WEBVTT

NOTE Please, Sir, May I Work More Hours?

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If anybody's been following the news lately, which means I think all you have to do is

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basically be alive or might be able to watch J.J. Leno to know this one, that Kathie Lee

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Gifford got slammed pretty well.

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She has a line of clothing that sells in Wal-Mart and there was a labor union group or a group

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funded by labor unions that disclosed that some of these outfits that were made for Wal-Mart

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In this factory in Honduras, where little children were working and making like 31 cents an hour or something of that amount.

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And of course, obviously, here is Kathy Lee, who makes millions, and she's sweating her money out of the labor of these little children and paying them only 31 cents an hour.

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and of course there is this uproar and you know she got blindsided pretty well with it and defended herself for a while but then started paying penance and agreed that this is terrible, that she wouldn't use this factory anymore and started giving money to liberal causes and appearing on the same podium with Robert the Third Reich, our secretary of labor.

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This was yet another chapter in something that's been going on for about 200 years, this whole question of child labor.

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It wasn't just Kathie Lee. The other night Dateline ran a story about child labor elsewhere, and this one was on Nike.

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They had Phil Knight, his net worth is over a billion dollars. He started the Nike company back in the 70s.

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of Money, The Theory of Money and Credit of Money and Credit of Money and Credit of Money

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We deal with this particular subject. This is one in which everybody wants little children to have happy childhoods.

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I have a daughter who's 19 and I hope she had a happy childhood. It's about over now.

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Do we really want little children working in factories and being exposed to all the evils that factory work gives?

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Do we want our children working at all? What should be policy about this?

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Generally, the argument gets framed in little children should be in school, they should be having a happy childhood, they shouldn't be working.

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And I was wondering, is that really what the alternatives are? Is that really what the case is?

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And so I just started looking a little bit into child labor, did something for the free market,

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in the Free Market, or should I really say the Jeffrey, that I wrote something and then Jeffrey took my scribblings and made them into a coherent article in the September free market and about this whole thing.

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All of us are obviously familiar with the child labor issue.

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This is something that really started coming up during the Industrial Revolution.

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What I've done for my talk today, I want to go back to the good old pre-Victorian and

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Victorian days and look at what was going on with child labor, what was going on before

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the factory system came about, why were children working, and then kind of fast forward, talk

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Talk a little bit about America, when the anti-child labor movement started around the

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late 1800s and the turn of this century with the progressive movement, and kind of work

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our way to the future.

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If anybody has any questions, by the way, just feel free to ask.

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You know, before the factory system, we had in rural England what is known as the cottage

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industries.

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And here's how it worked.

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You would have an entrepreneur who would be selling something, maybe be selling cloth

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to tailors, and it was his job, of course, to get the cloth to the tailors, and how would

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he do it?

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Well, he would go into the countryside where people lived, and he would contract out with

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people who would make the cloth in their homes, or they would spin thread in their homes,

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to do something in their homes and he would come by and collect that and pay them for

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it.

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And this is what was known as the cottage industry.

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And basically what you had were people would have these handlooms in their homes and the

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whole family would work together.

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Well how has this been presented historically?

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It's been presented as a warm and fuzzy and cozy system.

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What a wonderful way he had the families working together and everybody was happy. England was

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a glorious place. The people were making good living and life went on. And then, you know,

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as it's pointed out, then the factory system came about and threw all this stuff into an

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uproar and started ruining the lives of families and ruining the lives of little children.

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Well, what actually was the situation? I mean, were cottage industries, was this a situation

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Having seen movies like Rob Roy where everybody in the countryside lived in these warm and cozy little cabins with nice wooden rafters and light,

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the truth of the matter is what you had were poorly ventilated little huts and these places were full of vermin.

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If you had your clothes, you had better make sure that your clothes lasted a long, long time, which meant you never washed them.

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Because if you washed them, they would fall apart.

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You'd work 12, like I said before, 12 to 14 hours a day in dark, poorly ventilated, in tough conditions.

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One writer at the time wrote that the best thing about these little huts, or cottages, or whatever you wanted to call them, was that they did burn down quite easily.

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and uh... but that was about the best they could say for you. What about the

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children? We had this idea of children happily playing in the countryside and the

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like. Well the cottage industries they were not happily playing in the countryside. They

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were helping their families doing this very hard monotonous work. You know if you

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know anything about hand looms you know you run this you push the shuttle

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through push you know back and forth. That was the work I mean it was not the

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The most creative stuff in the world, it was just, you know, run the shuttle through, push it, and the problem was for the entrepreneurs, which this was a very, the transactions costs of the system were obviously quite high, and one of the things we know about entrepreneurship is that entrepreneurs are constantly trying to find new ways of doing things, and that's literally how these inventions, for example, like the spinning jenny came about. The spinning jenny was, I think at first,

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lower their transactions costs and to be able to get people in a more centralized place and the early factories were quite small and in fact they had an advantage in that for the first time the employer was actually providing the tools for the worker free of charge and the risk was on the employer and you didn't have to take these things out to each little cottage that you had a centralized place where you could work.

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And it actually, in a lot of ways, it was easier work for the people who were the workers as opposed to what was going on in the little cottages.

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And they've talked about the early factories being poorly lit places, whatever, well, a lot of them were not very nice places to work, neither were the homes.

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It's not like they were going from a warm and cozy place to this horrible factory.

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The Factory System literally developed from its very, very small beginnings and then as the things that were able to change it, they were able to go through all the different inventions like the flying shuttle and the spinning mule and the like.

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and the like. But they were able to develop large machines, power them with water power,

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and then the development of the steam engine towards the end of the 18th century allowed

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these factories to be located in places other than just by a river where they had happened

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to have either rapids or some kind of fall line. And enabled the factories to be a little

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more mobile and actually to a certain extent they could go to where the people were. That's

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In the factory system, the children went to work. They had already been working. This was not an unusual occurrence that little children were working.

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And I think that's one of the things that we have to keep coming back to.

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People tend to romanticize and say, well, gosh, in the cottage industries or down the farm, little children got to work side by side with their parents in these happy, cozy conditions.

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Well, yes, they worked side by side. John Locke wrote about three-year-old children going to work, children being apprenticed by the time that they were ten.

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10 and a lot of apprenticeships were basically a form of, you know, it's very much a harsh

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condition of servitude.

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In the factories, a lot of families did stay pretty much together.

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In fact, ironically, it was the factory acts of, I believe, 1832 or 1833, which separated

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working times for children and adults, which actually did more to break up that family

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situation, than anything that the factories ever did. But the system would work when

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the children, by the way, they were assigned pretty much easy tasks. These machines you

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would have, the threads would break, and so the children would be assigned, if there was

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a broken thread they would tie the threads back together. Generally speaking, it's kind

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One of the questions that they asked were children and women used as substitutes for

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males.

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One of the arguments is always, well, that factory owners would rather hire children

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and women because they could pay them less than they could pay men.

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Well, if that were the case, then there wouldn't have been any men working in England at all,

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at least in the factories.

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In a certain extent, they were substitutes because machinery took a lot of the back-breaking

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aspects of the labor out of commission, that there are things that children could do that

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they might not have been able to do before, but generally the children were not made to

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do the hard labor.

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This idea that the children were doing all the back-breaking stuff is absolutely ludicrous.

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I've been reading about even Clark Nardinelli, he used to be a Clemson, wrote a book on child

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labor and the industrial revolution and he points out a number of things even, and I'm

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just talking really about the factory system, not even the mines or whatever, but even the

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mines it was not the children who were doing the back breaking work, it would have been

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silly for the employers to hire children to make them do jobs that they couldn't do, generally

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They Did the Easier Type of Jobs, and so, anyway, what I would like to do in this, my talk is, you know, I've talked about the beginnings of the system, I want to go through a number of myths and then facts, we have myths about child labor and industrial revolution, I'd like to answer them with facts, I'd also like to point out something to you,

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And that is that we condemn child labor, I mean Life Magazine goes to Pakistan and they condemn seeing this little boy selling a soccer ball.

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Well, that particular industry is very much a cottage industry. It is the picture of what cottage industries were like back in the old days.

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I'm going to get a little bit later on talking about how progressives love third world and

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cottage industries.

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I've got some interesting pictures to show you from a Mennonite book which ends up extolling

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child labor.

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The very people who condemned child labor also extolled at the same time.

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That runs, I think, a very, very interesting little contradiction.

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Back in the 1970s, there was a man named E.F. Schumacher, probably some of you have heard

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We were looking at a picture of what we used to be like back before the factory system

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came about.

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Anyway, I want to have some myths and facts.

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First myth is the factory system actually meant that workers received lower pay than

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what they had earned under the cottage system.

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They did not migrate to the factories because wages were higher, but rather because increased

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productivity destroyed their old jobs.

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That's a very, in other words, this was very much an involuntary migration that people

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In fact, they were better off under cottage industries, but they couldn't produce enough

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to compete with the factories, so they got pulled into the factories and thus into a

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terrible way of living.

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Well, I've got a fact, as any decent economist knows, and I hope I have a room full of decent

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economists anyway, increased wages come about as a result of increased productivity.

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In neoclassical, and I know that's somewhat of a bad word in here, but there's a concept

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The Wage Equaling a Marginal Productivity

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I mean, that was a part of that system.

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The fact that the workers' lives improved materially demonstrates that their real purchasing

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power increased.

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One of the things that occurred was workers were able to start affording goods.

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They could actually, underwear started coming into being at this time.

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People had a change of clothes.

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They were able to wear cotton goods for the first time ever, and in fact, it's interesting.

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Some of the people tried to turn it on its head and said that they were able to wear

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cheaper cotton goods instead of these heavier woolen garments, and that was proof that their

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standard of living was going down.

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Well, it actually points out that these folks, they didn't have to worry about clothes lasting

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for years and years because they were able to afford more things.

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The quality of children's lives deteriorated with the coming of the factory system.

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They went from a happy, carefree life in the country to a hellish existence in the city.

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Child mortality rates dropped dramatically with the advent of the factory system.

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In the late 1700s, the child mortality rates dropped from about 75% to 32% in the early 1800s.

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Now, I don't know where Hessen got those figures. Clark Nardinelli has the earlier child mortality rates being much lower.

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But we do know this, that generally speaking, child mortality rates in pre-industrial England were astoundingly high.

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And that was part of a way of life and it began to change with the Industrial Revolution.

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We had a talk here last spring by a fellow named Brian Ellison who pointed out that the

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disease rates started to fall during the Industrial Revolution and we have no idea, this is even

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Before Vaccines, they had vaccines, kind of very crude vaccines at the time, but his

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point was that people started becoming much more forward looking.

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You know in the old cottage industry system, here's something to think about.

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Your lifestyle was as good as it was going to get.

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In other words, you were going to make subsistence wages, you were not going to get any more

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In other words, your life, in terms of being able to climb, there wasn't any ladder to

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climb. You were there. You were at the top rung of your personal ladder. And the factory

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system literally gave people an opportunity to think about a future, become more forward-looking.

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And as I pointed out before, young children did work in the pre-industrial age, whether

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One of the things to remember about farm work. Farm work was not exactly easy work. For example, the harvest. In those days, you would take the sickle. You were bending over, cutting seeds. They became stooped over. That kind of labor literally wore you out.

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And we have this idea that children are just running around happy and carefree and like,

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and then Simon Legree makes them go work in the factories, and that's just not the way

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things work.

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OK, myth, women and children are perfect substitutes for adult men, which meant that factory owners

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preferred hiring children, which meant that men went unemployed.

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In fact, while it is true that the advent of machinery meant that, quote, weaker people

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could do more work, the work that only men had performed before.

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Women and children were not perfect substitutes.

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Abare and Eakland point out in their text here that there was some, to a certain extent,

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they were substitutes, but it's pretty obvious they weren't perfect substitutes, because

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the women and children outnumbered the men in England at that time, had they been perfect

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substitutes and willing to work for less, every man in England would have been unemployed.

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As I point out, what we do see is that if real wages rise, as they did throughout the 19th century, child labor dropped as a percentage of the workforce.

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In the United States, child labor dropped drastically in the early decades of the 20th century, despite the lack of restrictive laws.

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In fact, I found an old editorial in the New York Times. This one is from, let me see, October 23rd, 1937. It was not written by Henry Hazlitt.

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I already checked that one out in your book, Jeff. But it was entitled, Liberalism in Tempo.

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President Roosevelt said in his last fireside chat that the democratic processes are bound to be slower than dictatorial processes, but they need not be dangerously slow.

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And he asks, what is dangerously slow? Surgeons say the knife should be used only in emergency, but the world has noted a strong tendency in surgeons to diagnose emergencies.

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So the new liberalism of the capital finds itself too often facing crises that simply will not wait.

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And he talks about child labor here. He says, the old liberal spirit would admit that child labor is a blot on any nation.

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But it would point out that without the intervention of Congress in 20 years from 1910 to 1930, we had cut down child labor by four-fifths.

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Mr. Roosevelt's phrase about goods being produced in the sweat of little children makes the picture too dark.

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For every 200 factory workers in the country, there was in the year 1930 just one child under the age of 16.

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In that year, we had less than 700,000 such young wage earners, of whom nearly half a million were on the farm.

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It said, if the proportion of child workers in 1930 were as high as 20 years earlier, we should have not 700,000 children at work, but 2,700,000.

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And again, they were not arguing against child labor laws, by the way, in this particular editorial.

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But, in essence, they answered the question about child labor and gave, I think unwittingly, the economic point of view,

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certainly the more libertarian point of view, that we had fewer children at work.

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We won't be dealing with that. Why did the percentage of child labor drop?

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And obviously, we're dealing with opportunity costs. What happens over a period of time is wages rise because we become more productive.

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That productivity has reflected the fact that now children, you know, families had some opportunities.

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In the early days, you have to understand that children went to work because the families needed the income.

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It wasn't a case of, you know, a child saying, Daddy, I want to go to school today. No, son, you're going to go to work.

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That was not the situation, especially in the early days of the Industrial Revolution.

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It was, this child has to work when it's possible, or we don't eat.

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This family does not survive, or it survives very much just on the edge.

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That was the reality of life.

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And I think we often forget how our ancestors lived, that life very much could be on the edge.

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Here's another myth.

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Crusaders against child laborers were simply humanitarians who wanted a better life for children, who were fighting against the evil capitalists who wanted to work children to death.

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And for the most part, the crusades against child labor were a larger part of rent-seeking by the upper classes and labor unions.

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This is a nice little quote, I used it in the Kathy Lee article, but here is what Nassau

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Senior economist had to say about the, and this is around 1843, he said to talk about

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the uproar against child labor, the workers' original object was to raise the price of

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Their Own Labor

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For this purpose, the spinners, who form a very small but powerful body among them, finding

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that they could not obtain a limitation of the hours of work to ten by combination, tried

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to effect it through the legislature.

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They knew that parliament would not legislate for adults.

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They got up there for a frightful, and as far as we have heard and seen, an utterly unfounded

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picture of the ill treatment of the children and the hope that the legislature would restrain

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in all persons under 18 years old to 10 hours, which they knew would, in fact, restrict the

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labor of adults to the same period.

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And in other words that we see even back then, Dr. LeBan, the early stirrings of public choice,

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interest group theory, how it is that small but very powerful groups which are able to

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to try to effect legislation, and basically what we have always found are unions and worker

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groups becoming allied with the so-called progressives, it's very interesting that when

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people did real live investigations you could always find horror stories, but generally

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speaking children were treated basically as other workers, probably by today's standards

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We wouldn't like some of the treatment that we saw.

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But that was pretty much standard for the day.

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That's just the way people were.

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Now, what you also had that time in England

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were a number of romantic writers coming to the fore.

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You had people like Charles Dickens.

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We have Oliver Twist, another of my favorites.

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I actually like his poetry a lot.

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But you have William Wordsworth, and writes London 1802.

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Milton, thou shouldst be living at this hour, England hath need of thee, or William Blake,

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who wrote, remember the poem that put the music in, did those feet in ancient times,

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walk upon England's mountains green, and then there is, and was Jerusalem builted here among

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Among these Dark, Satanic Mills, Edwin Markham, Benjamin Lindsay, and George Creel, Edwin

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Edwin Markham, Benjamin Lindsay, and George Creel. It was from one of the progressive

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groups from the International Child Welfare League. Edwin Markham was a well-known American

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poet. The first thing they had was this picture of a little child being draped, sacrificed

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at the Altar of Profit, and Thorne and Bondage, and it's interesting that, this is how it

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starts out, and the point was that the writing was never really done to say this is what

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the situation is.

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It was, this is how, let me read you a little paragraph to point out how people would deal

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In these United States, dedicated to freedom, justice, and fraternity, nearly 2 million little children are fed annually into the steel jaws of the modern industrial machine. Mammon has proved no less cruel to the little ones of the world than Malik.

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Remember Malik was the pagan god in Hebrew times. They sacrificed little children. They had them burned to death.

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Herod is held in detestation, yet he was more kind in that he slew outright.

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Nearly two million, golden boys and girls, citizens of the future and mothers it might be,

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mangled, mind, body and soul, aborted into immaturity, robbed of power and promise.

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They make no cry, these tiny victims, they are too tired.

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One listens in vain for some bitter wail to ring high and clear above the roar of the machinery that has them in its grasp.

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But the commonwealths of the Republic, like huge shells of the sea, are filled with their signs.

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Listen where one will, and one may hear it. For few indeed are the states in all this great country that come into the public court of public opinion with clean hands.

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Look where we will, we may see, for the stretch of the two million is from east to west, from north to south.

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Marked them as a huddle in the darkness, the squalor and the disease of city tenements,

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pouring youth and hope and happiness into the myriad inconsequentialities that they make for the adornment of those who preen themselves in the upper sunlight.

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and it's, I mean literally the whole book is this, this is the prose and this is what

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we see as a discussion of child labor, actually that's not Edwin Markham's chapter, Markham

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wrote the Crimson and Archontan.

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and detailing this sordid tragedy of child labor, occupation by occupation, so that the

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horror of it may be blazed like another handwriting on the wall. What more natural than that commencement

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should be made with what has been well-termed, harried among industries? Come, let us go

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into the weaving rooms of the cotton mills, and behold, in the hot, damp, decaying atmosphere,

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little wand figures flying in hideous cotillion among looms and wheels, children choked and

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children blinded by clouds of lint forever molting from the webs, children deafened by the jar and uproar of the eternal Niagara of machines, children silenced utterly in the desert desolation of the never ceasing clamor, children it seemed like specter shapes doomed to silence and done with life, beckoning to one another across some thunder-shaking inferno.

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and Childly. And, you know, it doesn't say anything. I mean, we could say that about

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graduate students.

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There are the elephant voices when you need them.

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The myth, child labor ended because concerned citizens and progressive legislators banded

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together to put an end to this brutality. In fact, child labor ended as incomes rose

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and as more value maximizing for children to go to school as to ensure future incomes.

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And also, the mother and the father, and later on just the father, until the modern age anyway,

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Capital is making enough to support the family. Capital, that awful industrial machine, made

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large-scale schooling and child labor obsolete for the first time in history.

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Progressives are against child labor. In fact, progressives are generally a favorite child

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labor as long as it's part of the pre-industrial cottage industry structure.

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I want to show you something. This is from folks who have gone against the factory system.

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This was a book. It's not that I don't want to attack Mennonites per se or even the late

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Doris Longacre who wrote this book. I'm sure she was a good woman, but she was writing

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about how North Americans, the usual stuff, were despoiling the world and we worked too

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The Third World, Significant Values are Expressed, Missing from Our Lives

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This is a young child, these young children working, this is in, I believe, Lebanon, in the Jordan, North Jordan, in this family weaving business in North Jordan,

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we've got the father as a visible example to his children.

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By the way, in the early factories, you know, the families generally did keep together, and they'd come to work together and the like,

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but the father is a visible example to his children.

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Children learn survival skills and do not require entertainment.

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Younger children learn from older ones.

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Children haven't put this stuff together.

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Use of hands keeps a sane balance between physical and mental activity.

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Non-renewable energy requirements are non-existent.

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That's because they're doing everything by hand.

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The materials used are produced locally.

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And I couldn't help but put a couple other things in there, too.

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It has a woman in Chad, you know, sitting in the dirt with a meal.

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And it says, a home environment in Chad uses natural replenished materials for building.

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It's called straw.

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It uses sunlight as a natural disinfectant, provides an unpolluted restorative environment,

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of the Environment, Provides a Oneness with a Natural Order, Reduces Utensils to a Few Important Ones, Gives a Sense of Unity to Each Home and to the Community.

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And then the third one, has this man stripping buds out of a tree.

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says, look, subsistence-leaving an upper volta pushes resourcefulness to an extreme. Buds

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being gathered from a tree will be used in a gravy served with millet. Well, the only

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thing is, of course, once you strip buds from a tree, then you've basically stripped the

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photosynthesis process from that poor tree when it killed off, which is not exactly restorative.

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And you had the progressive movement tied in with these folks, and with small is beautiful.

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I mean, what they want is return to child labor, because you would have to have child

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labor in the third world.

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Return to what we saw the little boy, all of us, all our children, would be sewing little

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Social Soccer Balls, Sewing Something by Hand for Six Cents, Under that Old System.

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And of course, you know, I think that that shows to me there's a real sense of moral

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bankruptcy when we're dealing with some of these opponents for that hypocrisy.

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I'm going to talk about one other aspect in what John Wells told me just before we came

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down here in a minute.

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But one more myth, in fact, families were separated when children began to work in factories

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and as I point out, greater damage to families came with the factory acts of 1833 which set

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different working hours for children and adults. This, according to Nardinelli, shifted some

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of the care for children from parents to the government. So we have aspects of the welfare

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state even as early as 1833. And I've dealt with just some of the fallacies, informal fallacies.

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We've got the hasty generalization or false cause. The factory system created poverty

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and Misery. In truth, living conditions for lower classes were miserable, be they in the

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city or the countryside. Granted, there was much gerry-belt housing in the cities as people

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moved in from the countryside. One thing, they had a window tax in England at the time.

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And so, one of the things that you did, and I got this from a book that F. A. Hayek edited,

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Capitalism and Historians, that, you know, so you had incentive to have fewer windows.

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It's true that the factory system did change the work habits of people. Timeliness became

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much more important, which did away with some of the more casual atmosphere working. And

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then the second one, I love this one, which is what the market book was, it's the appeal

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of pity. And we know that if you've taken a logic course, you know that that's one of

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the informal fallacies of logic. The arguments against child labor were framed in overly

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Dramatically, but if the majority of children in the USA and the United Kingdom had been

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sacrificed at the altar of profit during the late 19th and early 20th centuries, they would

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have produced a nation of sick weaklings and hardly the energetic societies which led the

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world in production.

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I think that if we had been killing off all our children, as they were saying, then it

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seems to me that it would have reflected it.

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The last thing I want to go into is child labor today, just very quickly, because there's

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still a huge debate about that.

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The USA Today had an editorial basically defending child labor in third world countries because

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it said, look, these children go to work out of necessity.

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Well, the opposing view is written by our friend Ralph Nader, and he talks about this

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is a form of child abuse.

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Children do not work because economic conditions demand it, but because society is permitted.

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In every developing country where child labor is widespread, there is widespread adult unemployment.

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Putting children in schools would put more adults to work.

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And actually putting children in schools which don't exist, kicking children out of factories

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would put more Ralph Nader's allies to work.

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And it says, manufacturers can afford to pay adult workers.

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The labor costs are typically a small portion of the cost of making goods. Consumers are

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even willing to pay extra. One study found that 84% of American consumers would pay $1

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more in a $20 shirt to ensure that it was not made to child labor.

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John Wells told me a very, very interesting story. In fact, the USA Today editorial tends

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to very much back it up. He said a couple Christmases ago he was at a factory in Bangladesh

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And he said that, you know, they had children working in there and they were making pajamas

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to be sent to the United States.

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And he said that the, you know, children were treated well and like, but he said the thing

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that he realized was those children were there because they had to be there, because that's

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how they had to survive.

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And that the sad thing was the place was about to be shut down, children were about to be

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in the United States. And Oxfam, according to the USA Charity Oxfam, found that most of these children took more hazardous jobs, many becoming prostitutes.

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That's part of the reality of it. And that we know, you know, there are some things we know historically.

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It's kind of funny, the New York Times, even though it was advocating child labor laws, made a very good case for why we don't need them.

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In the absence of child labor laws, the vast majority of children working in factories

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dropped. Why? Because of good old opportunity costs, something we're supposed to learn

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the very first day in economics. The truth of the matter is that the factory system does

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work. If we don't want children to work, promote the factory system, promote productivity,

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and allow productivity to exist elsewhere, and allow third world countries to be able

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for Nike to be contracting with these folks, even if it does mean that little children

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are working.

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The same way with Kathie Lee, she's not one of my favorite characters, but I thought she

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got an unfair rap, and the problem is, of course, when you're a celebrity and image

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is everything, there's no way to intellectually be able to defend yourself.

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And so I think that this is one of those things for us that we know the truth, we also know

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In some ways it's intellectually hard to defend because of all the other emotions and children and bondage type arguments that we get.

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Thank you very much.

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I think it's kind of interesting, but you sort of made a point and made it implicitly, but I'll try to draw it out quickly, is that people, when they start to talk about child labor and isn't it horrible, they're comparing, say, today with then, what they need to be doing is comparing then

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with the period before.

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People look at it and say, well, we don't want child labor, we want our kids in school.

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We don't need them working and enslaving away and being potentially harmed.

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We wouldn't want that right now for our children.

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Well, we don't want that for our children because we don't need that for our children now.

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But back then, as you pointed out, it was necessary.

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I've never heard anybody make an argument that looked and said, well, you know,

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What was, as you did, you know, the cottage industry like, and what did the Factor X do? It's always, what do we have now?

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You know, I don't think that, to be honest, I don't think that Robert Wright really cares what happens to children in the Third World, but he sure does care what happens to his union supporters at home.

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And to a certain extent, I think this will actually stunt the economic growth of these other countries. I think it will actually cause more problems.

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Let's follow that line of reasoning a little bit more. If we have a country where we have children who are working, and that's a very typical situation,

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Then we have the United States paying for their education, bribing parents so that they can take their children and educate them.

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So now, say, you know, ten decade or decade and a half later, now we have all these educated people.

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Can a country like that just automatically produce those sorts of jobs that these people are going to be looking for,

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or are we just going to have a whole bunch of highly educated people doing the same thing that they were doing before?

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That's one of the problems of, say, India, some of these third world countries, especially

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that you have a lot of highly educated people, literally have nowhere to go. And part of

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it is because I think there is a natural progression of an economy. And if you try to block that

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somehow or try to do it artificially, you're going to end up with all sorts of imbalances

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that are not easily remedied. You know, I think you're hitting on a very big point.

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The country is leapfrogging and not building up the capital necessary to support these problems.

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Yeah, because what happens when the subsidy runs out?

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Basically, are we going to be sending money abroad to prop up people in this country?

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I mean, it's just, when you think about it, it's kind of insidious.

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Bill I have two observations. First of all, it seems to me it's very debatable whether you regard the law as a leading indicator or a lagging indicator, something like this. I think you can make a very good case that, in fact, the law ends up being a lagging indicator.

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are expected of underlying trends such as an increasing value of human capital relative to physical capital or non-human capital so that people start having fewer and fewer kids and the value of educated kids becomes higher and in fact they enact laws against child labor long after these deeper trends in the economy are already well underway and in fact all the rhetoric really doesn't amount to much other than to justify

393
00:48:39.480 --> 00:48:44.700
I'm a deeper trend that's been going on with that's one observation the second

394
00:48:44.700 --> 00:48:49.440
observation is I think you ask a very so that's in some sense that's a

395
00:48:49.440 --> 00:48:54.060
historical scientific question okay number one and you could couple that in

396
00:48:54.060 --> 00:48:57.480
fact with probably a good rent-seeking story which one is essentially as

397
00:48:57.480 --> 00:49:07.520
follows that during the same time period as more capital intensive procedures or

398
00:49:07.520 --> 00:49:31.520
and the processes were developed for production that on balance, that started defining an interest group that could make short-term rents available to them by outlawing their labor-intensive competition, at least in the short run, maybe not in the long run, but certainly in the short run, and I suspect with a little bit of good scientific work you can uncover whether that was valid or not.

399
00:49:31.520 --> 00:49:42.520
My second observation is more of a question, and that is, John Safplies here has argued for some time that when you take away the economic value associated with people, that has consequences.

400
00:49:42.520 --> 00:49:51.520
He's argued that in the context of slavery, where slaves at one point, when slavery was legal, that meant that people had economic value.

401
00:49:51.520 --> 00:50:00.520
And rather than just engaging in genocide when you wanted to take over the neighboring tribe because you couldn't enslave them because people wouldn't buy them, they had no value,

402
00:50:00.520 --> 00:50:02.520
The Theory of Money and Credit

403
00:50:30.520 --> 00:50:36.520
Presumably gives parents and all those, all other people, but particularly parents who have the biggest vested interest there,

404
00:50:36.520 --> 00:50:39.520
the biggest incentive to take good care of their kids.

405
00:50:39.520 --> 00:50:42.520
Actually, you can add to that. What does that do to birth rates?

406
00:50:42.520 --> 00:50:45.520
I mean, the children are worth less than the BQ or none.

407
00:50:45.520 --> 00:50:48.520
Well, at that point, children become somewhat of a drain.

408
00:50:48.520 --> 00:50:49.520
Right.

409
00:50:49.520 --> 00:50:58.520
An economic drain, because what happens is that you have to put more money in, you know, you put more money into them earlier,

410
00:50:58.520 --> 00:51:11.500
The Third World Children are looked at as a very important asset in that they are the

411
00:51:11.500 --> 00:51:19.560
parent social security. People complain about large families in the Third World and over

412
00:51:19.560 --> 00:51:28.800
The Smaller Family means that the older people are going to have fewer people caring for

413
00:51:28.800 --> 00:51:35.200
them in their old age and then they will be much of an economic burden, kind of interesting

414
00:51:35.200 --> 00:51:42.060
in China, which has been following this one child policy for years.

415
00:51:42.060 --> 00:51:45.240
One of the interesting things that has occurred is that we're talking about China, which

416
00:52:15.240 --> 00:52:34.240
In terms of the practical implications for child rearing of having child labor, if a child is considered as someone who has economic values and you're probably treated as someone who's more responsible,

417
00:52:34.240 --> 00:52:38.240
And I bet there would probably be a lot less behavior problems, you know,

418
00:52:38.240 --> 00:52:43.240
with someone who is considered an important part in any other household,

419
00:52:43.240 --> 00:52:48.240
as opposed to like today, childhood is considered kind of a time of leisure,

420
00:52:48.240 --> 00:52:51.240
where kids just mess around and do whatever they want.

421
00:52:51.240 --> 00:52:55.240
And give you grief.

422
00:52:55.240 --> 00:53:01.240
I wonder if in all the research that you've done, did you notice there was any dovetailing

423
00:53:01.240 --> 00:53:05.240
and significant historical events.

424
00:53:05.240 --> 00:53:09.240
Tausig noticed the rise of the cottage industry.

425
00:53:09.240 --> 00:53:12.240
Well, not necessarily tariffs as much as wars.

426
00:53:12.240 --> 00:53:15.240
Well, that's exactly right. That's a good point.

427
00:53:15.240 --> 00:53:19.240
In fact, Hohenberg, primary in economic history,

428
00:53:19.240 --> 00:53:21.240
says that there were some...

429
00:53:21.240 --> 00:53:23.240
You had the times in the early 1800s

430
00:53:23.240 --> 00:53:26.240
when the prices of goods went up faster than wages.

431
00:53:26.240 --> 00:53:29.240
Precisely, this was the time of the Napoleonic Wars.

432
00:53:29.240 --> 00:53:40.200
and that after Waterloo that you saw a general rise in the standard living because you didn't

433
00:53:40.200 --> 00:53:44.560
have all the young men going off to fight and the wars draining off the resources. They

434
00:53:44.560 --> 00:53:49.620
had smaller things, like the Crimean War and the like, but nothing quite like the Napoleonic

435
00:53:49.620 --> 00:53:54.760
Wars. The Napoleonic Wars, really nothing was seen in Europe again like that until the cataclysm

436
00:53:54.760 --> 00:54:10.880
We better let people go teach.

437
00:54:10.880 --> 00:54:15.120
Call it into this.