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The economic of Slavery

DanT
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7/5/2013 10:19:25 AM
Posted: 3 years ago
Slavery typically occurs when there is a labor shortage; in other words, the supply of labor does not meet the demand for labor.

The Labor supply = the Marginal Utility of Leisure / the Marginal Utility of Income = the derivative of income with respect to Leisure

The Labor demand = the nominal Marginal Product of Labor = the Price x (change in income / change in labor)

Slave owners did not buy slaves simply to own slaves, just as they would not buy cattle simply to own cattle. Slaves were purchased as a source of cheep labor. If there was no labor shortage, there would be no desire to purchase a slave. Unlike the industrial north, the south was an agricultural community, and therefore had much a smaller demand for labor.

Eli Whitney believed that the cotton gin would reduce the demand for labor by replacing labor with more advanced technology. In actuality the cotton gin increased the demand for labor, by increasing the Marginal Product of Labor.

The cotton gin increased the market for slaves rather than decreasing the market for slaves.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
wrichcirw
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7/6/2013 11:02:51 AM
Posted: 3 years ago
At 7/5/2013 10:19:25 AM, DanT wrote:
Slavery typically occurs when there is a labor shortage; in other words, the supply of labor does not meet the demand for labor.

The Labor supply = the Marginal Utility of Leisure / the Marginal Utility of Income = the derivative of income with respect to Leisure

The Labor demand = the nominal Marginal Product of Labor = the Price x (change in income / change in labor)

Slave owners did not buy slaves simply to own slaves, just as they would not buy cattle simply to own cattle. Slaves were purchased as a source of cheep labor. If there was no labor shortage, there would be no desire to purchase a slave. Unlike the industrial north, the south was an agricultural community, and therefore had much a smaller demand for labor.


Eli Whitney believed that the cotton gin would reduce the demand for labor by replacing labor with more advanced technology. In actuality the cotton gin increased the demand for labor, by increasing the Marginal Product of Labor.

The cotton gin increased the market for slaves rather than decreasing the market for slaves.

I've seen some research to this that goes into the economies of the North and South. Supposedly the North was fully of independent homesteads as was allowable by their primarily food crops. The South raised cash crops like tobacco and cotton, which required vast plantations to be economically viable. Industrialization did not become an issue until after hundreds of years of institutionalized slavery, and is thereby irrelevant to the argument.

The logic is that resource exploitation in the North favored an individual ownership approach, whereas the South favored large chain-gangs, which would then facilitate slavery over indentured servitude.

I'm not sure I buy that logic, but I buy it more than your argument, which is contradictory in the underlined. If as you say "the south was an agricultural community, and therefore had much a smaller demand for labor" then they wouldn't need a source of labor in the first place, to say nothing about slave labor. Low demand has nothing to do with a supply shortage, and would actually ameliorate such a situation.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
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7/6/2013 11:04:53 AM
Posted: 3 years ago
At 7/6/2013 11:02:51 AM, wrichcirw wrote:
At 7/5/2013 10:19:25 AM, DanT wrote:

The South raised cash crops like tobacco and cotton, which required vast plantations to be economically viable.

Hmmm...after thinking about this part, I believe they had to adopt slavery to be economically viable because their competition in other European colonies instituted similar slave labor policies to grow these cash crops.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
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7/6/2013 11:22:04 AM
Posted: 3 years ago
At 7/6/2013 11:02:51 AM, wrichcirw wrote:
At 7/5/2013 10:19:25 AM, DanT wrote:
Slavery typically occurs when there is a labor shortage; in other words, the supply of labor does not meet the demand for labor.

The Labor supply = the Marginal Utility of Leisure / the Marginal Utility of Income = the derivative of income with respect to Leisure

The Labor demand = the nominal Marginal Product of Labor = the Price x (change in income / change in labor)

Slave owners did not buy slaves simply to own slaves, just as they would not buy cattle simply to own cattle. Slaves were purchased as a source of cheep labor. If there was no labor shortage, there would be no desire to purchase a slave. Unlike the industrial north, the south was an agricultural community, and therefore had much a smaller demand for labor.


Eli Whitney believed that the cotton gin would reduce the demand for labor by replacing labor with more advanced technology. In actuality the cotton gin increased the demand for labor, by increasing the Marginal Product of Labor.

The cotton gin increased the market for slaves rather than decreasing the market for slaves.

I've seen some research to this that goes into the economies of the North and South. Supposedly the North was fully of independent homesteads as was allowable by their primarily food crops. The South raised cash crops like tobacco and cotton, which required vast plantations to be economically viable. Industrialization did not become an issue until after hundreds of years of institutionalized slavery, and is thereby irrelevant to the argument.

The logic is that resource exploitation in the North favored an individual ownership approach, whereas the South favored large chain-gangs, which would then facilitate slavery over indentured servitude.

I'm not sure I buy that logic, but I buy it more than your argument, which is contradictory in the underlined. If as you say "the south was an agricultural community, and therefore had much a smaller demand for labor" then they wouldn't need a source of labor in the first place, to say nothing about slave labor. Low demand has nothing to do with a supply shortage, and would actually ameliorate such a situation.

I actually meant to say the south had a low labor supply due to the lower population typical of agricultural communities. That was a typo; I should have proof read.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DanT
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7/6/2013 11:23:27 AM
Posted: 3 years ago
At 7/5/2013 10:19:25 AM, DanT wrote:
Slavery typically occurs when there is a labor shortage; in other words, the supply of labor does not meet the demand for labor.

The Labor supply = the Marginal Utility of Leisure / the Marginal Utility of Income = the derivative of income with respect to Leisure

The Labor demand = the nominal Marginal Product of Labor = the Price x (change in income / change in labor)

Slave owners did not buy slaves simply to own slaves, just as they would not buy cattle simply to own cattle. Slaves were purchased as a source of cheep labor. If there was no labor shortage, there would be no desire to purchase a slave. Unlike the industrial north, the south was an agricultural community, and therefore had much a smaller supply of labor.


Eli Whitney believed that the cotton gin would reduce the demand for labor by replacing labor with more advanced technology. In actuality the cotton gin increased the demand for labor, by increasing the Marginal Product of Labor.

The cotton gin increased the market for slaves rather than decreasing the market for slaves.

Sorry about the typo. I should have proof read.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
darkkermit
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7/7/2013 12:51:33 AM
Posted: 3 years ago
Those equations are completely wrong. But yes, I am familiar with the backward bending supply curve of labor. Theoretically there could be a situation where demand cannot equal supply of labor, which would create shortages, and increasing the wages of workers would not end the shortage.

However, that's just what happens. There's a shortage. Just like there's been shortages when price controls happened. If it were true that labor shortages causes slavery, we'd see an increase in the amount of slaves in modern days, especially for high paying jobs. This is because wages are high enough so that the labor-leisure problem is more relevant (hours worked have been decreasing as an economy grows)

However, there are less slaves now, especially in developed countries, than any point in history.
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DanT
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7/7/2013 1:35:53 AM
Posted: 3 years ago
At 7/7/2013 12:51:33 AM, darkkermit wrote:
Those equations are completely wrong.

Says you.
If they are wrong, than which equations are right?

But yes, I am familiar with the backward bending supply curve of labor. Theoretically there could be a situation where demand cannot equal supply of labor, which would create shortages, and increasing the wages of workers would not end the shortage.

A minimum wage could end the shortage by reducing the labor demand and increasing the labor supply. The Marginal Product of Labor will still be below its potential. Because the Short Term aggregate supply would be below the Long Term Aggregate Supply, the economy would suck.

However, that's just what happens. There's a shortage. Just like there's been shortages when price controls happened. If it were true that labor shortages causes slavery, we'd see an increase in the amount of slaves in modern days, especially for high paying jobs. This is because wages are high enough so that the labor-leisure problem is more relevant (hours worked have been decreasing as an economy grows)


It does not follow. If there was a labor shortage of people for higher paying jobs, the requirements for hire would be lowered due to the lack of competition.

If all the lower paying jobs were done by slave labor, than a shortage of higher paying jobs started to developed, slaves would be brought in for those higher paying jobs as well.

However, there are less slaves now, especially in developed countries, than any point in history.

The fact that most developed countries have high unemployment rates points towards a labor surplus, not a shortage.

When employers hire illegally below minimum wage, or run sweatshops, it is basically the same effect. Take for example the farmers out west who hire illegals to work their fields below minimum wage, because the supply of workers willing to work for minimum wage is too small.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DetectableNinja
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7/7/2013 9:17:29 PM
Posted: 3 years ago
cheap*

Also, I'm not trying to be combative at all or anything, but was there a point to this topic at all? I'm curious, because it seemed to be more of an observation than an argument to generate discussion.
Think'st thou heaven is such a glorious thing?
I tell thee, 'tis not half so fair as thou
Or any man that breathes on earth.

- Christopher Marlowe, Doctor Faustus
DanT
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7/7/2013 10:41:03 PM
Posted: 3 years ago
At 7/7/2013 9:17:29 PM, DetectableNinja wrote:
cheap*

Also, I'm not trying to be combative at all or anything, but was there a point to this topic at all?

I just like to share tidbits every now and again.

One point that can be made, if any, is the impact it had on the south prior to the civil war. The south became dependent on slave labor, and to abolish slavery would have crippled their economy. If the labor shortage was the focus, rather than the issue of slavery its-self, than slavery could have been abolished much sooner.

I'm curious, because it seemed to be more of an observation than an argument to generate discussion.

Science, namely economics, is a set of observations which can be supported by models. The Laffer curve started as nothing more than an observation.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DanT
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7/8/2013 1:27:51 PM
Posted: 3 years ago
At 7/8/2013 12:55:01 PM, OMGJustinBieber wrote:
If there was no labor shortage, there would be no desire to purchase a slave.

lol, ok.

If the Marginal Product of Capital per Labor is above the maximum, than more labor is required to reduce the capital per labor ratio. When the Marginal Product of Capital per Labor is below or above the maximum, than the aggregate output is below its potential.

If there are not enough workers to meet the demand for labor, than slavery is adopted in order to meet the demand.

The European slave trade was reintroduced after the black plague wiped out most of the workers in Europe. In America the industrialized north had a far greater population than the rural south,which is why the south required slaves and the north didn't.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
OMGJustinBieber
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7/8/2013 2:08:34 PM
Posted: 3 years ago
At 7/8/2013 1:27:51 PM, DanT wrote:
At 7/8/2013 12:55:01 PM, OMGJustinBieber wrote:
If there was no labor shortage, there would be no desire to purchase a slave.

lol, ok.

If the Marginal Product of Capital per Labor is above the maximum, than more labor is required to reduce the capital per labor ratio. When the Marginal Product of Capital per Labor is below or above the maximum, than the aggregate output is below its potential.


If there are not enough workers to meet the demand for labor, than slavery is adopted in order to meet the demand.

The European slave trade was reintroduced after the black plague wiped out most of the workers in Europe. In America the industrialized north had a far greater population than the rural south,which is why the south required slaves and the north didn't.

Blah, blah, blah, people aren't rational. People don't care; you just make the assumption that no slave owner wants to own a slave just for the sake of owning it with absolutely no proof. Do you have access to the mind of even 1 slave owner, never mind the history of slave owners? Or do you just believe that they're all self-interested, rational agents?

I guess we wouldn't want to disturb the worldview.
DanT
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7/8/2013 2:18:00 PM
Posted: 3 years ago
At 7/8/2013 2:08:34 PM, OMGJustinBieber wrote:
At 7/8/2013 1:27:51 PM, DanT wrote:
At 7/8/2013 12:55:01 PM, OMGJustinBieber wrote:
If there was no labor shortage, there would be no desire to purchase a slave.

lol, ok.

If the Marginal Product of Capital per Labor is above the maximum, than more labor is required to reduce the capital per labor ratio. When the Marginal Product of Capital per Labor is below or above the maximum, than the aggregate output is below its potential.


If there are not enough workers to meet the demand for labor, than slavery is adopted in order to meet the demand.

The European slave trade was reintroduced after the black plague wiped out most of the workers in Europe. In America the industrialized north had a far greater population than the rural south,which is why the south required slaves and the north didn't.

Blah, blah, blah, people aren't rational. People don't care; you just make the assumption that no slave owner wants to own a slave just for the sake of owning it with absolutely no proof. Do you have access to the mind of even 1 slave owner, never mind the history of slave owners? Or do you just believe that they're all self-interested, rational agents?

I guess we wouldn't want to disturb the worldview.

People didn't buy slaves just to own slaves. People bought slaves in order to put them to work.

That is like saying "you just make the assumption that no rancher wants to own a cow just for the sake of owning it with absolutely no proof"

People bought slaves as they would cattle. Slaves were considered lifestock, and were purchased for their labor.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
OMGJustinBieber
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7/8/2013 2:34:10 PM
Posted: 3 years ago
People bought slaves as they would cattle. Slaves were considered lifestock, and were purchased for their labor.

You need to understand that you're talking about an intention here; namely, that when all slaveowners bought slaves they did so with the express purpose of putting them to work.

The fact that they did put them to work is not very helpful for you here, as that very well may have been a secondary purpose.

Have you considered that slaves may have been bought for sexual purposes, or perhaps to bolster one's social status, or, given the long history of slavery, I'd venture to say there were probably more than a few drunk purchases where slaves were bought "just to own slaves."

You can say a lot of things about history, but calling it "rational" is not one.
OMGJustinBieber
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7/8/2013 2:42:05 PM
Posted: 3 years ago
Dan, I'm not seeking to repudiate the foundations of classical economics. If you want to argue that there's a relationship between the price of a slave and slave ownership, I won't argue. However, if you want to make the claim that capitalism on its own would have wiped out slavery then we're not going to see eye to eye.
DanT
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7/8/2013 3:33:41 PM
Posted: 3 years ago
At 7/8/2013 2:34:10 PM, OMGJustinBieber wrote:
People bought slaves as they would cattle. Slaves were considered lifestock, and were purchased for their labor.

You need to understand that you're talking about an intention here; namely, that when all slaveowners bought slaves they did so with the express purpose of putting them to work.

The fact that they did put them to work is not very helpful for you here, as that very well may have been a secondary purpose.

Have you considered that slaves may have been bought for sexual purposes,
Slaves, typically young females with light skin, were purchased for sex. But sex is also a service that one can pay for via brothels or prostitution. The white prostitutes would have been more attractive to the slave owners than African slaves, which is why darker skinned slaves were not likely to be bought for sex.

Darker skinned slaves were mainly purchased for the fields, while lighter skinned slaves were mainly purchased for things like housework, or childcare.

Slaves were also purchased for breeding more slaves.

or perhaps to bolster one's social status,
Slaves were expensive. In current dollars the average cost of a slave never fell below $200. By 1858 the average cost of a slave had risen to around $800.

Seeing as they would have to feed and shelter the slaves (just like how they would need to feed and shelter livestock), it would be very expensive to purchase a slave simply to flaunt one's social status.

or, given the long history of slavery, I'd venture to say there were probably more than a few drunk purchases where slaves were bought "just to own slaves."

Oh please. And you accuse me of speculation. People did not buy slaves just to own slaves, and there certainly were not drunk purchases. If someone made a drunk slave purchase, they would find themselves in a heap of debt pretty fast. If someone made a drunk slave purchase, the slave would likely be back at action the next day.

You can say a lot of things about history, but calling it "rational" is not one.

I never used the word rational, so please refrain from putting it in quotes.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
OMGJustinBieber
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7/8/2013 4:09:36 PM
Posted: 3 years ago
We both know (hopefully) that this won't end in agreement. I'd be happy to take it to debate, but I'll end with this since it highlights our differences:

People did not buy slaves just to own slaves, and there certainly were not drunk purchases. If someone made a drunk slave purchase, they would find themselves in a heap of debt pretty fast.

Given the thousands, or even millions of slave auctions, I have no idea how you could deny the presence of people buying drunk. You just dismiss that off hand. The fact that it's unwise to buy slaves drunk has no bearing on whether it could have happened, so the part about it leaving them in debt - even if I grant you the point - is irrelevant to the dispute about whether it occurred or not.

I'm going to end it here and throw down the gauntlet.
DanT
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7/8/2013 4:21:57 PM
Posted: 3 years ago
At 7/8/2013 2:42:05 PM, OMGJustinBieber wrote:
Dan, I'm not seeking to repudiate the foundations of classical economics. If you want to argue that there's a relationship between the price of a slave and slave ownership, I won't argue. However, if you want to make the claim that capitalism on its own would have wiped out slavery then we're not going to see eye to eye.

Where did I say that capitalism would have wiped slavery out? I said slavery occurs when there is an insufficient labor supply; therefore the supply curve never meets the demand curve.

The demand for slaves is a positive function of the labor shortage.

In order to decrease the demand for slaves, they would have to do one of the following;
A.) decrease the Marginal Utility of Income
B.) increase the Marginal Utility of Leisure
C.) decrease the quantity of capital

If income increases the Marginal Utility of Income decreases, and if Leisure decreases the Marginal Utility of Leisure increases. If you reduce the quantity of capital, you reduce the potential Marginal Product of Labor.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DanT
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7/8/2013 4:27:27 PM
Posted: 3 years ago
At 7/8/2013 4:09:36 PM, OMGJustinBieber wrote:
We both know (hopefully) that this won't end in agreement. I'd be happy to take it to debate, but I'll end with this since it highlights our differences:

OK than. Lets start a debate
People did not buy slaves just to own slaves, and there certainly were not drunk purchases. If someone made a drunk slave purchase, they would find themselves in a heap of debt pretty fast.

Given the thousands, or even millions of slave auctions, I have no idea how you could deny the presence of people buying drunk.
As I've stated before. If someone made a drunk purchase, they would have to put the slave back on the market once they sober up. Just like if a drunk purchased a car they could not afford, they would have to sell the car. If they didn't they would acquire debt, and eventually the drunk purchase would be repossessed or liquidated.
You just dismiss that off hand. The fact that it's unwise to buy slaves drunk has no bearing on whether it could have happened, so the part about it leaving them in debt - even if I grant you the point - is irrelevant to the dispute about whether it occurred or not.

Once again. If it did occur, it would be an irreverent point, because they could not keep the slave.
I'm going to end it here and throw down the gauntlet.

OK I'll send a debate challenge.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
OMGJustinBieber
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7/8/2013 4:27:41 PM
Posted: 3 years ago
At 7/8/2013 4:21:57 PM, DanT wrote:
At 7/8/2013 2:42:05 PM, OMGJustinBieber wrote:
Dan, I'm not seeking to repudiate the foundations of classical economics. If you want to argue that there's a relationship between the price of a slave and slave ownership, I won't argue. However, if you want to make the claim that capitalism on its own would have wiped out slavery then we're not going to see eye to eye.

Where did I say that capitalism would have wiped slavery out? I said slavery occurs when there is an insufficient labor supply; therefore the supply curve never meets the demand curve.

The demand for slaves is a positive function of the labor shortage.

In order to decrease the demand for slaves, they would have to do one of the following;
A.) decrease the Marginal Utility of Income
B.) increase the Marginal Utility of Leisure
C.) decrease the quantity of capital

If income increases the Marginal Utility of Income decreases, and if Leisure decreases the Marginal Utility of Leisure increases. If you reduce the quantity of capital, you reduce the potential Marginal Product of Labor.

I never accused you of saying that capitalism would wipe out slavery, I'm just saying if you want to claim that then...

Again, if you want to argue general trends then I'm fine. Yes, if slaves become more expensive then demand goes down, etc.

I'm just saying that there are other forces, whether it's as simple as sexual drive or social pressure or just plain stupid drunkenness that should caution you against absolute adherence to these rules. I'm with claiming a general trend, but nothing further.
OMGJustinBieber
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7/8/2013 6:31:45 PM
Posted: 3 years ago
At 7/8/2013 6:25:10 PM, DanT wrote:
Why did you decline the debate?

We weren't debating the resolution you proposed; I was taking issue with some of your generalization and underlying assumptions.
DanT
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7/8/2013 6:41:38 PM
Posted: 3 years ago
At 7/8/2013 6:31:45 PM, OMGJustinBieber wrote:
At 7/8/2013 6:25:10 PM, DanT wrote:
At 7/8/2013 12:55:01 PM, OMGJustinBieber wrote:
If there was no labor shortage, there would be no desire to purchase a slave.

lol, ok.
Why did you decline the debate?

We weren't debating the resolution you proposed; I was taking issue with some of your generalization and underlying assumptions.

What is the difference between "Slave Labor was the result of Labor Shortages," and "If there was no labor shortage, there would be no desire to purchase a slave," other than one being a negative statement.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DanT
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7/8/2013 6:42:16 PM
Posted: 3 years ago
At 7/8/2013 6:41:38 PM, DanT wrote:
At 7/8/2013 6:31:45 PM, OMGJustinBieber wrote:
At 7/8/2013 6:25:10 PM, DanT wrote:
At 7/8/2013 12:55:01 PM, OMGJustinBieber wrote:
If there was no labor shortage, there would be no desire to purchase a slave.

lol, ok.
Why did you decline the debate?

We weren't debating the resolution you proposed; I was taking issue with some of your generalization and underlying assumptions.

What is the difference between "Slave Labor was the result of Labor Shortages," and "If there was no labor shortage, there would be no desire to purchase a slave," other than one being a negative statement?

Sorry, that was a question.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
OMGJustinBieber
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7/8/2013 6:50:26 PM
Posted: 3 years ago
At 7/8/2013 6:41:38 PM, DanT wrote:
At 7/8/2013 6:31:45 PM, OMGJustinBieber wrote:
At 7/8/2013 6:25:10 PM, DanT wrote:
At 7/8/2013 12:55:01 PM, OMGJustinBieber wrote:
If there was no labor shortage, there would be no desire to purchase a slave.

lol, ok.
Why did you decline the debate?

We weren't debating the resolution you proposed; I was taking issue with some of your generalization and underlying assumptions.

What is the difference between "Slave Labor was the result of Labor Shortages," and "If there was no labor shortage, there would be no desire to purchase a slave," other than one being a negative statement.

The second statement is clearly false and I'll take you up on that, thus my acceptance.

It's entirely possible that the initial impetus for slavery could have been a labor shortage, I don't know, I'm not an economist. I feel like the first statement is much more defensible.
darkkermit
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7/8/2013 8:20:06 PM
Posted: 3 years ago
At 7/7/2013 1:35:53 AM, DanT wrote:
At 7/7/2013 12:51:33 AM, darkkermit wrote:
Those equations are completely wrong.

Says you.
If they are wrong, than which equations are right?

Google the "labor-leisure" problem and look up the solution yourself.



But yes, I am familiar with the backward bending supply curve of labor. Theoretically there could be a situation where demand cannot equal supply of labor, which would create shortages, and increasing the wages of workers would not end the shortage.

A minimum wage could end the shortage by reducing the labor demand and increasing the labor supply. The Marginal Product of Labor will still be below its potential. Because the Short Term aggregate supply would be below the Long Term Aggregate Supply, the economy would suck.

The short-term aggregate supply wouldn't be below the long-term aggregate supply. Lower unemployment and increasing the workforce would always increase the short-term aggregate supply of the economy, obviously. More people working means more goods and services are produced.

However, that's just what happens. There's a shortage. Just like there's been shortages when price controls happened. If it were true that labor shortages causes slavery, we'd see an increase in the amount of slaves in modern days, especially for high paying jobs. This is because wages are high enough so that the labor-leisure problem is more relevant (hours worked have been decreasing as an economy grows)


It does not follow. If there was a labor shortage of people for higher paying jobs, the requirements for hire would be lowered due to the lack of competition.

a) There are things called licensing requirements and regulations that can restrict this practice.
b) There are high costs to training someone that doesn't fit the requirements or it might be too expensive to hire an unqualified person, so nobody is hired.

If all the lower paying jobs were done by slave labor, than a shortage of higher paying jobs started to developed, slaves would be brought in for those higher paying jobs as well.

However, there are less slaves now, especially in developed countries, than any point in history.

The fact that most developed countries have high unemployment rates points towards a labor surplus, not a shortage.

When employers hire illegally below minimum wage, or run sweatshops, it is basically the same effect. Take for example the farmers out west who hire illegals to work their fields below minimum wage, because the supply of workers willing to work for minimum wage is too small.

Not in all professions. You've heard of people proclaim about the shortages in nursing, and computer programming.

However, we shouldn't expect complete employment since markets are incomplete, namely the high transaction costs and information asymmetry. For example, when obtaining a job, there's a long process that employers have to go through to select a candidate. The unemployed person might also be applying to a bunch of places that he or she is unqualified for and remains unemployed for that reason.
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DanT
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7/8/2013 10:42:47 PM
Posted: 3 years ago
At 7/8/2013 8:20:06 PM, darkkermit wrote:
At 7/7/2013 1:35:53 AM, DanT wrote:
At 7/7/2013 12:51:33 AM, darkkermit wrote:
Those equations are completely wrong.

Says you.
If they are wrong, than which equations are right?

Google the "labor-leisure" problem and look up the solution yourself.

WTF. You tell me my equation is wrong, than you tell me to look up the equation I used.

The Marginal Utility of Leisure / the Marginal Utility of Income = the derivative of income with respect to leisure.

As income increases the Marginal Utility of Income decreases, and as leisure increases the Marginal Utility of Leisure decreases.




But yes, I am familiar with the backward bending supply curve of labor. Theoretically there could be a situation where demand cannot equal supply of labor, which would create shortages, and increasing the wages of workers would not end the shortage.

A minimum wage could end the shortage by reducing the labor demand and increasing the labor supply. The Marginal Product of Labor will still be below its potential. Because the Short Term aggregate supply would be below the Long Term Aggregate Supply, the economy would suck.

The short-term aggregate supply wouldn't be below the long-term aggregate supply. Lower unemployment and increasing the workforce would always increase the short-term aggregate supply of the economy, obviously. More people working means more goods and services are produced.

Obviously you never heard of the Law of Diminishing returns.

The aggregate output is a function of capital and labor. The Labor supply is limited by the population, and when the capacity of the labor supply is below the Potential of the the Marginal Product of Labor it results in wasted capital.

However, that's just what happens. There's a shortage. Just like there's been shortages when price controls happened. If it were true that labor shortages causes slavery, we'd see an increase in the amount of slaves in modern days, especially for high paying jobs. This is because wages are high enough so that the labor-leisure problem is more relevant (hours worked have been decreasing as an economy grows)


It does not follow. If there was a labor shortage of people for higher paying jobs, the requirements for hire would be lowered due to the lack of competition.

a) There are things called licensing requirements and regulations that can restrict this practice.
And slavery is illegal. What is your point?
b) There are high costs to training someone that doesn't fit the requirements or it might be too expensive to hire an unqualified person, so nobody is hired.

This applies to slave labor as well. You are shooting yourself in the foot with this rebuttal.
If all the lower paying jobs were done by slave labor, than a shortage of higher paying jobs started to developed, slaves would be brought in for those higher paying jobs as well.

However, there are less slaves now, especially in developed countries, than any point in history.

The fact that most developed countries have high unemployment rates points towards a labor surplus, not a shortage.

When employers hire illegally below minimum wage, or run sweatshops, it is basically the same effect. Take for example the farmers out west who hire illegals to work their fields below minimum wage, because the supply of workers willing to work for minimum wage is too small.

Not in all professions. You've heard of people proclaim about the shortages in nursing, and computer programming.

It is not as easy to get away with illegal hiring in those industries. Also, illegal workers are not necessarily skilled in those fields.
However, we shouldn't expect complete employment since markets are incomplete, namely the high transaction costs and information asymmetry. For example, when obtaining a job, there's a long process that employers have to go through to select a candidate. The unemployed person might also be applying to a bunch of places that he or she is unqualified for and remains unemployed for that reason.
How is this relevant?
"Chemical weapons are no different than any other types of weapons."~Lordknukle
darkkermit
Posts: 11,204
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7/8/2013 11:11:02 PM
Posted: 3 years ago
At 7/8/2013 10:42:47 PM, DanT wrote:
At 7/8/2013 8:20:06 PM, darkkermit wrote:
At 7/7/2013 1:35:53 AM, DanT wrote:
At 7/7/2013 12:51:33 AM, darkkermit wrote:
Those equations are completely wrong.

Says you.
If they are wrong, than which equations are right?

Google the "labor-leisure" problem and look up the solution yourself.

WTF. You tell me my equation is wrong, than you tell me to look up the equation I used.

The Marginal Utility of Leisure / the Marginal Utility of Income = the derivative of income with respect to leisure.

You have it reverse. Should be
The Marginal Utility of Income/ the Marginal Utility of Leisure = the derivative of income with respect to leisure.

This is also not equal to the supply of labor.

As income increases the Marginal Utility of Income decreases, and as leisure increases the Marginal Utility of Leisure decreases.

agreed.




But yes, I am familiar with the backward bending supply curve of labor. Theoretically there could be a situation where demand cannot equal supply of labor, which would create shortages, and increasing the wages of workers would not end the shortage.

A minimum wage could end the shortage by reducing the labor demand and increasing the labor supply. The Marginal Product of Labor will still be below its potential. Because the Short Term aggregate supply would be below the Long Term Aggregate Supply, the economy would suck.

The short-term aggregate supply wouldn't be below the long-term aggregate supply. Lower unemployment and increasing the workforce would always increase the short-term aggregate supply of the economy, obviously. More people working means more goods and services are produced.

Obviously you never heard of the Law of Diminishing returns.

Diminishing returns on productivity =/= no increase in productivity. Unless you're arguing that employing more people would create negative productivity, in which case there's no reason the person would be hired in the first place.

The aggregate output is a function of capital and labor. The Labor supply is limited by the population, and when the capacity of the labor supply is below the Potential of the the Marginal Product of Labor it results in wasted capital.

Why? I fail to see how capital would be wasted by employing more people. More capital would be used the more employed, since capital often needs labor to be used.

It is not as easy to get away with illegal hiring in those industries. Also, illegal workers are not necessarily skilled in those fields.

Your point?

However, we shouldn't expect complete employment since markets are incomplete, namely the high transaction costs and information asymmetry. For example, when obtaining a job, there's a long process that employers have to go through to select a candidate. The unemployed person might also be applying to a bunch of places that he or she is unqualified for and remains unemployed for that reason.
How is this relevant?

If you were a CEO of a company, and your company just went under, are you going to jump at the first job you get? No, your going to look for business management positions and be unemployed, because you want to see if you can find a better job than McDonalds.

Because, it shows how unemployment can occur even if there are shortages of jobs in other fields. It's called structural uenmployment.
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DanT
Posts: 5,693
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7/9/2013 12:17:53 AM
Posted: 3 years ago
At 7/8/2013 11:11:02 PM, darkkermit wrote:
At 7/8/2013 10:42:47 PM, DanT wrote:
At 7/8/2013 8:20:06 PM, darkkermit wrote:
At 7/7/2013 1:35:53 AM, DanT wrote:
At 7/7/2013 12:51:33 AM, darkkermit wrote:
Those equations are completely wrong.

Says you.
If they are wrong, than which equations are right?

Google the "labor-leisure" problem and look up the solution yourself.

WTF. You tell me my equation is wrong, than you tell me to look up the equation I used.

The Marginal Utility of Leisure / the Marginal Utility of Income = the derivative of income with respect to leisure.

You have it reverse. Should be
The Marginal Utility of Income/ the Marginal Utility of Leisure = the derivative of income with respect to leisure.

No, the Marginal rate of substitution states that the Marginal Utility of Leisure/ the Marginal Utility of Income = the derivative of income with respect to leisure, because more income results in a lower Marginal Utility of Income, and more leisure results in a lower Marginal Utility of Leisure.

As wages increase the marginal utility of income decreases, and the marginal utility of leisure increases. The Marginal Utility of Leisure increases because you now have more money to spend during leisure time. The Marginal Utility of Income decreases because the amount of discretionary income has increased.

This is also not equal to the supply of labor.

Yes it is, because work is intended to obtain income, so the supply of labor depends on the utility of leisure vs labor.
As income increases the Marginal Utility of Income decreases, and as leisure increases the Marginal Utility of Leisure decreases.

agreed.

Than what's the problem?



But yes, I am familiar with the backward bending supply curve of labor. Theoretically there could be a situation where demand cannot equal supply of labor, which would create shortages, and increasing the wages of workers would not end the shortage.

A minimum wage could end the shortage by reducing the labor demand and increasing the labor supply. The Marginal Product of Labor will still be below its potential. Because the Short Term aggregate supply would be below the Long Term Aggregate Supply, the economy would suck.

The short-term aggregate supply wouldn't be below the long-term aggregate supply. Lower unemployment and increasing the workforce would always increase the short-term aggregate supply of the economy, obviously. More people working means more goods and services are produced.

Obviously you never heard of the Law of Diminishing returns.

Diminishing returns on productivity =/= no increase in productivity.
But increasing labor does not "always increase the short-term aggregate supply". It depends on other factors of production.

Unless you're arguing that employing more people would create negative productivity, in which case there's no reason the person would be hired in the first place.

Just because you hire more workers, does not imply greater productivity. At some point it will decrease the marginal product of each worker. Over-staffing could be just as harmful as under-staffing.
The aggregate output is a function of capital and labor. The Labor supply is limited by the population, and when the capacity of the labor supply is below the Potential of the the Marginal Product of Labor it results in wasted capital.

Why? I fail to see how capital would be wasted by employing more people.
I said below the potential. I am talking about under-staffing here. Over-staffing results in wasted labor, while under-staffing results in wasted capital.
More capital would be used the more employed, since capital often needs labor to be used.

And when you surpass the potential marginal product of labor, the amount of capital available to each worker declines.
It is not as easy to get away with illegal hiring in those industries. Also, illegal workers are not necessarily skilled in those fields.

Your point?

My point is that you need to have a supply of illegal workers in order to hire illegal workers. Also, if it is easy to get caught, employers are less likely to hire illegally.
However, we shouldn't expect complete employment since markets are incomplete, namely the high transaction costs and information asymmetry. For example, when obtaining a job, there's a long process that employers have to go through to select a candidate. The unemployed person might also be applying to a bunch of places that he or she is unqualified for and remains unemployed for that reason.
How is this relevant?

If you were a CEO of a company, and your company just went under, are you going to jump at the first job you get? No, your going to look for business management positions and be unemployed, because you want to see if you can find a better job than McDonalds.

You are going off on a tangent, that is irrelevant to the discussion.
Because, it shows how unemployment can occur even if there are shortages of jobs in other fields. It's called structural uenmployment.

Still does not change the fact that the employer is looking for labor. If there is not enough labor to go around, than they must find some other means to supply the required labor.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
CarefulNow
Posts: 780
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8/16/2013 12:30:09 PM
Posted: 3 years ago
One obvious and important difference between slaves and indentured servants that's being overlooked is that slaves were black and indentured servants were white. Now, I don't put much stock into race, but there is an area where whites and blacks diverged extremely, and that's resistance to the strain of malaria that thrived in the tropics and subtropics, including the southern US but not the northern US.