Monday, November 26, 2012


The history of slavery in the Americas is canonical Law of Unintended Consequences. The British banned the Atlantic trade, so slavers took to chaining their cargo together so that if Royal Navy interceptors were spotted, the whole shipment could be kicked overboard before arrests were made. The Haitian revolt may have so soured the island's relationship with France and sent such a hostile signal to the rest of the world that it might be partly responsible for the misery and stagnation found there today (which is not to belittle the efforts of the international aid community, the Duvaliers and the HIV epidemic). Most relevant to what I'd like to consider today, fiat emancipation in the United States may have helped lead to decades of Jim Crow legislation and simmering racial tension that still lingers.

Compare two principal ways of ending slavery institutions: legislative diktat and buyout. In each, the first-order effects are the same: slaves are freed. In the first, the second-order effects may be so large as to upend the efficiency gains of the first-order effects. In a plausible counterfactual history, Congress might have levied a tax or issued debt to purchase the roughly 4 million slaves in the US in 1860. The market price for a slave varied greatly, but the mean price was around $1800 at the time. $7.2 billion is quite a stack, but a hell of a bargain compared to the $6.1 billion plus more than a million war casualties and over a century of seething resentment brought to us by the Civil War (or the War of Northern Aggression for my readers south of the Mason-Dixon Line).

There's nothing at all euvoluntary about slavery. Ending it might be another matter. All else equal, the hidden costs and unintended consequences of abolition are lower when owners are compensated for their loss. I hope that this lesson is not lost of people who want to eliminate, say, Cambodian sex slavery. The US example shows that even with many of the strong institutions of successful economies, policy choices can still lead to needless misfortune. Part of ongoing efforts to combat human trafficking might not want to give short shrift to mollifying legitimate elites when necessary, even if it seems distasteful. The consequences of failing to do so might be even more distasteful.

Now that I think about it, there's an interesting question for euvoluntarists in there: when is it appropriate to uphold moral principles at the expense of expediency? That could be a curious comparative statics problem. I'll give it some thought and get back to you.

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Do you have suggestions on where we could find more examples of this phenomenon?