate such as this one forces us to think about different assumptions that we all make when it comes to endorsing different decisions made to challenging situations, and whose interests we take into account. We might also ask who has the power to make the decision in a given situation, and whether or not this is just. A great many decisions that are made are foolish ones, but those decisions are made because of the way that power is held in a particular situation. Whether or not slavery was profitable for the South as a whole depends largely on whose perspective is taken into account–it was clearly profitable for slaveowners who either grew crops for sale or who bred slaves for sale in the interstate slave trade, and it was clearly a bad deal for poor whites whose possibilities for advancement were strongly limited by competition with slaves and for those whose opportunities to make money in an internal market were hindered by the lack of urbanization and the low purchasing power of subsistence level “white trash”, free blacks, and slaves. Yet it was not those low-earning populations that were the ones making the decisions that led to the preservation and intensification of the slave-based economy of the South in the first place.
Whose opinion counts? A decision may be profitable for an individual person or firm that is unprofitable for society as a whole. Nations as well as people and businesses may adopt beggar-thy-neighbor policies in attempt to exploit others in a time of crisis. Certain people’s needs and interests are always sacrificed for the benefit of others, frequently on a consistent basis. Likewise, we occasionally give praise and lip service to non-financial rewards for people who heroically act in ways that benefit society as a whole by serving in the military or teaching, for example, in lieu of greatly increasing their salaries, which are paid for out of tax proceeds. We tend to think of the interests of children as being easily threatened by more powerful adults, and such they are, but the economic power of children spending the money their parents have (often foolishly) given them or (less foolishly) spend on their behalf can be demonstrated by the way that various products are marketed to children in specific ways. The moral conundrums of this sort of marketing has in turn led to laws like COPPA which attempt to regulate the practice of appealing to children over the heads of their parents, which in turn creates more dilemmas and questions about where to draw the line between acceptable and unacceptable behavior. There is a wide gulf between that which is profitable to do and that which is morally right, but for some people their morals are determined by their narrow view of their own economic interests, and not just the obvious cases that come to mind.
Frequently, critics of unrestrained capitalism and socialism make similar complaints about the lack of concern that the other pays to matters of externalities. For example, it may be profitable for a particular business to pay its employees low enough wages that they qualify for government benefits, but this is clearly not in the best interests of governments themselves to subsidize the profits of firms by paying food stamps and other benefits to those who are working full time and should be able to support themselves from that labor. Here is a case where the profits involved must take into account those costs which are externalized to local, state, and federal governments rather than paid in wages and benefits. Similarly, the decision of those of sound body and mind to deliberately avoid working while attempting to demand that their lifestyle be paid for by others is similarly a choice which is in their own personal best interests while not in the best interests of society as a whole, which is being asked to subsidize their laziness. And given the high cost of going out to eat all the time or paying for daycare for children or paying for maid service, the unpaid labor that is done by a housewife demands respect even though it is difficult to quantify that labor except in looking at what would have to be paid to others to do those tasks at considerable expense. It is easy for us to act in our own personal and selfish interests and not to realize or care that we are harming other people through our own selfishness.
The fact that many economists have praised the beneficial repercussions of self-interested behavior does not mean that all self-interested behavior is therefore legitimized. And in any decision to be made, one should be honest about whose voice and whose interests are to be taken into account and what the cost of responding to those interests is. There are always trade-offs to be made when one is deciding to do one thing and not to do another, and there are always opportunity costs for lost benefits as well as frequently negative consequences that simply have to be dealt with and overcome as best as possible. Accounting for these matters is not a simple task for any one of us, and it becomes a harder task when we move beyond the individual to the family, the firm or institution, and then on to the community or society. The fact that we are seldom aware of or sensitive to the repercussions of the decisions that we make and the fact that other people frequently have a vested interest in deceiving us as to those consequences if we are not savvy about such matters only makes it more difficult for us to act according to wisdom as well as our best interests, to say nothing about what is righteous to do in a given situation.
But even where it is frequently difficult to make the right decision, especially since we are ignorant of what will necessarily follow that decision, we can frequently do better than we do if we think about whose interests are worth keeping in mind. If a city is thinking about acting in restraint of trade in a given matter, it is worth reflecting on the question as to whether or not this particular decision will make things worth for those one is purportedly working in benefit of. For example, it is well-known that rent control laws reduce the availability of housing as well as the quality of housing stock and thus ultimately increase the actual cost of housing by lowering supply and artificially increasing demand. And frequently our desire to punish one particular segment of society that is viewed as parasitic or exploitative only harms everyone when the beneficial responses of that given segment vanish along with those people to less hostile areas. It is only after the fact that we realize how much others were acting for our benefit while seeking to serve their own interests as well. But by then it is generally too late. And if we do not care about the interests or well-being of others, we have no one to blame other than ourselves if we find that we suffer as a result of having taken someone’s contributions for granted.