Capitalism and Sex Slavery
We continue our report on our recent trip to Kilkenny … and on capitalism and sex slavery … below.
But first, a peek at the markets. Not much action in stocks on Tuesday. But gold continues to lose ground. Traders are talking about tapering again. US unemployment numbers improved… bringing the Fed closer to its target. If the goal is reached, and if the Fed eases up on its bond buying, it is supposed to be bad for the money metal.
Should you worry about it? Should you sell your gold, fearing the Fed may come to its senses and stop QE before it really increases the inflation rate?
Nah…
Minneapolis Fed President Narayana Kocherlakota has called for the Fed to target a 5.5% unemployment threshold, rather than the current 6.5% threshold. And the Wall Street Journal reports that Fed officials have also considered adjusting their 2.5% inflation threshold to make it clear they don't want it below 1.5%.
According to the latest Bureau of Labor Statistics press release, the US Consumer Price Index rose just 0.2% in September. And in Europe consumer prices are increasing at less than 1% a year – dangerously close to deflation and similar to the rate of consumer price rises in Japan. This has prompted Mario Draghi, head of the European Central Bank, to cut its target rate to 0.25%. In the US, the CPI has risen by just 1.2% over the last 12 months.
As to the unemployment numbers: The feds have bent the figures in their direction by eliminating millions of people from the official job pool. This may flatter the numbers. But it doesn’t do much for household incomes – on which a real recovery depends. This suggests that the Fed is not really going to taper – not any time soon. It just wants to keep investors on their toes… while holding the door open for more interventions.
Whiskey Galore!
Government intervention was the subject at hand at the Kilkenomics economics “festival” we spoke at last week in Kilkenny, Ireland. Most of the speakers were in favor of it. Our report continues:
The sun had made no appearance all day. So it might have been midnight… or only four o’clock in the afternoon. But at Cleere’s bar the drinking had been going on for many hours before the “debate” began.
“Can capitalism be kept on the straight and narrow?” was the question before us. The subtext: Can regulators stay ahead of the industries they are meant to regulate?
We had no doubt about it: The correct answer was no. Capitalists will use every trick in the book to subvert, undermine, twist and corrupt the system that made them rich. But regulators will always help them.
Why?
Because of the law of declining marginal utility. As you get more of something, each additional unit is worth less to you than the one before. Like shots of Irish whiskey, the first is a vivid treasure; the last is lost in a blur. So too, the dollar in your pocket now is always worth more than extra dollar you may make tomorrow.
Government – a reactionary institution whose chief purpose is to look into the future and prevent it from happening – helps protect what is… at the expense of what will be. That’s because today’s rich people offer bribes. Tomorrow’s rich don’t even exist yet. Today’s rich people turn the machinery of government to their own purposes – which is why cronies will always be capitalism’s worst enemies.
They talk the talk of “free enterprise,” but quietly walk over to the regulators, confident they can be bought at a reasonable price. The regulators then wrap up the industry in red tape, which helps keep out the competition. And in a crisis – such as the credit crunch of 2008-09 – the overseers bring in government support, as needed, to keep their host alive.
Keep capitalism on the straight and narrow? Forget it!
But there was no time to explain all that to the dozens of spectators, each with a pint of Guinness in his hand… and many more in his belly. We had only a couple of shots; we had to make them good. Otherwise, our Commie-sympathizing opponents – who had already won over the audience – would leave us crumpled over on the stage … whimpering for mercy.
“Violence? Or peaceful cooperation?” we began, like a Prince of Denmark with an economics degree. “We have been programmed over millions of years for both.
“But what works? Cooperation – chiefly in hunting – increased the total return for primitive peoples. Cooperation produces win-win transactions. Today, that is as true in the case of the exchange of bodily fluids as it is with oil or money.
“But people are competitive. They don’t always want win-win. In most of pre-history, men competed for women. This was not a win-win situation at all. It was a win-lose situation. The supply of women was limited. You could only get more by forcing someone else to have less.”
Poor Joane Broadbrook
We interrupt the debate scene at Cleere’s pub to wander down to the coast to the little tourist town of Baltimore. It is a tiny and mostly forgotten relic today. But what a story it has to tell: one of the most remarkable stories in Christendom. For it was the only town in England, Scotland, Wales or Ireland that was ever attacked by Moors.
Why? They wanted more.
Imagine the shock to poor Joane Broadbrook. She awoke early on the morning of June 20, 1631, to discover her roof was on fire and troops of the Ottoman Empire were breaking down her door.
Heavy with child, she must have thought it was a nightmare. But it was a nightmare that wouldn’t stop, even if she pinched herself. A notorious Barbary Coast pirate named Morat Rais had organized a slaving expedition, with a crew of desperadoes backed by 230 Janissaries in their bright red tunics and curved Yatagan sabers.
Rais, aka Jans Jensen, was Dutch. He had been a slave, too. But in the open meritocracy of the Barbary Coast slave trade, he had risen through the ranks to become an admiral of the fleet. Now, he made Sallee, on the Moroccan coast, his base. On that day in June, Rais and his band of entrepreneurs and adventurers were in the middle of what could be described as a capitalist undertaking.
The project had been financed, equipped and staffed by trained professionals months before. Rais’s ship had left port in Algiers to a tumultuous send-off, much like cutting the ribbon on a new factory.
The raw material – 107 residents of the town of Baltimore on the south coast of Ireland – had been taken in. They were now being processed – first by driving them into the holds of their vessels… then by shipping them back to the retail market in Algiers… and finally by putting them up for sale. The slave market in Algiers was a free market, in some respects. Much like an auction of used farm equipment, prospective buyers were allowed careful inspection.
The men were poked and prodded. Potential buyers wanted to see how they might hold up. And they were asked questions: What had they done? What skills did they have? How hard had they worked? The unlucky ones had the hard hands and muscles of field hands. They were sent to the galleys and to the quarries, where they were usually worked to death after a few years, although we know there were many exceptions.
The lucky ones had marketable skills – such as gunsmithing – and were spared the oars and the sledges. Instead, they were brought into a complex, sophisticated and highly nuanced system of slavery, which was also curiously free in its own way.
A Different Kind of Markets
Most of the captives from Baltimore were women and children. It was the women who got the closer inspection. Bidders were allowed to feel for themselves the firmness of a woman’s breasts and determine whether or not she was still a virgin.
Each buyer formed in his own mind the right value of the merchandise. And then, in an outcry auction, a price was established. We don’t know if the price thus established was perfect in the sense that today’s economists use. But it was the best they could do under the circumstances. In the early 17th century, business was good, and it was protected and regulated by the government. The white slavers roamed as far as Iceland bringing back the valuable fair-skinned women.
Rais had committed a ghastly atrocity on Heimaey Island, Iceland, in 1627. He attacked with five ships. Arriving in the Westmann Islands, he assaulted several towns. But on this raid, as on many others, business was soon mixed with a perverse pleasure. The troops went wild, murdering, mutilating and raping hundreds of innocent islanders – men, women and children.
They were there on business. But they didn’t seem interested in maximizing profits. Half the population was wasted before it was even loaded up for shipping. What kind of business was this? Documents from the period show the going rate for women was between $86 and $357 in today’s money. But an extraordinarily beautiful woman could bring more. Men, generally, sold for less.
When we saw these figures we were shocked and disgusted. One hundred bucks for a woman who could bring you a lifetime of pleasure; the buyers were being cheap. But again, markets are never wrong. Economists can explain these things. A woman would be capitalized based on the net expected benefit, not the gross. That is, you’d have to subtract the cost of supporting her and the grief she would cause you along the way.
Besides, supply and demand figured in the equation, too. Pirates like Morat Rais were bringing hundreds of new slaves to the market. Demand had a hard time keeping up. The Sultan already had about 1,000 wives and concubines in his Topkapi harem. What could he do with another one?
Also, you have to adjust these prices to the modern world. At the time, a clergyman might work all year for $100. So, we can imagine that a pretty young woman, in today’s terms, would have fetched about as much as a cheap house or an expensive car.
Seems perfectly reasonable, no?
The above article is from Diary of a Rogue Economist originally written for Bonner & Partners.
Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.