WEBVTT NOTE Voting for Victory? An Analysis of Confederate Trade Legislation 1 00:00:00.000 --> 00:00:08.000 The little present that I've brought along that's still in the mail room is just a copy of the quarterly journal of Austrian Economics. I'm one of the editors of this journal. 2 00:00:08.000 --> 00:00:22.000 It's something that I highly recommend because I know that many of you have looked through professional academic journals and what you'll very often find is a great deal of mathematics and formulas 3 00:00:22.000 --> 00:00:52.000 and things that may not be really relevant to applied economics, the type of things that you might be doing on the job or things that might benefit you on the job and this is a journal that we hope and strive to make very readable and very helpful either directly in applying economic analysis or in building your ability to formulate problems and to understand the background methodology of what 4 00:00:52.000 --> 00:01:17.000 The Austrian economist view as economics, and I am obviously from the Austrian school of economists, and at the Ludwig von Mises Institute, we're kind of like the Shiite Austrian economists in contrast to the Sunni sort of soft core, wishy-washy type of Austrians. 5 00:01:17.000 --> 00:01:29.520 Now, with that said, however, I have to say that this talk is based on a paper which has 6 00:01:29.520 --> 00:01:36.880 been distributed apparently over the web to you that is much more in line with mainstream 7 00:01:36.880 --> 00:01:44.760 applications, methodology and content. 8 00:01:44.760 --> 00:01:52.400 The paper itself, Voting for Victory, An Analysis of Confederate Government Trade Regulations 9 00:01:52.400 --> 00:02:00.680 and Legislation, that sounds pretty darn unimportant 150 years later about a failed government. 10 00:02:00.680 --> 00:02:06.360 What I'm going to argue and show you is that it provides a lot of valuable lessons. 11 00:02:06.360 --> 00:02:12.740 So in the course of this evening I hope that you will see basically how we have carried 12 00:02:12.740 --> 00:02:18.920 out this research agenda, not just in this paper but in a series of papers and most recently 13 00:02:18.920 --> 00:02:27.180 a book on the subject about the role of economics in the American Civil War. 14 00:02:27.180 --> 00:02:33.320 And I think you'll also find that we're going to be providing some key insights into the 15 00:02:33.320 --> 00:02:42.060 actual outcome of America's greatest and most tragic and most liberating event in American 16 00:02:42.060 --> 00:02:43.060 and History. 17 00:02:43.060 --> 00:02:51.180 And it's not just historical, but I think that what you'll find is that these insights 18 00:02:51.180 --> 00:02:57.700 are just as applicable today in terms of improving our understanding of things like war, things 19 00:02:57.700 --> 00:03:02.940 like trade policy, and things like how politics actually works. 20 00:03:02.940 --> 00:03:10.660 So I'm going to begin by giving you sort of an overview of our research agenda. 21 00:03:10.660 --> 00:03:18.500 What we started with and what we've come to in this, probably the last paper in the series. 22 00:03:18.500 --> 00:03:27.060 It started out as a one-line footnote in my dissertation, literally one line, and my dissertation 23 00:03:27.060 --> 00:03:29.020 director said, what is this? 24 00:03:29.020 --> 00:03:34.700 I said it's a footnote, you can't have a footnote that's just one line long. 25 00:03:34.700 --> 00:03:43.060 But there it was, and basically what it was, was a note saying that the running drugs into 26 00:03:43.060 --> 00:03:49.860 the country illegally is very similar to what the blockade runners were doing during the 27 00:03:49.860 --> 00:03:50.860 Civil War. 28 00:03:50.860 --> 00:03:57.860 They were running goods into the country against a very formidable police force. 29 00:03:57.860 --> 00:03:59.500 So we started with that. 30 00:03:59.500 --> 00:04:06.780 And that one footnote has become a long, drawn out, but I think insightful research agenda. 31 00:04:06.780 --> 00:04:13.020 The first paper in the series, we're basically taking very simple economic tools here. 32 00:04:13.020 --> 00:04:17.340 I think you can do a lot of good research, publishable research, with basic economics 33 00:04:17.340 --> 00:04:22.960 that you could very easily find in your Principles of Economics course. 34 00:04:22.960 --> 00:04:27.300 In this paper, what we are playing off is what's called the Elchin and Allen effect. 35 00:04:27.300 --> 00:04:30.300 And has anybody heard of the Elchin and Allen effect in here? 36 00:04:30.300 --> 00:04:32.300 Okay, a couple people. 37 00:04:32.300 --> 00:04:35.300 It's just basically relative prices. 38 00:04:35.300 --> 00:04:40.300 And Elchin and Allen described a problem in the state of Washington 39 00:04:40.300 --> 00:04:47.300 where the people in Washington were complaining that all the good apples were being shipped out. 40 00:04:47.300 --> 00:04:51.300 And Elchin and Allen explained that the cost of the truck of shipping those apples 41 00:04:51.300 --> 00:04:55.300 from the state of Washington to Arkansas is the same. 42 00:04:55.300 --> 00:05:20.300 The truck driver doesn't care whether the apples are really good apples or really poor apples and so as a consequence of that fixed cost of shipping the apples out, the apple shippers would end up shipping out the highest quality apples and leaving the rotten, spoiled, gnarly apples for the people of Washington. 43 00:05:20.300 --> 00:05:27.700 So, the same thing happens with drugs. When drug dealers think about running drugs into 44 00:05:27.700 --> 00:05:33.100 the country, from Colombia, let's say, and they realize that they're facing the same 45 00:05:33.100 --> 00:05:40.900 amount of risk, whether they run in marijuana with potency of 2% or marijuana with potency 46 00:05:40.900 --> 00:05:46.900 of 5%. So, what they end up doing is, based on their incentives, with that fixed cost 47 00:05:46.900 --> 00:05:53.900 of Money, The Theory of Money and Credit of Money and Credit of Money and Credit of Money 48 00:06:16.900 --> 00:06:22.900 and Alan Effect, we call it the Rhett-Butler Effect because Butler was the famous character 49 00:06:22.900 --> 00:06:28.580 in Gone with the Wind who was a blockade runner. And what we found was we looked at the number 50 00:06:28.580 --> 00:06:33.500 of ships running in through the blockade, we looked at the number that were being captured, 51 00:06:33.500 --> 00:06:37.800 which is akin to the number of drug dealers being captured, and then we looked at the 52 00:06:37.800 --> 00:06:44.140 price of high quality goods versus low quality goods. And what we found was that every time 53 00:06:44.140 --> 00:06:50.660 The union forces of the North were successful in capturing the blockade runners that the 54 00:06:50.660 --> 00:06:57.420 price of luxury goods would actually fall because the blockade runners would go more 55 00:06:57.420 --> 00:07:03.100 and more towards the high-quality, high-priced luxury goods. 56 00:07:03.100 --> 00:07:07.100 So it's a very simple relative price effect. 57 00:07:07.100 --> 00:07:14.100 If you put a fixed cost on doing something like transporting a good, you'll end up encouraging 58 00:07:14.100 --> 00:07:17.980 The Higher Potency, Higher Quality Good. 59 00:07:17.980 --> 00:07:25.580 The second paper was actually published in the Quarterly Journal of Austrian Economics. 60 00:07:25.580 --> 00:07:33.820 In this case we looked at what could the Confederate government have done to improve the odds of 61 00:07:33.820 --> 00:07:41.900 block-haters running into the South and bringing goods, much needed goods in and cotton out 62 00:07:41.900 --> 00:07:42.900 of the Country. 63 00:07:42.900 --> 00:07:50.000 Well, what we found is they didn't do anything positive and that they actually ended up enacting 64 00:07:50.000 --> 00:07:56.300 a lot of negative policies on these blockade runners and made it actually more difficult 65 00:07:56.300 --> 00:07:57.940 to run the blockade. 66 00:07:57.940 --> 00:08:03.700 So in the first paper we emphasized just the basic price effect of running the blockade 67 00:08:03.700 --> 00:08:04.700 and capturing the ships. 68 00:08:04.700 --> 00:08:15.200 In the second paper, we looked at Confederate policy, and we began to realize that instead of just really a minor issue, 69 00:08:15.200 --> 00:08:24.200 something that's more related to the movie Gone with the Wind than to anything of modern policy relevance, 70 00:08:24.200 --> 00:08:34.200 And what we came to see was that this battle at sea was really the key to the outcome of America's Civil War. 71 00:08:34.200 --> 00:08:41.200 You may know, you may not know, but North and South were fairly evenly matched. 72 00:08:41.200 --> 00:08:48.200 Their generals went to the same war college. They had the same guns. They had the same bullets. 73 00:09:18.200 --> 00:09:19.200 People. 74 00:09:19.200 --> 00:09:24.400 But it's a lot easier to defend a position than to attack a position. 75 00:09:24.400 --> 00:09:30.000 And the Union was attacking while the South only had to defend itself. 76 00:09:30.000 --> 00:09:36.840 You may recall at Gettysburg when General Lee sent General Pickett with 10,000 men on 77 00:09:36.840 --> 00:09:41.280 Pickett's charge up a hill. 78 00:09:41.280 --> 00:09:47.200 Lee used all of his cannons and shot the cannons at the Union lines until the cannons were 79 00:10:17.200 --> 00:10:23.880 You could expect to be a draw, and the land war was a draw. 80 00:10:23.880 --> 00:10:27.600 The Union would win a battle, the Confederacy would win a battle. 81 00:10:27.600 --> 00:10:30.920 The next one would be a draw, and it would go on like that. 82 00:10:30.920 --> 00:10:31.920 Okay? 83 00:10:31.920 --> 00:10:39.260 Now, if you have a war like that, eventually, if the Union can invade successfully and overthrow 84 00:10:39.260 --> 00:10:45.500 the Confederate government, then the Confederate government wins the war. 85 00:10:45.500 --> 00:10:51.060 But they didn't, obviously. 86 00:10:51.060 --> 00:10:58.460 We argue that the blockade was a leaky affair, if not for Confederate policy. 87 00:10:58.460 --> 00:11:07.620 It's kind of interesting to note that in this battle at sea, this most important battle, 88 00:11:07.620 --> 00:11:12.660 on the Confederate side, the people running the blockade, they didn't have uniforms, they 89 00:11:12.660 --> 00:11:19.220 They didn't have guns. They never shot at the Union ships. And the Union blockade fleet 90 00:11:19.220 --> 00:11:25.980 that was trying to stop these blockade runners in this most important aspect of the war, 91 00:11:25.980 --> 00:11:32.460 they didn't shoot at the Confederates either. They didn't shoot at the Confederates because 92 00:11:32.460 --> 00:11:38.200 the Union blockade fleet was paid on the basis of how many ships they captured. So if you 93 00:11:38.200 --> 00:11:43.600 You guys had a union boat out there and you captured a Confederate ship with valuable 94 00:11:43.600 --> 00:11:45.160 cotton, let's say. 95 00:11:45.160 --> 00:11:50.200 You could take it to port and sell it and get to keep all the money. 96 00:11:50.200 --> 00:11:55.280 So they never shot at the Confederates because they didn't want to damage the ship and damage 97 00:11:55.280 --> 00:11:57.840 the commodities that were on board. 98 00:11:57.840 --> 00:12:00.240 So what were the Confederates' mistakes? 99 00:12:00.240 --> 00:12:06.560 Well, they started the war with a policy of King Cotton, which said that cotton was king, 100 00:12:06.560 --> 00:12:11.960 We're not going to sell any to the rest of the world, and we're going to make England 101 00:12:11.960 --> 00:12:14.680 and France intervene on our behalf. 102 00:12:14.680 --> 00:12:19.960 We're going to make them send their large navies to the Confederacy and blow up the 103 00:12:19.960 --> 00:12:20.960 Union ships. 104 00:12:20.960 --> 00:12:23.960 Of course, that didn't work. 105 00:12:23.960 --> 00:12:30.120 Then they came up with a brilliant idea of impressing naval ships in the South. 106 00:12:30.120 --> 00:12:35.520 So if you had a large cargo ship, let's say, in the South, the Confederate government impressed 107 00:12:35.520 --> 00:12:42.520 at the University of New York, The University of New York, The University of New York, The 108 00:13:05.520 --> 00:13:13.960 The American South at this time was an economy based more on its own comparative advantage 109 00:13:13.960 --> 00:13:19.840 in cotton production than any other economy in the world and probably the history of the 110 00:13:19.840 --> 00:13:22.360 world. 111 00:13:22.360 --> 00:13:26.400 And then later in the war they enacted trade regulations. 112 00:13:26.400 --> 00:13:32.520 They said that this blockade business is out of control and that we need to regulate it. 113 00:13:32.520 --> 00:13:37.080 So they prohibited luxury goods from being imported. 114 00:13:37.080 --> 00:13:43.000 They put price controls on imported goods, and they required that all ships coming and 115 00:13:43.000 --> 00:13:49.800 going leave half of their cargo space for the Confederate government. 116 00:13:49.800 --> 00:13:55.080 And you might think at first that some of those things don't sound too bad, like prohibiting 117 00:13:55.080 --> 00:13:57.200 luxury goods. 118 00:13:57.200 --> 00:14:04.880 Why do we need to import jewelry and perfume and brandy and things like that, dresses, 119 00:14:04.880 --> 00:14:08.200 when we're at war and we're losing the war? 120 00:14:08.200 --> 00:14:14.800 Well, it turns out that luxury goods were imported by the crew, that each crew got to 121 00:14:14.800 --> 00:14:19.920 carry a knapsack of stuff into the country. 122 00:14:19.920 --> 00:14:26.960 And so the blockade runners had an incentive to run because they were carrying a bag full 123 00:14:56.960 --> 00:15:03.960 The next paper we looked more specifically at, did the regulations have to do with the 124 00:15:26.960 --> 00:15:53.920 In this paper is called The Unintended Consequences of Confederate Trade Legislation, so the ultimate 125 00:15:53.920 --> 00:15:58.200 And the answer is going to be it hurt the war effort, that it even hurt the government's 126 00:15:58.200 --> 00:16:05.200 ability to get food for its troops and ammunition for the army. 127 00:16:05.200 --> 00:16:11.040 And of course it's very difficult to decipher these kind of things empirically. 128 00:16:11.040 --> 00:16:16.600 You've got a war going on, you've got hyperinflation going on. 129 00:16:16.600 --> 00:16:25.680 So the numbers that exist from this period are very difficult to decipher. 130 00:16:25.680 --> 00:16:30.600 There was a currency revaluation at the exact same time, so that while all this is going 131 00:16:30.600 --> 00:16:37.400 on, the Confederate government said, if you bring in $3 of Confederate currency, we'll 132 00:16:37.400 --> 00:16:41.180 give you $2 of the new currency. 133 00:16:41.180 --> 00:16:45.680 If you don't bring in the old currency, it's not going to be worth anything after a certain 134 00:16:45.680 --> 00:16:52.480 Period Time. So there's a lot of chaos going on in the world of this economy, this historical 135 00:16:52.480 --> 00:17:00.040 economy, but what we did was we divided up the goods for which we had price data into 136 00:17:00.040 --> 00:17:07.440 the category of goods that were wholly imported into the South, goods that were wholly domestically 137 00:17:07.440 --> 00:17:14.560 produced in the South, and goods that were both produced domestically and imported. And 138 00:17:14.560 --> 00:17:21.680 So we're using very basic techniques, again, to look at this question. 139 00:17:21.680 --> 00:17:29.440 And what we found was that imports, the goods that were imported, rose dramatically after 140 00:17:29.440 --> 00:17:34.160 this legislation went into effect. 141 00:17:34.160 --> 00:17:40.080 So things like, basic things that the Confederate war effort and the Confederate economy needed 142 00:17:40.080 --> 00:17:49.160 like beef, flour and salt, basic necessities dried up and the price of domestically produced 143 00:17:49.160 --> 00:17:56.920 goods like cotton actually went down because it couldn't get out into the European markets. 144 00:17:56.920 --> 00:18:06.000 So what we do find when we apply some econometric techniques to this issue is that this legislation 145 00:18:06.000 --> 00:18:13.560 caused a distinct harm to the southern economy and this is occurring almost simultaneously 146 00:18:13.560 --> 00:18:20.560 with the disintegration of the Confederate Army and the disappearance of the Confederate 147 00:18:20.560 --> 00:18:21.560 government. 148 00:18:21.560 --> 00:18:26.680 I mean, the army is being dispersed, the Confederate government is on the run, Jefferson Davis 149 00:18:26.680 --> 00:18:35.280 is wearing a dress and trying to escape Richmond, basically, as a result of this legislation. 150 00:18:35.280 --> 00:18:42.120 So it doesn't seem to make much sense that they use this legislation. 151 00:18:42.120 --> 00:18:46.480 And so we're getting a little closer to this particular paper, but when we published this 152 00:18:46.480 --> 00:18:53.940 book, the academic journal Public Choice, which looks at issues of why particular pieces 153 00:18:53.940 --> 00:18:59.920 of legislation are enacted, they reviewed it and reviewed it very favorably, but at 154 00:18:59.920 --> 00:19:07.800 But at the end they said they never did explain why the Confederate government would make 155 00:19:07.800 --> 00:19:16.320 all of these bonehead policy moves that undermine their own efforts. 156 00:19:16.320 --> 00:19:18.640 So hence this paper. 157 00:19:18.640 --> 00:19:26.480 Why did they vote for policies that would have unintended consequences if they were 158 00:19:26.480 --> 00:19:31.920 known to be obviously destructive. 159 00:19:31.920 --> 00:19:37.640 So here we have Voting for Victory, an analysis of the Confederate trade legislation. 160 00:19:37.640 --> 00:19:43.840 Things were not going good for the Confederacy in mid-1863. 161 00:19:43.840 --> 00:19:51.640 The Union won at Gettysburg, Vicksburg and Chattanooga so that the Confederate Army in 162 00:19:51.640 --> 00:20:01.040 Pennsylvania was badly defeated, the city of Vicksburg in Mississippi was captured, opening 163 00:20:01.040 --> 00:20:08.200 up the Mississippi, cutting off Texas and the other western states, and Chattanooga, 164 00:20:08.200 --> 00:20:16.240 you know where Chattanooga is, it's in central south Tennessee on the road I-75 headed towards 165 00:20:16.240 --> 00:20:22.840 and the Heartbed of the Southern Economy. 166 00:20:22.840 --> 00:20:28.360 So things were looking very poorly and the Confederate government started enacting a 167 00:20:28.360 --> 00:20:34.160 lot of legislation like this trade legislation, including lots of taxes. 168 00:20:34.160 --> 00:20:38.640 The act itself was called an act to prohibit luxury goods or articles not necessary or 169 00:20:38.640 --> 00:20:42.240 of common use. 170 00:20:42.240 --> 00:20:47.920 and it consisted of, as I said, prohibitions against luxuries, price controls on imports 171 00:20:47.920 --> 00:20:55.360 and impressments of ship or cargo space. Political scientists are also been paying recent attention 172 00:20:55.360 --> 00:21:01.040 to this issue. As a matter of fact, I just received a working paper, Yale University 173 00:21:01.040 --> 00:21:08.880 report on the question of why did the Confederates wait so long to enact taxes to support the 174 00:21:08.880 --> 00:21:16.520 War Effort, and why do they use inflation for so long? Basically, one of the differences 175 00:21:16.520 --> 00:21:23.120 that you find between economists, most economists, and political scientists, or most political 176 00:21:23.120 --> 00:21:30.160 scientists, is that political scientists try to explain things almost, not exclusively, 177 00:21:30.160 --> 00:21:37.400 but usually by ideology. What's the politician's ideology? Are they liberal or conservative? 178 00:21:37.400 --> 00:21:43.560 Are they Republican or Democrat? 179 00:21:43.560 --> 00:21:46.520 Economists look for economic interests. 180 00:21:46.520 --> 00:21:47.920 Who's going to benefit? 181 00:21:47.920 --> 00:21:49.880 How much is this going to cost? 182 00:21:49.880 --> 00:21:55.600 Who's going to have to pay for this piece of legislation? 183 00:21:55.600 --> 00:22:03.240 Of course, neither side denies, economists don't deny that ideology exists and political 184 00:22:03.240 --> 00:22:12.520 Scientists don't deny that economic interests don't exist. It's just where the emphasis lays. 185 00:22:17.960 --> 00:22:27.560 So, again, what we find is that very often the best technique is often the simplest. And so we 186 00:22:27.560 --> 00:22:33.080 We looked at how these legislators voted. 187 00:22:33.080 --> 00:22:37.960 In December 24th, 1863, the bill was introduced and read. 188 00:22:37.960 --> 00:22:42.280 December 30th, it came up but was postponed. 189 00:22:42.280 --> 00:22:47.680 January 21st, it came up in 1864 and it was postponed. 190 00:22:47.680 --> 00:22:53.520 January 28th, an amendment to the bill was offered in Congress. 191 00:22:53.520 --> 00:22:59.360 And this amendment, it's a little confusing in the paper, but this amendment basically 192 00:22:59.360 --> 00:23:07.080 would allow the president of the Confederacy to weaken this legislation. 193 00:23:07.080 --> 00:23:13.280 So that instead of requiring all ships have to give exactly 50% to the Confederate government, 194 00:23:13.280 --> 00:23:20.320 this legislation would allow the president to reduce that percentage to say 30%. 195 00:23:20.320 --> 00:23:28.520 The amendment failed, 24 to 42. Next, a move to reconsider this bill, in other words, to 196 00:23:28.520 --> 00:23:35.080 take another vote or another look at it, came up, but it failed again, 27 to 37, voting 197 00:23:35.080 --> 00:23:42.520 against the movement to reconsider. Then finally, on that day, a final vote was taken and it 198 00:23:42.520 --> 00:23:51.640 passed unamended in its original form 61 to 11. Virtually all the people who voted against 199 00:23:51.640 --> 00:24:01.120 it had voted for the amendment and voted for the motion to reconsider. Now we had a problem 200 00:24:01.120 --> 00:24:04.720 with the amount of data that's involved in this. So what we wanted to do is to look at 201 00:24:04.720 --> 00:24:13.280 all three votes as counting towards a particular representative's view of things. 202 00:24:13.280 --> 00:24:20.000 So we made an index so that if you voted against the amendment, a representative would be given 203 00:24:20.000 --> 00:24:22.800 a value of plus one. 204 00:24:22.800 --> 00:24:29.240 If you voted against reconsidering the amendment, you were given another plus one, and if you 205 00:24:29.240 --> 00:24:35.400 When you voted for the trade regulation itself, you were given a plus one. 206 00:24:35.400 --> 00:24:40.680 And so through this method, you could have a legislator who was ranked zero, who was 207 00:24:40.680 --> 00:24:46.940 completely for free trade, or you could have a representative ranked three, who was completely 208 00:24:46.940 --> 00:24:49.880 against free trade. 209 00:24:49.880 --> 00:24:55.480 Or you could have something in between, somebody who was marginally pro-trade or marginally 210 00:24:55.480 --> 00:25:01.080 Against Trade. 211 00:25:01.080 --> 00:25:12.080 Now we ran several models, as you saw on the paper, first running the models without ideological 212 00:25:12.080 --> 00:25:19.200 or political variables and then running them with ideological and political variables. 213 00:25:19.200 --> 00:25:27.380 We started out by testing each of the separate votes on the legislation and then we used the 214 00:25:27.380 --> 00:25:34.420 combined vote of the index 0 through 3. 215 00:25:34.420 --> 00:25:40.960 We compared their voting records to who they were, what were their characteristics, and 216 00:25:40.960 --> 00:25:46.160 the types of variables we used were, we had three political variables, which was how they 217 00:25:46.160 --> 00:25:49.600 Whether they stood on secession, whether they wanted to leave the Union or not in the first 218 00:25:49.600 --> 00:25:55.760 place, what was their political party prior to the war, Democrat or Whig, and whether 219 00:25:55.760 --> 00:25:59.800 or not they were a lame duck in Congress. 220 00:25:59.800 --> 00:26:05.180 We included eight occupational categories, if they were a farmer or a lawyer or a banker. 221 00:26:05.180 --> 00:26:10.660 We included two variables about representatives' slave holdings. 222 00:26:10.660 --> 00:26:15.840 How many did they have and how significant those holdings were. 223 00:26:15.840 --> 00:26:23.260 Three variables about their personal wealth, a slave index of the congressional county 224 00:26:23.260 --> 00:26:30.440 that they were from, the county income, and four invasion variables, whether or not the 225 00:26:30.440 --> 00:26:37.980 congressman district was occupied by the union forces or whether or not the congressman district 226 00:26:37.980 --> 00:26:42.900 was behind enemy lines, so to speak. 227 00:26:42.900 --> 00:26:47.460 So we basically have a very good picture of who these people were, what their occupation 228 00:26:47.460 --> 00:26:51.860 was, how much money they had, what their county was like, was it a slave holding county or 229 00:26:51.860 --> 00:26:57.820 was it a free county, and whether or not it was behind enemy lines. 230 00:26:57.820 --> 00:27:05.060 We argue in the paper that whether or not a district was invaded is the key and deciding 231 00:27:05.060 --> 00:27:06.340 factor. 232 00:27:06.340 --> 00:27:11.020 You're always going to have some people who are for free trade and benefit from free trade 233 00:27:11.020 --> 00:27:17.500 and you're always going to have people who are against trade and pro-protectionist. 234 00:27:17.500 --> 00:27:26.020 But the one thing that changes through the war is not really their ideology, is not really 235 00:27:26.020 --> 00:27:31.380 their county, is not really their personal standing or their profession, but whether 236 00:27:31.380 --> 00:27:37.460 or not their district was invaded and occupied by the Union. 237 00:27:37.460 --> 00:27:40.940 Now why would this matter? 238 00:27:40.940 --> 00:27:48.140 Well, in the case of trade legislation, we argue that it's placing costs on people who 239 00:27:48.140 --> 00:27:51.200 live in the South during the war. 240 00:27:51.200 --> 00:27:57.420 If you put prohibitions, if you put price indexes, if you put taxes on the economy, 241 00:27:57.420 --> 00:28:00.920 what's that going to do? 242 00:28:00.920 --> 00:28:03.460 It's going to raise the price of food to you. 243 00:28:03.460 --> 00:28:06.420 It's going to raise the price of clothing to you. 244 00:28:06.420 --> 00:28:10.220 It's going to raise the price of medicine to you. 245 00:28:10.220 --> 00:28:15.060 Unions are going to go up. You're going to inflict pain on people. You're going to make 246 00:28:15.060 --> 00:28:24.460 it not impossible but very difficult to export those products that they make. But if you're 247 00:28:24.460 --> 00:28:31.460 behind enemy lines, if you're in union control, that policy isn't going to hurt you at all. 248 00:28:31.460 --> 00:28:37.060 Those taxes, those prohibitions, those price controls essentially don't matter in those 249 00:29:07.060 --> 00:29:15.180 That's very boring. That's also not my specialty. I'm not an econometrician. So if you have 250 00:29:15.180 --> 00:29:20.480 any really hard questions, especially if it involves really hard words, I'm probably not 251 00:29:20.480 --> 00:29:28.200 going to be able to answer them. But I will take any difficult questions on econometrics 252 00:29:28.200 --> 00:29:34.500 back to my econometrician. And if he thinks it's a good question, I'll see if I can get 253 00:29:34.500 --> 00:29:47.020 And the best question, I'll even give you a copy of my book, but what did we find? 254 00:29:47.020 --> 00:29:55.740 Well basically that invasion of your district made it always much more likely, statistically 255 00:29:55.740 --> 00:30:01.340 significant, that you were going to vote for restrictions on trade. 256 00:30:01.340 --> 00:30:08.280 So if your constituents were beyond Confederate held territory, you would vote for those 257 00:30:08.280 --> 00:30:15.600 draconian trade restrictions and that's really the only variable that comes out consistently 258 00:30:15.600 --> 00:30:22.780 across all these models. 259 00:30:22.780 --> 00:30:35.080 Leave Owners tended to vote in the same way. 260 00:30:35.080 --> 00:30:41.060 Now one of the interesting things that's going on here is as the Union is invading, it's 261 00:30:41.060 --> 00:30:45.300 in a sense liberating the slaves. 262 00:30:45.300 --> 00:30:51.100 And you can liberate slaves, it's really hard to liberate land, things like land, because 263 00:30:51.100 --> 00:30:57.580 That's fixed. But slaves can run away. Slaves can be captured by Union troops and freed 264 00:30:57.580 --> 00:31:06.700 into the North. And so the slave owners are going to be pushing for any measure that might 265 00:31:06.700 --> 00:31:18.260 help preserve their slave ownership. Non-slave districts, not surprisingly, also had some 266 00:31:18.260 --> 00:31:23.780 some evidence that they wanted to weaken these regulations. 267 00:31:23.780 --> 00:31:34.860 So when we get weak evidence that places urban areas, seaports, congressmen from those districts 268 00:31:34.860 --> 00:31:41.460 with the intent not to be fewer slaves and more international trade, people who worked 269 00:31:41.460 --> 00:31:46.100 in finance, people who worked in banking, that occupation actually came up with some 270 00:31:46.100 --> 00:31:48.100 The Theory of Money and Credit 271 00:32:16.100 --> 00:32:26.660 The Yale University study that I mentioned found it entirely different. 272 00:32:26.660 --> 00:32:33.180 They didn't look at this piece of legislation, they looked at taxes and they found that ideological 273 00:32:33.180 --> 00:32:43.580 variables did matter, sort of, and that capture variables like invasion variables did not 274 00:32:43.580 --> 00:32:44.580 matter. 275 00:32:44.580 --> 00:33:00.580 They kind of found the exact opposite, but not really. They measured things differently, and they also use slave ownership as an ideological variable. 276 00:33:00.580 --> 00:33:12.580 Well, we're using it as an economic variable. So in many respects, I think that they kind of changed the data from its original form. 277 00:33:12.580 --> 00:33:17.540 and actually we're taking data that was given by other political scientists 278 00:33:17.540 --> 00:33:22.120 and they changed the data in the mean of some of the variables to come up with 279 00:33:22.120 --> 00:33:24.740 ideological results. 280 00:33:24.740 --> 00:33:27.420 So why did the Confederate Congress 281 00:33:27.420 --> 00:33:30.040 vote for these unintended consequences 282 00:33:30.040 --> 00:33:35.160 that actively contributed to the fall of the Confederate government? 283 00:33:35.160 --> 00:33:38.240 The answer is that occupied districts 284 00:33:38.240 --> 00:33:40.520 could vote for 285 00:33:40.520 --> 00:33:46.920 the legislation without having to pay any of the cost, okay, so you've lost your district, 286 00:33:46.920 --> 00:33:52.040 your congressman represented a district that's been lost, it's not going to cost your district 287 00:33:52.040 --> 00:33:57.960 anything, but it might conceivably get it back for you, you might conceivably have some 288 00:33:57.960 --> 00:34:00.800 chance of the Confederacy winning. 289 00:34:00.800 --> 00:34:12.720 So basically, we view the Confederate loss and the Union victory on the part of the South 290 00:34:12.720 --> 00:34:22.640 as a flawed democracy, that basically this ability to vote for benefits and costs of 291 00:34:22.640 --> 00:34:30.740 districts that are no longer under control of your government is a weakness in the political 292 00:34:30.740 --> 00:34:36.660 System, which ultimately contributed to the fall of the Confederacy. 293 00:34:36.660 --> 00:34:45.660 Our research process and program has examined many of the aspects of this key issue of the 294 00:34:45.660 --> 00:34:47.760 American Civil War. 295 00:34:47.760 --> 00:34:51.640 We identify a main problem, which is the blockade. 296 00:34:51.640 --> 00:34:57.380 We identify a main effect, which is the Rhett-Butler Effect or the Relative Price Effect. 297 00:34:57.380 --> 00:35:04.180 We look at the effectiveness of the blockade and find that it's a policy-driven result 298 00:35:04.180 --> 00:35:06.660 on the part of the Confederate government. 299 00:35:06.660 --> 00:35:12.540 We look at specific analysis such as the unintended consequences of the trade legislation, and 300 00:35:12.540 --> 00:35:19.920 we find the source of the problem, which is the congressional voting, which essentially 301 00:35:19.920 --> 00:35:30.380 led to big government solutions and in this case prohibitions, price controls and impressments. 302 00:35:30.380 --> 00:35:42.720 And this is in line with a more general theme where the Confederate loss was a result of 303 00:35:42.720 --> 00:35:51.120 a big government approach to the war and a big government approach that became more draconian 304 00:35:51.120 --> 00:35:57.600 as the war proceeded and that this evidence that we're providing is evidence for what's 305 00:35:57.600 --> 00:36:05.220 called now in the history profession the libertarian view of the Civil War and it's interesting 306 00:36:05.220 --> 00:36:13.700 And to note that this libertarian view of the Civil War has been attributed to a fellow 307 00:36:13.700 --> 00:36:21.180 that I work for, I work with Joe Stromberg at the Mises Institute and one of your colleagues 308 00:36:21.180 --> 00:36:27.220 at San Jose State University, Jeffrey Hummel, those are the two leading proponents, I guess, 309 00:36:27.220 --> 00:36:33.140 of this libertarian view that the South, the Confederate loss was attributed to the fact 310 00:36:33.140 --> 00:36:51.940 As I said, this gives us some information about war in general, strategy, and the fact 311 00:36:51.940 --> 00:36:56.140 that economics matters most when fighting a war. 312 00:36:56.140 --> 00:37:06.220 Basically, almost any country can defeat any other country if it uses its resources effectively. 313 00:37:06.220 --> 00:37:11.340 So you can have a very small country defeat a world power. 314 00:37:11.340 --> 00:37:22.140 Afghanistan defeated the Soviet Union, Vietnam defeated the United States, the United States 315 00:37:22.140 --> 00:37:27.900 Defeated Great Britain, the world's largest power at the time. 316 00:37:27.900 --> 00:37:36.900 Trade Policy, the lesson here I think is important and transparent hopefully, but it is that 317 00:37:36.900 --> 00:37:41.860 government direction of trade is not the way to go. 318 00:37:41.860 --> 00:37:58.140 And finally, in politics, political solutions, I think that the lesson to be learned is that 319 00:37:58.140 --> 00:38:06.900 central control is almost always harmful to the goal that you're seeking. 320 00:38:06.900 --> 00:38:10.700 And with that, I'll open up for questions. 321 00:38:10.700 --> 00:38:26.700 You mentioned the three different votes. I didn't catch the dates, and the reason why I'm asking is it's conceivable, since you're saying that there was a voter that captured the country, that last vote made a big swing in the number of people that voted for it. 322 00:38:26.700 --> 00:38:39.700 Was there a big push, showman's march to the sea, or something where a large segment of the South was lost, and that would have influenced the people that were in the position to vote, to vote the way you're saying they voted? 323 00:38:39.700 --> 00:38:51.020 Yes, Sherman was marching on Atlanta, not to the sea at that point. There is a big swing 324 00:38:51.020 --> 00:39:01.260 in the vote. You look at the amendment and it's 2442. You look at the move to reconsider 325 00:39:01.260 --> 00:39:28.340 The end vote is for the legislation itself, whether to pass it or not, it's an all-or-nothing 326 00:39:28.340 --> 00:39:35.100 type of proposition. So you get a lot of funny results in all-or-nothing propositions. And 327 00:39:35.100 --> 00:39:41.180 you do so today in Congress. I mean, that's what I said is that what you see in this process, 328 00:39:41.180 --> 00:39:48.100 you can see today in Congress where a particular party, a particular group, a block of senators 329 00:39:48.100 --> 00:39:54.860 will offer amendments. They'll even offer amendments that they really hate just to try 330 00:39:54.860 --> 00:39:55.860 How to Kill the Bill 331 00:39:55.860 --> 00:40:03.860 Okay, so let's say there's a proposal to increase the minimum wage to $7 an hour and we go in 332 00:40:03.860 --> 00:40:07.860 there and make a proposal to amend it to $17 an hour. 333 00:40:07.860 --> 00:40:16.180 Well, if it got to $17 an hour, we wouldn't be for it, but even Ben wouldn't be for it. 334 00:40:16.180 --> 00:40:24.620 So you can rig the system, that's what's going on. 335 00:40:24.620 --> 00:40:28.020 You can rig the system and that's what they're doing in those first two votes. 336 00:40:28.020 --> 00:40:33.340 But then it comes to the all or nothing choice and almost everybody votes for it except those 337 00:40:33.340 --> 00:40:39.960 eleven hardcore pro-free trade people who had been, I mean they got a score of zero 338 00:40:39.960 --> 00:40:45.140 because they voted the right way all three times. 339 00:40:45.140 --> 00:40:51.740 And you know, you see this in Congress today, you'll be fighting a piece of legislation 340 00:40:51.740 --> 00:40:56.780 And when it comes up for final vote, you'll think, oh, well, you know, I'll vote for 341 00:40:56.780 --> 00:41:01.740 the budget, you know, just so I can say I was on the winning side, or I'd marginally 342 00:41:01.740 --> 00:41:04.700 support that rather than another possible alternative. 343 00:41:04.700 --> 00:41:11.340 So congressional voting, you know, we're pretty sure that it's almost always based on economic 344 00:41:11.340 --> 00:41:16.620 interests or self-interested motivations, but it's a messy process. 345 00:41:16.620 --> 00:41:17.620 Yes? 346 00:41:17.620 --> 00:41:22.620 I'm most interested in voting, especially the fourth vote. You alluded to in a footnote. 347 00:41:22.620 --> 00:41:30.620 The next year they re-voted again and they reversed themselves. So, what happened there and why did you conclude that date in there? 348 00:41:30.620 --> 00:41:35.620 Geez, oh, I've forgotten all about that part. Okay, let's see. 349 00:41:35.620 --> 00:42:00.220 Yes, what happened, what happened in, they reversed it because they were feeling the negative 350 00:42:00.220 --> 00:42:11.500 of Effects, and so there was a combination of the fact that, obviously some congressmen 351 00:42:11.500 --> 00:42:23.900 don't understand economics, landmark point that I made there, they might not understand 352 00:42:23.900 --> 00:42:28.880 their own interest or their own district's interest that well, but once the legislation 353 00:42:28.880 --> 00:42:37.360 is in effect, then all of the costs start to come home and so they acted to overturn 354 00:42:37.360 --> 00:42:44.520 it, but what was it that the president vetoed that, right? 355 00:42:44.520 --> 00:42:48.000 They voted again, but they failed to override. 356 00:42:48.000 --> 00:42:52.960 They failed to override. 357 00:42:52.960 --> 00:42:59.040 Now the reason we didn't do anything with that was not that we left any cards on the 358 00:42:59.040 --> 00:43:00.040 table. 359 00:43:00.040 --> 00:43:06.440 It was because by that time they had already sent the transcriber out with a gun to help 360 00:43:06.440 --> 00:43:12.360 defend Richmond and they were going mostly in secret sessions. 361 00:43:12.360 --> 00:43:20.880 The Confederate Senate almost always met in secret sessions and then they would come up 362 00:43:20.880 --> 00:43:25.840 with the legislation and quickly hand it over to the House to see what their point of view 363 00:43:25.840 --> 00:43:26.840 was. 364 00:43:26.840 --> 00:43:32.080 I wanted to vote it into, because they didn't want a lot of this stuff leaking out about 365 00:43:32.080 --> 00:43:39.240 budgets or call-ups of troops, and so eventually almost everything went into secret sessions 366 00:43:39.240 --> 00:43:48.160 and they would not record a lot of the votes, so we're actually kind of surprised that so 367 00:43:48.160 --> 00:43:53.840 So much of the data is available, so much of the information is available. 368 00:43:53.840 --> 00:43:58.520 The Confederates were really good bureaucrats. 369 00:43:58.520 --> 00:44:05.080 They kept a lot of detailed information, even though they were running out of paper. 370 00:44:05.080 --> 00:44:07.960 But they kept a lot of detailed information. 371 00:44:07.960 --> 00:44:14.080 As a matter of fact, you've heard of the phrase red tape. 372 00:44:14.080 --> 00:44:23.720 Ted Tate actually comes from the Civil War and the Confederate quartermaster, General 373 00:44:23.720 --> 00:44:31.280 something like Irwin Myers, was in charge of requisitioning commodities and equipment 374 00:44:31.280 --> 00:44:35.120 and stuff to the Confederate armies. 375 00:44:35.120 --> 00:44:44.640 And if everything wasn't exactly correct, he would put a piece of high-cost European 376 00:44:44.640 --> 00:44:52.720 red tape on that requisition and that meant it stopped until whoever requested it came 377 00:44:52.720 --> 00:44:56.880 in and started looking for it and filled out the forms correctly. 378 00:44:56.880 --> 00:45:01.840 So the Confederate government, you know, they have this free market, small government, limited 379 00:45:01.840 --> 00:45:06.880 Government Reputation, but they were all, many of them were big government 380 00:45:06.880 --> 00:45:21.080 bureaucrats. Yes, someone who knows trade restrictions for the economy, and I thought that a lot of the southern 381 00:45:21.080 --> 00:45:33.080 I don't think that Congress people would have felt that way or understood those kinds of things because they were always the ones voting against the high tariffs from the Northeast. 382 00:45:33.080 --> 00:45:47.080 Voting for such legislation as this would be voting against victory. Yet you characterize all the Congressmen who vote for the trade legislation as being sincerely pro-victory. 383 00:46:17.080 --> 00:46:21.360 But they were thinking, this is very short-sighted thinking, and they were thinking, you know, 384 00:46:21.360 --> 00:46:26.880 if we can just get those guys running those ships, maybe these ships don't even know 385 00:46:26.880 --> 00:46:30.720 about it, maybe they'll just run in here, violate the regulations and we'll just take 386 00:46:30.720 --> 00:46:36.120 all their property, which is what they would do if you violated the regulations. 387 00:46:36.120 --> 00:46:43.700 If you got caught with any luxury goods, they took your whole boat and everything in it. 388 00:46:43.700 --> 00:46:49.980 So it may have been just a, I don't have any specific information on this, but it may have 389 00:46:49.980 --> 00:46:54.020 been just an effort to steal the stuff that was coming in. 390 00:46:54.020 --> 00:46:55.020 Yes? 391 00:46:55.020 --> 00:47:02.020 I was under the impression that in the Confederate Congress, they didn't actually have a two-party 392 00:47:02.020 --> 00:47:03.020 system. 393 00:47:03.020 --> 00:47:08.020 So I was kind of confused as to how the political scientists are going over or against alluding 394 00:47:08.020 --> 00:47:11.220 to party bonds against the Mexican nation. 395 00:47:11.220 --> 00:47:13.260 That's an excellent point. 396 00:47:13.260 --> 00:47:18.540 In the Confederate Legislature, it was a one-party legislature. 397 00:47:18.540 --> 00:47:26.420 They didn't call themselves Whigs or even Democrats because they were fighting the Whigs 398 00:47:26.420 --> 00:47:30.660 and the former Whigs and the Democrats up north. 399 00:47:30.660 --> 00:47:41.260 And so they basically dropped party labels in the Confederate Congress and they also, 400 00:47:41.260 --> 00:47:48.520 at least on the surface did not organize committees on that basis, but that didn't stop the political 401 00:47:48.520 --> 00:47:53.600 scientists from going back and finding out what party they belonged to before the war 402 00:47:53.600 --> 00:48:03.760 because almost all of these people were politicians prior to the war or were active in politics 403 00:48:03.760 --> 00:48:10.760 in some form or another. So we know what they were before the war. And so they could actually 404 00:48:12.660 --> 00:48:17.660 go back and reconstruct that sort of thing. Lydia? 405 00:49:03.760 --> 00:49:05.760 The Theory of Money and Credit 406 00:49:33.760 --> 00:50:00.760 I'm surprised that the occupations didn't have some correlation with voting. Do you have an explanation for that? 407 00:50:00.760 --> 00:50:12.440 So, we don't normally expect occupation to have much of an effect in the U.S. Congress, 408 00:50:12.440 --> 00:50:20.240 for example, primarily because they're all lawyers, but actually back in this time there 409 00:50:20.240 --> 00:50:28.260 were a good number of lawyers, but there was a fair representation from 8 different professions. 410 00:50:28.260 --> 00:50:37.060 We did see a little bit of evidence that, for example, the finance and banking people were 411 00:50:37.060 --> 00:50:44.760 opposed to the trade restrictions because, of course, trade requires financing and that 412 00:50:44.760 --> 00:50:50.420 sort of thing, and finance people have to have some economic knowledge, so they wouldn't 413 00:50:50.420 --> 00:50:56.740 be fooled and they might be hurt significantly as a result. 414 00:50:56.740 --> 00:51:06.780 As the models changed and brought in more variables, a lot of that would disappear. 415 00:51:06.780 --> 00:51:16.060 You clearly got the sense that certain professions were lined up in a certain direction or another, 416 00:51:16.060 --> 00:51:30.100 But that other variables were stronger, and so slave holding definitely had an impact 417 00:51:30.100 --> 00:51:39.460 which would tie that to farmers, but frankly the results, the econometric results in this 418 00:51:39.460 --> 00:51:46.260 in this area are weak and you see the numbers dancing around between land value farmers 419 00:51:46.260 --> 00:51:53.700 as an occupation, slave holding, slave holding the counties, it's just unstable and I think 420 00:51:53.700 --> 00:51:57.860 that's one of the reasons why the professions get wiped out. 421 00:51:57.860 --> 00:52:05.860 I wonder if there's any relation to how long legislators, I mean the tendency might be 422 00:52:05.860 --> 00:52:27.960 Oh yeah, and this is going on to a very significant degree in the Confederate House. 423 00:52:27.960 --> 00:52:34.400 You have members of the House who are powerful members of the U.S. Congress and they're powerful 424 00:52:34.400 --> 00:52:41.400 of Money, The Theory of Money and State, The Theory of Money and State, The Theory of Money 425 00:53:04.400 --> 00:53:13.400 You mentioned for a Confederate congressman, winning the war was essential. Is there any 426 00:53:13.400 --> 00:53:18.400 relationship between the Bush administration and how they won the vote just this recent 427 00:53:18.400 --> 00:53:23.400 election? Do you see any relationship between these two? 428 00:53:23.400 --> 00:53:39.480 I'd like to. In the case of the Confederate Congress, if they lose the war, they're out 429 00:53:39.480 --> 00:53:45.480 of a job. There's no way, I mean, they'll obviously lose their Confederate House seat 430 00:53:45.480 --> 00:53:49.000 and it's unlikely that their constituents are going to be that pumped up about electing 431 00:54:19.000 --> 00:54:26.640 Any of the ones that were, for example, involved in the original secession, and now with respect 432 00:54:26.640 --> 00:54:39.680 to President Bush, now of course he is now a lame duck president. 433 00:54:39.680 --> 00:54:50.840 With respect to the war in Iraq, there's a little bit of similarity in the sense that 434 00:54:50.840 --> 00:54:58.320 if he wins a war, a president goes down in history as being a great president. 435 00:54:58.320 --> 00:55:05.720 And the more people you kill, the greater the war, the greater you are as a president. 436 00:55:05.720 --> 00:55:13.260 If you lose the war, if Bush loses Iraq, if it gets nasty, and the next guy has to come 437 00:55:13.260 --> 00:55:23.360 in and pull American troops out in bitter defeat, then Bush will go down as a very bad 438 00:55:23.360 --> 00:55:26.480 president. 439 00:55:26.480 --> 00:55:35.280 The only example I can think of is President Johnson, who ramped up the Vietnam War, killed 440 00:55:35.280 --> 00:55:58.280 I was wondering what the voter preference of the confederate had to play in this decision-making process and also the manufacturers of the goods that are being restricted? 441 00:55:58.280 --> 00:56:20.900 Well, voter preferences are very weakly introduced into the model by looking at a few variables 442 00:56:20.900 --> 00:56:24.200 that relate to the congressman's districts. 443 00:56:24.200 --> 00:56:32.560 Whether or not the district was wealthy or poor, whether it was a slave-holding district 444 00:56:32.560 --> 00:56:43.840 or few slaves in the district, those sorts of variables. 445 00:56:43.840 --> 00:56:52.480 The manufacturing in the South during the war was a mess. 446 00:56:52.480 --> 00:56:57.740 Before the war, you could characterize it very easily as manufacturing in the South 447 00:56:57.740 --> 00:57:08.400 was limited and it was most directed at industries that centered around cotton, tobacco, those 448 00:57:08.400 --> 00:57:09.600 sorts of things. 449 00:57:09.600 --> 00:57:12.440 So the processing industries. 450 00:57:12.440 --> 00:57:16.700 So before the war, it's very easy to identify those interests. 451 00:57:16.700 --> 00:57:20.980 During the war, it's very, very difficult because everybody was getting government contracts 452 00:57:20.980 --> 00:57:27.980 I'm sure what your view of an Austrian is regarding account metrics in general and specifically 453 00:57:27.980 --> 00:57:30.980 the ability to work like you've done. 454 00:57:30.980 --> 00:57:33.980 Do you feel like you need a shower? 455 00:57:33.980 --> 00:57:40.980 Well, you know, as an Austrian, I'm not going to say I'm not going to say I'm not going 456 00:57:40.980 --> 00:57:47.980 to say I'm not going to say I'm not going to say I'm not going to say I'm not going 457 00:57:47.980 --> 00:58:07.980 Well, you know, as an Austrian and a member of the Shiite school of the Austrians, the Austrians are against the use of econometrics as a methodological tool. 458 00:58:07.980 --> 00:58:08.980 To do economics. 459 00:58:08.980 --> 00:58:09.980 To do economics. 460 00:58:09.980 --> 00:58:10.980 To find history, right? 461 00:58:10.980 --> 00:58:16.980 No. No. No, they don't even like it as history. 462 00:58:16.980 --> 00:58:23.700 but they view it as history but they don't think it's good history and you 463 00:58:23.700 --> 00:58:31.300 know there's a lot of problems with econometrics besides methodological ones 464 00:58:31.300 --> 00:58:38.380 however you know so in the Austrian School an econometric test doesn't prove 465 00:58:38.380 --> 00:58:43.940 anything it doesn't disprove anything the absence of econometric evidence 466 00:58:43.940 --> 00:58:50.940 doesn't just prove or prove anything in terms of economic theory or the understanding of 467 00:58:50.940 --> 00:59:07.940 economic policy, but it does create for me a plausible empirical story that when you're 468 00:59:07.940 --> 00:59:17.380 You're trying to communicate ideas with economists and you're like a very small percentage of 469 00:59:17.380 --> 00:59:24.020 the economics profession and the economics profession itself is much, much larger and 470 00:59:24.020 --> 00:59:32.420 focuses, pays a lot of attention to econometric analysis, then, you know, if you want to be 471 00:59:32.420 --> 00:59:43.060 In dialogue, then you occasionally do some kind of metrics, and I don't like that, but 472 00:59:43.060 --> 00:59:46.660 it's fun to work with other people too, so, yes, Ben? 473 00:59:46.660 --> 00:59:51.900 Let me push you on defending your own paper, maybe it'll make me a student or a CA, or 474 00:59:51.900 --> 00:59:54.900 even a current, I don't know. 475 00:59:54.900 --> 00:59:59.980 So, it's the story that you're telling, you're not doing what Mises is calling theory, you're 476 00:59:59.980 --> 01:00:09.540 So it seems like econometrics is one of many tools used to do history, and some parts of 477 01:00:09.540 --> 01:00:13.140 history are better suited for econometrics, others are better suited for ethnographic 478 01:00:13.140 --> 01:00:18.380 type things, and econometrics is as methodologically sound as the other type. 479 01:00:18.380 --> 01:00:23.860 So instead of just saying your papers communicate to the other economists, I mean, I think it 480 01:00:23.860 --> 01:00:52.300 I don't know if it's the best technique. 481 01:00:52.300 --> 01:01:01.700 It's the best technique that I know of to deal with all of these numbers simultaneously. 482 01:01:01.700 --> 01:01:10.340 I actually took the entire data set and of all the congressmen, all the individual congressmen 483 01:01:10.340 --> 01:01:17.260 and all of the characteristics and all of the votes and started putting it down on paper. 484 01:01:17.260 --> 01:01:22.960 And this took a long time, but I like eyeballing the data, and I ended up with a sheet of paper 485 01:01:22.960 --> 01:01:29.960 that was like that, it was all taped together. 486 01:01:29.960 --> 01:01:38.660 And the results that I sort of deciphered from just looking at the numbers was very 487 01:01:38.660 --> 01:01:42.920 similar to some of the results that we got with our models. 488 01:01:42.920 --> 01:01:48.920 But it is, that was a very complicated task. I don't actually think that the econometrics 489 01:01:48.920 --> 01:01:57.120 that we have right now with the data that is involved in this study, I think the results 490 01:01:57.120 --> 01:02:02.920 are still very unclear. But they were clear enough on the ones that we were concerned 491 01:02:02.920 --> 01:02:11.200 about which is the invasion variables that we went forward with basically. So, you know, 492 01:02:11.200 --> 01:02:18.600 There is no other technique that deals with numbers systematically at this level, and 493 01:02:18.600 --> 01:02:19.600 ... 494 01:02:19.600 --> 01:02:25.160 You could have put it on a map, please. 495 01:02:25.160 --> 01:02:26.160 Done that. 496 01:02:26.160 --> 01:02:28.960 That would have been a really cool start. 497 01:02:28.960 --> 01:02:34.080 Yeah, it gets really complicated though, but I've done that, put them on maps, economic 498 01:02:34.080 --> 01:02:37.240 geography maps behind them, the whole nine yards. 499 01:02:37.240 --> 01:02:38.240 Yes? 500 01:02:38.240 --> 01:02:46.240 Since you watched their votes, a lot of them were in the Congress of the United States when they seceded. 501 01:02:46.240 --> 01:02:55.240 Now, there was an agricultural area and their vote would have hinged, whether they were conservative or liberal, on their background. 502 01:02:55.240 --> 01:03:05.240 When they switched and went to the South as a separate country, did their voting attitude or the way they voted, is there any correlation to how they changed it? 503 01:03:05.240 --> 01:03:12.240 I can very easily see them voting one way here and voting the other way when they were a separate country. 504 01:03:12.240 --> 01:03:19.240 They were voting for less agricultural taxes when they went home. They voted for big taxes. 505 01:03:19.240 --> 01:03:25.240 Actually, we did not study that particular issue, but that issue has been studied. 506 01:03:25.240 --> 01:03:34.240 What they have found is that there's pretty good cohesion between what you were before the war 507 01:03:34.240 --> 01:03:42.240 and what you did after the war. That is, if you accept econometric results. Just kidding. 508 01:03:43.760 --> 01:03:48.160 Yes, Ben. All right, so I'll ask you a non-econometric question. Okay. Actually, 509 01:03:48.160 --> 01:03:53.040 more of a geography support question. Okay. And the way you break up the day is you use 510 01:03:53.680 --> 01:03:58.400 Union controlled districts and districts that aren't contiguous with the rest of the Confederacy 511 01:04:28.400 --> 01:04:33.400 should be counted like the rest of the Confederacy since they're on the ocean and there aren't really these effects? 512 01:04:33.400 --> 01:04:38.400 Or were there no ports in Texas or New Orleans, the last big port? I don't know that. 513 01:04:38.400 --> 01:04:42.400 Tell me why they can be counted as a program. 514 01:04:58.400 --> 01:05:04.680 Well, you basically have the Mississippi River being controlled by the Union. 515 01:05:04.680 --> 01:05:12.740 You have Union gunboats and Union Army, and the Union Army is going out there and capturing 516 01:05:12.740 --> 01:05:17.080 the most fertile, cotton-growing area in the world. 517 01:05:17.080 --> 01:05:22.840 But that makes it very difficult to cross from West to East Confederacy. 518 01:05:22.840 --> 01:05:23.840 They did it. 519 01:05:23.840 --> 01:05:32.280 They actually, there was trade from west to east, but government communication was highly 520 01:05:32.280 --> 01:05:33.280 disrupted. 521 01:05:33.280 --> 01:05:41.000 It was very difficult to move armies, equipment, and bureaucratic type stuff from one part 522 01:05:41.000 --> 01:05:42.000 to another. 523 01:05:42.000 --> 01:05:48.880 So, for example, when they had the Monetary Revaluation Act, that went into effect at 524 01:05:48.880 --> 01:05:54.680 at a date certain in the East, and then I think three months later in the West. 525 01:05:54.680 --> 01:06:00.360 So there was that much of a delay in getting from East to West. 526 01:06:00.360 --> 01:06:05.580 And that was just basically moving the paper, you know, a few boxes of paper money over 527 01:06:05.580 --> 01:06:10.560 and getting the Western banks to exchange. 528 01:06:10.560 --> 01:06:21.740 The western government of the Confederacy was at this time basically in disarray and most 529 01:06:21.740 --> 01:06:31.160 of the customs officials and that sort of thing had been moved out of Texas because 530 01:06:31.160 --> 01:06:41.540 Galveston was, Galveston Island had actually been taken and the port had even before that 531 01:06:41.540 --> 01:06:48.380 had been effectively blockaded and the port at Metamortis down by the Mexican border was 532 01:06:48.380 --> 01:06:51.860 also effectively completely blockaded. 533 01:06:51.860 --> 01:07:01.820 So there wasn't really much except small craft blockade running out of the western confederacy. 534 01:07:01.820 --> 01:07:10.660 Now they enacted the legislation but towards the end of the war the western army of the 535 01:07:10.660 --> 01:07:13.980 confederacy actually attacked Galveston. 536 01:07:13.980 --> 01:07:22.100 They stole some boats and some cotton up the river in Houston and they strapped the cotton 537 01:07:22.100 --> 01:07:32.940 onto these rafts and went to Galveston and because they had these huge cotton bales all 538 01:07:32.940 --> 01:07:37.060 around the boats, the Union cannon fire didn't hurt them. 539 01:07:37.060 --> 01:07:42.580 And so they successfully invaded Galveston and took it back over again. 540 01:07:42.580 --> 01:07:48.180 And they destroyed enough ships, I think, so that the blockade was actually open for 541 01:07:48.180 --> 01:07:49.180 a little bit. 542 01:07:49.180 --> 01:07:50.820 But that was after the legislation. 543 01:07:50.820 --> 01:07:58.100 So we added it all up and we basically said, you know, this legislation really didn't affect 544 01:07:58.100 --> 01:08:02.140 the western part of the Confederacy. 545 01:08:02.140 --> 01:08:08.580 Arkansas completely out of Confederate hands. 546 01:08:08.580 --> 01:08:18.860 Louisiana completely in Union hands, completely in Union hands, so that we didn't really see 547 01:08:18.860 --> 01:08:24.940 any way that they could have an effect, that any effect would be coming from the Union economy, 548 01:08:24.940 --> 01:08:26.940 not the Confederate legislation. 549 01:08:26.940 --> 01:08:29.940 Like the Western states were basically self-sufficient? 550 01:08:29.940 --> 01:08:32.940 Self-sufficient, yeah, pretty much, pretty much. 551 01:08:32.940 --> 01:08:39.380 Yeah, you said that, you know, essentially you concluded that the blockade, you know, 552 01:08:39.380 --> 01:08:42.820 caused some bad policy on the part of the Confederacy, which caused them to lose the 553 01:08:42.820 --> 01:08:43.820 war. 554 01:08:43.820 --> 01:08:44.820 Yeah. 555 01:08:44.820 --> 01:08:45.820 Couldn't you make, like, a similar argument for a lot of other cases that caused them 556 01:08:45.820 --> 01:08:46.820 to lose the war? 557 01:08:46.820 --> 01:08:47.820 I mean, for example, like, the lack of Europeans' intervention. 558 01:08:47.820 --> 01:08:48.820 Mm-hmm. 559 01:08:48.820 --> 01:08:49.820 I mean, would that be a... 560 01:08:49.820 --> 01:08:50.820 I mean, how do you think that plays into it? 561 01:08:50.820 --> 01:08:51.820 I mean, was that a reasonable thing for them to assume might happen? 562 01:08:51.820 --> 01:08:52.820 Did it work out that way, or is it... 563 01:08:52.820 --> 01:08:53.820 Well... 564 01:08:53.820 --> 01:09:09.720 Well, that is, you're absolutely right, I mean, there are a thousand and one reasons 565 01:09:09.720 --> 01:09:16.680 why the Confederacy lost, and if any one of those had gone the other way, they might have 566 01:09:16.680 --> 01:09:17.680 won. 567 01:09:17.680 --> 01:09:22.560 And I'm not really, of course, looking at this issue because we're going to try to restart 568 01:09:22.560 --> 01:09:27.880 the Civil War or something like that. I mean, we're not trying to replay it here, but your 569 01:09:27.880 --> 01:09:37.560 point is absolutely valid. Historians now think that the King Cotton policy of waiting 570 01:09:37.560 --> 01:09:50.600 for European intervention was wrong-headed and probably more of a story than their actual 571 01:09:50.600 --> 01:09:54.360 and Social Strategy. 572 01:09:54.360 --> 01:09:59.400 But like you say, you could dismiss a thousand things and you'd still have a number of things 573 01:09:59.400 --> 01:10:04.480 left over that were important, battles that could have been won, messages that could have 574 01:10:04.480 --> 01:10:12.720 been lost or not lost, soldiers or generals who were killed because a cannonball ripped 575 01:10:12.720 --> 01:10:18.640 off their big toe and they bled to death, there's so many of those things. 576 01:10:18.640 --> 01:10:24.800 But I guess it's just the economist instinct when you have, when you wash out all these 577 01:10:24.800 --> 01:10:29.220 things north and south and you have these more or less identical and balanced military 578 01:10:29.220 --> 01:10:37.260 forces and economies and then you have this one separate issue where they both differ 579 01:10:37.260 --> 01:10:48.200 so which is the blockade and the blockade running and trade is so vital to the Confederate 580 01:10:48.200 --> 01:10:57.200 Cause. That's why our noses are sniffing and snooping in that direction. Yes. 581 01:10:57.200 --> 01:11:08.200 In 1923, you had the Gettysburg, which was basically an unlawful division for the war of slavery. 582 01:11:08.200 --> 01:11:16.200 But by enacting the blockades, the South pretty much cornered themselves and isolated themselves because they weren't trading. 583 01:11:16.200 --> 01:11:21.200 And as part of that, you can't say, well, yeah, they say it's about slavery. This is about trading. 584 01:11:21.200 --> 01:11:24.200 We're trying to trade with you. We're here in Europe. We're trying to get money. 585 01:11:24.200 --> 01:11:29.560 Money, you know, and they're blockading us, you know, we're trying to reach out to them 586 01:11:29.560 --> 01:11:30.560 on the scene. 587 01:11:30.560 --> 01:11:36.000 So I think that, Ryan, I think that was his commission, they pretty much build their own 588 01:11:36.000 --> 01:11:37.000 thing. 589 01:11:37.000 --> 01:11:44.400 Yeah, well we argue in the book that the secession and the war itself were about international 590 01:11:44.400 --> 01:11:48.700 trade and tariff policy and all that kind of stuff, with the South wanting free trade 591 01:11:48.700 --> 01:12:00.200 and the North Wanting Protectionism and High Tariffs. 592 01:12:00.200 --> 01:12:03.380 It is perplexing. 593 01:12:03.380 --> 01:12:07.900 Why would a free trade group enact all of this stupid policy? 594 01:12:07.900 --> 01:12:14.900 Believe me, that's just the beginning of the stupid policies that they enacted. 595 01:12:14.900 --> 01:12:23.240 That's why I think you need extraordinary reasons for those types of maneuvers. 596 01:12:23.240 --> 01:12:27.480 You can't just say, oh, they kind of got tired of things, or they got desperate, or their 597 01:12:27.480 --> 01:12:29.400 ideology shifted, that kind of thing. 598 01:12:29.400 --> 01:12:30.400 It's got to be something big. 599 01:12:30.400 --> 01:12:31.400 Lydia. 600 01:12:31.400 --> 01:12:36.400 There's a little bit, and I don't know if I hit you very well, kind of an egg thing 601 01:12:36.400 --> 01:12:45.880 I'm not quite sure about, because there are benefits to trade and having that trade come 602 01:12:45.880 --> 01:12:50.200 through and carrying whatever they're going to carry, those benefits accrue to them to 603 01:12:50.200 --> 01:12:55.200 the extent that they can keep the resources that come on those ships in the South and 604 01:12:55.200 --> 01:12:57.200 use them for the purposes of the South. 605 01:12:57.200 --> 01:13:03.000 You're arguing that to the extent that people who are overtaken by the unions don't carry 606 01:13:03.000 --> 01:13:11.000 or because all those resources, if they can be commandeered by the Union soldiers, we don't want them to come in, right? 607 01:13:11.000 --> 01:13:19.000 That trade is not benefiting the South. If it gets misdirected, if it gets, you know, who has the money to buy the stuff that's coming off the boat to some extent? 608 01:13:19.000 --> 01:13:24.000 It's now going to be the people that are so much closer to you in the North. 609 01:13:24.000 --> 01:13:41.000 and so blocking trade might not be the signal that they put their foot in the grave and ended the war, but the fact that the war was ending and they had lost control of the resources that were coming in, so why let them go to the union? 610 01:13:41.000 --> 01:13:44.000 I don't know if there's any counter-evidence in terms of... 611 01:13:44.000 --> 01:13:47.000 So the 11 people who press reporting it, 612 01:13:47.000 --> 01:13:51.000 what kind of system do they have to control the trade that's coming in? 613 01:13:51.000 --> 01:13:54.000 If they could keep those resources in their hands, 614 01:13:54.000 --> 01:13:58.000 then I could see why they still want to support the over trade. 615 01:13:58.000 --> 01:14:05.000 Yeah, the Confederates had lost trade and the control over trade 616 01:14:05.000 --> 01:14:09.000 in the sense that their other major ports 617 01:14:09.000 --> 01:14:18.040 The Confederates, they were all effectively closed down by the Union except one and both 618 01:14:18.040 --> 01:14:25.240 the Union and the Confederates stopped even monitoring the minor ports. 619 01:14:25.240 --> 01:14:32.620 So the minor ports were costing the Confederates more to monitor than they were taking in revenues. 620 01:14:32.620 --> 01:14:39.380 So they just gave those customs guys a rifle and said, you know, go, you're in unit X. 621 01:14:39.380 --> 01:14:46.340 And so there were all these minor ports that were unmonitored by both sides and the major 622 01:14:46.340 --> 01:14:55.420 ones were all shut off except one, Port Fisher in North Carolina so that by and large the 623 01:14:55.420 --> 01:15:02.660 The business was all going from the Bahamas and Bermuda to Wilmington to Richmond to the 624 01:15:02.660 --> 01:15:09.220 Army of Northern Virginia. Probably 50% of all trade was going in that direction and the 625 01:15:09.220 --> 01:15:22.140 biggest other chunk was crossing where? Between the North and the South. The Confederates 626 01:15:22.140 --> 01:15:32.320 In the Union, governments were the two biggest traders between themselves in the war. The 627 01:15:32.320 --> 01:15:42.780 Confederates were trading a pound of cotton for a pound of beef. Kind of interesting because 628 01:15:42.780 --> 01:15:51.640 the North needed cotton just as much as the South needed meat because they needed clothes. 629 01:15:51.640 --> 01:15:54.840 You can't grow, I'm from the north and you can't grow cotton up there, I can tell you 630 01:15:54.840 --> 01:15:55.840 that. 631 01:15:55.840 --> 01:15:56.840 Alright, well thank you.