Charlottesville Revisited – The Next American Rebellion Won’t Be a Black Swan

The 2020 Presidential election is being tee’d up to foment racial animosity between Biden’s Blacks and Trump’s Deplorables.

The2020 Democratic presidential candidate Joe Biden is far ahead of the incumbent Donald Trump in the polls, but two thirds of his supporters cite fear of Trump being re-elected, mostly due to perceptions of racism, rather than support for the candidate or his Party’s Platform. Biden’s core supporters are angry black protestors, Trump’s core are largely angry white “deplorables.

The Charlottesville Premise

Bucolic Charlottesville is rich in political symbolism as home to the University of Virginia founded by Thomas Jefferson, author of the Declaration of Independence and founder of the Democratic Republican Party. Virginia was the Capital of the South during the great Civil War, Charlottesville the site of the statue of the Confederate military leader Robert E. Lee. In 2017 riots broke out there between black groups led largely by the Black Lives Matter (BLM) movement leading protests of this and other statues. After strongly condemning the historically racist groups that a Charlottesville resident had invited to oppose the destruction, President Trump said that there were “good people” on both sides of the monument issue, then insisted that the racial hatred must stop.

Some conservatives would go along with tearing down Confederate statues. But predictably, the Founding Fathers were targeted next. Statues of George Washington have already been destroyed and the Washington Monument is on the chopping block. In New York, where the current governor and Democratic presidential hopeful Andrew Cuomo renamed the Tappan zee Bridge after himself (technically, his father), political leaders have voted to remove Thomas Jefferson’s statue, the Jefferson Memorial sure to follow. Even Lincoln isn’t safe.

The Charlottesville premise is that America was born to slavery and American racist oppression never ended, causing the current income and wealth gap with whites, and that the statues are symbols of this inborn oppression, The Democratic Party Platform to be finalized in August promises to eliminate racial income and wealth differences by doubling down on traditional socialist redistribution. The young party leaders correctly argue that this will require “fundamental change,” a political Jacobin revolution converting America from a failed meritocratic Republic to a “peoples’ democracy.”

I’ve argued elsewhere that the economic and social costs of this agenda pose an existential threat to America. However unrealistic, “moral imperatives” trump constitutional, institutional and resource constraints. Nations don’t choose suicide, they just stumble into it one step at a time.

Governor Cuomo responded to Trump’s 2016 campaign theme to Make America Great Again (MAGA) that “America was never that great” based on its racial history. The liberal main stream media labeled Trump, the Republican Party and anyone who might disagree with their Charlottesville premise – hence their platform – as racist. When the Democrats decided to shift attention from their platform by choosing as an interim “centrist” leader the soon to be 78 year old Joe Biden, it wasn’t surprising that when announcing his candidacy he chose to make Trump’s racism his central campaign issue by replaying a truncated clip of Trump’s Charlottesville “good people” quote.

Slavery: The United States Original Sin

History is extremely subjective and continually revised, especially toward political ends. The 2019 New York Times 100 page 1619 Project revised history in support of the Charlottesville premise by claiming an immoral America was settled in 1619 as a slave colony, that the American Revolution established a “slaveacracy” as opposed to a meritocracy, and that while the Civil War emancipated slaves white racist oppression has remained the primary determinant of the economic fate of contemporary blacks.

Slavery had existed for over 5 millennia before the Scottish moral philosopher Adam Smith argued in The Theory of Moral Sentiments (1759) that the interaction of free individuals, rather than god, government or intellectuals, was the source of changing moral sentiments. The Founding Fathers made their case for independence from one of the most benign governments in history on moral grounds. The subsequent U.S. Constitution ratified in 1789 safeguarded individual rights of men by severely limiting the power of the federal government, but still treated slaves as property.

That the Declaration was written by Thomas Jefferson, a Southern slaveholder, is difficult to comprehend today. But many households in all the Northern colonies owned slaves, the basic difference being that the Southern economy favored larger numbers of slaves in a plantation setting, which some historians conclude was less oppressive than Northern small scale slavery. Jefferson personally considered ending slavery a moral imperative. But slavery was already a dying institution in 1789 when the Founders compromised on its future by agreeing to forbid the importation of slaves after 1807.

The Moral Imperative for Abolition: Social and Economic Constraints Still Mattered

Britain also abolished the slave trade in 1807 and abolished slavery in 1833 as it had become unprofitable in its colonies. Similarly, moral sentiment in North America turned against slavery beginning in 1804 with state abolitionist laws.

However the invention of the Cotton Gin in 1794 dramatically increased the profitability of slave labor. By 1860 the American South was producing three quarters of the world’s cotton, almost all exported, much of it to Great Britain. Meanwhile, the price of slaves in the domestic trading market increased 15 fold due to the cost of raising slaves, the productivity of cotton and competition from the new slave states whose soils had not yet been over-worked. Unlike in Brazil where slaves were easily replaced and had a life expectancy of only 8 years, American owners had a strong incentive to increase their wealth by maximizing the lifetime productivity of slaves and their progeny.

Ending slavery was increasingly seen as a moral imperative, particularly for those with little or no economic stake. During the American Civil War Britain was caught between its economic interests tied to American cotton and domestic abolitionist sentiment. The substitution of cotton from colonial India subsequently facilitated its neutrality (and moral sentiments).

The expansion of slavery to new states was contentious as it would upset the political balance of power in the Senate. But the more contentious issue stemmed from the reliance on customs duties for 85%-90% of all federal revenues prior to the Civil War. These were collected almost entirely at southern customs houses (such as Fort Sumter) as an indirect tax on the economic profits of slave labor that funded the importation of foreign manufactured goods. High duties protected Northern industry and were spent mostly in the North for internal improvements.

The proposed Morrill Act dramatically raising duties triggered cessation. Most Northerners didn’t understand that the “economic rents” of Southern slavery were funding their government expenditures until after the South seceded, especially as much of it was siphoned into corrupt northern enterprises. Only then did “saving the Union” become a cause worth fighting for.

Southern “rebels” saw their continually ignored economic grievances as not unlike those of the earlier rebellious generation, adopting a close facsimile as their Constitution but for slavery and reliance on duties.

The moral imperative for ending slavery was everywhere weighed against not just the economic profit but the potential societal upheaval for both whites and blacks. Nowhere were these concerns greater than in the American south, where the slave population often dominated. America didn’t lag far behind international moral sentiments, and paid by far the greatest price in the Civil War, losing one tenth of its population. But that was just the beginning.

Post War Political Racism

With the abolition of slavery and the substitution of excise taxes on northerners for duties, largely unanticipated consequences of Civil War, the Republican Party could now claim the moral high ground, passing the 13th, 14th, and 15th Amendments providing rights of citizenship to emancipated slaves, including the right of males to vote.

The War accelerated legal gains but the war wounds and subsequent social upheaval the South had long feared deepened racial animosity with the repercussions still reverberating nationally today. Poorer whites facing declining incomes due to the spill-over of slavery’s economic rents and postwar labor market competition and a threat to their social status organized as “white supremacists” against black personal and economic liberation. They built statues of the Confederate military heroes during the late Reconstruction era, a time when white oppression was arguably worse than during slavery.

The Civil War dramatically shifted political power to the federal government, but racist state politicians repressed black liberty resulting a century later in the Voting Rights Act of 1965 that continues to monitor and regulate state voting. While there are still accusations of political racism limiting black voters, these are strongly disputed.

Virtually no one disputes the immorality of slavery today, but imposing twenty first century moral sentiments retroactively would require erasing or condemning virtually all American (and world) history. If all Confederates are to be labeled “racists” and “traitors” then the Founding Fathers are as well. To oppose this is not racist. America can recognize both its historical flaws and its progress in meeting its high ideals.

Marketplace Discrimination: the Source of Improved Living Standards.

Adam Smith’s subsequent book, An Inquiry into the Wealth of Nations (1776) extended his moral sentiments to a competitive market system, the only system considered by the Founding Fathers as consistent with individual liberty and the accumulation of individual and hence national wealth. Its’ most basic protection was limited government, especially the less politically accountable federal government. It never mentions “democracy,” something they were skeptical of.

Racism and Black Wages

Emancipation left plantation owners with their land wealth, but wage expense. It is not obvious that sharecroppers earned the full wage during Reconstruction implied by the price of slaves prior to emancipation, possibly due to less productive production methods (plantation owners wanted to return to the old large scale plantation model, but with pay) or competition from landless whites. In any event rising wages due to productivity increases was a long drawn out affair.

Progressive President Herbert Hoover passed the Davis Bacon Act in 1931 to prevent blacks from obtaining jobs on federal projects. Progressive President FDR used both the minimum wage and unionization protected by the Wagner Act of 1935 to raise wages beyond black productivity, creating mass black unemployment. Currently progressives still use project labor agreements in municipal contracts, Davis bacon wage regulation in federal contracts, and minimum wage requirements for private contracts, all on the promise to raise black income but inevitably driving many, particularly the inexperienced young, out of the labor force.

The Civil Rights Act of 1964 prohibits private employers from discrimination in employing and compensating on the basis of race or sex (the Civil Rights Act of 1968 extended this from labor to housing markets).This Act lacked teeth, but by 1972 “while black-white differences have not disappeared, the convergence in economic position in the fifties and sixties suggests a virtual collapse in traditional discriminatory patterns in the labor market” according to a study published by the Brookings Institution.

While the Civil Rights Act is well intended, there is essentially no way for government to measure the productivity of an individual employee and this legal/regulatory club is no substitute for self interest among competing employers. Wage gap differences have since increased, but there are myriad other considerations and explanations.

Starting with the Clinton DOJ, and expanded by the Obama Administration, Disparate impact studies assumed that statistical correlation implies causation. U.S. professional sports represent arguably the highest paid profession outside of political cronyism and Wall Street. Statistically the descendents of African slaves in the Americas (black and Hispanic) should account for 16%: the actual percentages are: NBA (81%), NFL (70%) and MLB (43%) (the NHL is mostly Canadian). Does anyone doubt they earn their jobs and incomes?

The primary difference in earned income relates to lower labor force participation. According to the Pew Research Center: One 2011 working paper, after reviewing existing research on wage and unemployment differentials among blacks and whites, concluded that “none of the existing models of race discrimination in the labor market explains the major empirical regularities.”

Reparations and Social Justice

Reparations– a tax on all non-black U.S. citizens paid to all black citizens in the name of both racial and social justice – follow directly from the Charlottesville premise. Early in the 2020 campaign most democratic candidates either supported or were open to reparations. The assumed benchmark is the missing pay during slavery and the missing pay since based on black/white pay differentials. Over four centuries, this would be calculated in the tens of trillions of dollars.

But if we are to start from the beginning, when first enslaved (by Negro tribesmen, sold to white traders) and brought to North America (instead of Brazil, a death sentence), wouldn’t the relevant benchmark be their potential earnings in their place of origin, sub-Saharan Africa where today per-capita incomes are less that $1000 annually (the comparable household income isn’t available) ? Adding in transfers amounting to about $45,000 annually for low income families (black and other) in the United States – which conservative sociologists argue is the source of black contemporary oppression inhibiting their rise to the middle class – would produce an equal but opposite reparations tax bill.

I’m obviously not suggesting that. But this tax redistribution concept mirrors those duties of the pre Civil War North that exacerbated the North/South conflict, and will do the same between blacks and whites today.

Trump’s Redneck Deplorables

Trump’s “deplorables,” the half of his supporters that his opponent Hillary Clinton called racists (and a dozen or so other epitaphs) are more likely to be white, mostly because black voters including the two thirds of black households who are middle class, have overwhelmingly voted democratic, particularly since the nomination of Barack Obama. The one third of black households who are likely in the lowest income quintile are in more direct competition with what some have called the “rednecks” of Trump’s base for jobs and resources somewhat comparable to that of the post Civil War era. These groups have much in common: both are affected by globalization and impacted more by job losses than benefitted by cheaper consumer prices. Neither group is in any position to repress the other, but both groups are open to racist explanations of their fate, fertile ground to raise racial animosity.

That college attendees of both races are more likely to accept the Charlottesville premise isn’t surprising. Administrators separate black students at orientation and encourage segregation throughout their stay. Any historian who doesn’t promote the Charlottesville premise expects to be fired, as were sociologists before them.

Extreme Polarization of Contemporary Party Politics

The Trump Administration took the traditional Republican market approach to reduce black unemployment, freeing markets to improve the economy. This resulted in record low black unemployment until the forced COVID 19 shut down, particularly in blue states, eliminated jobs more likely held by blacks.

Liberal Democratic political scientist Ezra Klein in Why We’re Polarized (2018) concludes Trump is the most polarizing President in history, (not coincidentally one rank ahead of his predecessor), based on his speech, personality and character. At the other pole is Joe Biden running as a “uniter,” who chose the Charlottesville premise, the most divisive issue in American politics that was sure to exacerbate racial animosities and incite violence, as the centerpiece of his presidential campaign.

Slavery is an unfortunate part of American history, but the 1619 Project revisionism cannot erase the long history of democratic racism repressing black economic opportunity: Jim Crow Laws during Reconstruction; the Progressive Movement founded on eugenics – black euthanasia; President Woodrow Wilson – an “extreme” racist; FDR’s New Deal – “explicitly” racist; LBJ – a racist. Progressive policies since LBJ have inhibited black labor force participation and upward mobility.

America should be judged on what it is today, and choose based on what each political party will do to improve it. The fundamental political choice is between continuing improvement of our competitive market system or doubling down on socialist methods. The Trump campaign theme “opportunity for all” was Martin Luther King’s Dream, sowing racial strife his worst nightmare.

Kevin Villani

Kevin Villani was chief economist at Freddie Mac from 1982 to 1985. He has held senior government positions, has been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on how politicians and bureaucrats with no skin in the game caused the sub-prime lending bubble and systemic financial system failure.

13 thoughts on “Charlottesville Revisited – The Next American Rebellion Won’t Be a Black Swan”

  1. I see no mention of The Northwest Ordinance of 1787, which banned slavery north of the Ohio River.

    The prohibition of slavery in the territory had the practical effect of establishing the Ohio River as the geographic divide between slave states and free states from the Appalachian Mountains to the Mississippi River (an extension of the Mason–Dixon line). It also helped set the stage for later political conflicts over slavery at the federal level in the 19th century until the Civil War.

    Also, the Dredd Scott Decision was a bad Supreme Court decision by Roger Taney but it would never have gotten to the appeals level if Scott and his wife had had competent legal representation.

    Taney, like Chief Justice Roberts, was creating legislation instead of ruling on the existing law. Scott and his wife were clearly free under existing law. A recent book describes the case and clarifies the issues.

  2. Anyone know where to find a transcript of the Tulsa rally? I was interrupted at the start, and did not catch all the words.

    Given everything, I thought opening the campaign in Tulsa made for ideal circumstances for calling out Anti-Fa for the similarities with the 1921 incident in Tulsa.

    I found myself disappointed with Trump’s moderation in only empathizing the wickedness of the current acts.

  3. Despite what the New York Times and the revisionist 1619ers would have us believe, slavery did not build America. It was grossly inefficient. Economic historians Olmstead and Rhode have shown that productivity increases in cotton production were driven by innovations in selective breeding of better varieties

    The pre-war bubble in slave prices was probably caused by increasing hostility in the North to slavery. As the abolition movement gathered steam and opposition to national mandates like the fugitive slave laws increased, a political risk premium was pushing prices up, similar to recent bubbles we’ve seen in commodities markets.

    There’s no denying segregation held them back, but blacks were making economic gains after the war. Sharecropping may not have been as lucrative as land ownership, but it did greatly encourage blacks to settle into nuclear families, providing them with huge cultural advantages that we know are leveraged for economic advancement. Other negative factors like the worldwide collapse in cotton prices through the 1870s and 1880s and the 1892-1922 boll weevil infestation played major roles in limiting overall growth.

  4. Just out of curiosity, do you all totally buy into the inherited guilt and collective guilt mantra?
    Though occasionally it may be appropriate, I don’t think inherited or collective guilt is inherently true or universal. I think of it as, part and parcel, of the Cloud People’s schtick of privatizing gain/benefit and collectivizing pain loss, or blame. Think TARP. I don’t doubt that cotton produced a lot of revenues that benefitted the privileged but I don’t see how it benefitted the 19th century equivalents of Joe Six Pack eking out a living on the great plains. To be sure, I have a bias, which comes from doing the genealogy of ordinary people. Did I miss something, did slavery trigger a robust thriving southern middle class, or produce world changing innovations and entrepreneurs? There was a reason that the yeoman farmers of the “Army of the West” referred to poor southern whites as “Dirt Eaters”.
    I think it was incredible resources, steam, trains, electricity, innovation…… that boosted Americans economically above the rest of the world.

  5. “During the American Civil War Britain was caught between its economic interests tied to American cotton and domestic abolitionist sentiment. The substitution of cotton from colonial India subsequently facilitated its neutrality (and moral sentiments).”

    The moral sentiments of both the Whig and Tory British aristocracy remained firmly on the side of the South throughout the war. This can be confirmed by reading the relevant articles in the 1864 and 1865 issues of the “Quarterly Review” (Tory) and “Edinburgh Review” (Whig) many of which are available free online at Google books. By way of a fig leaf, they came up with the same specious arguments to the effect that the war “wasn’t about slavery” as Marxists, 1930’s southern schoolmarms, and Confederate Heritage types alike.

    “High duties protected Northern industry and were spent mostly in the North for internal improvements.”

    The link you give in this sentence does not support what you say. The word “mostly” is exaggerated even if you’re speaking of geographical areas, which would be absurd in any case. It’s more reasonable to consider what was spent per capita, and there the South had a decided advantage. If you want to stick with geographical regions, spending in the East versus the western and frontier states is more relevant. The latter came out ahead in that comparison.

    “The proposed Morrill Act dramatically raising duties triggered cessation (secession?).”

    This is a highly dubious claim. In fact, secession was triggered by the election of an anti-slavery President and the awareness of the southern slave oligarchy of rising anti-slavery sentiment in the north, and even within their own region among the vast majority impoverished mentally and economically by slavery. The South seceded from the Union before the Morrill tariffs ever went into effect, and could have stopped the act dead in its tracks by the simple expedient of leaving their representatives in Congress. Under southern Presidents like Polk, tariffs before the act were anything but the “abomination” claimed by later southern apologists after the “Tariff of Abominations” of 1828 was dismantled in 1833.

    ” …and paid by far the greatest price in the Civil War, losing one tenth of its population”

    Figures for estimated loss of life in the Civil War are usually around 650,000. The white population of the country at the time was something over 25 million. Bad as they were, the losses were nowhere near a tenth of the population.

    “With the abolition of slavery and the substitution of excise taxes on northerners for duties, largely unanticipated consequences of Civil War, the Republican Party could now claim the moral high ground, passing the 13th, 14th, and 15th Amendments providing rights of citizenship to emancipated slaves.”

    In fact, these Amendments were passed after Congress essentially seized power from President Johnson and denied representatives of the South their seats in Congress. Blacks took power under the thumb of northern carpetbaggers backed by a military occupation. These regimes imposed confiscatory taxes which went to line the pockets of these “public servants.” As a result, southerners lived in misery in economies where recovery from the war was artificially suppressed until federal troops were withdrawn by President Hayes. These facts should be kept in mind when considering the history of “white supremacy.” I am not making moral judgments about any of this. I am simply stating facts. In fact, my ancestors fought for the North, and I’m proud they did.

    I could go on, but I think I’ve made my point. The point is that it’s best to read the source material yourself rather than have it interpreted for you by latter day historians when it comes to subjects as controversial as the Civil War. Heaven forefend that I should ever puff my blog on Chicago Boyz, but my latest article does have a link to an article about slavery published in the December, 1857 issue of the Atlantic Monthly which may open the eyes of those who seriously believe that the Civil War “wasn’t about slavery.”

  6. The pre-war bubble in slave prices was probably caused by increasing hostility in the North to slavery.

    Most likely due to the abolition of the slave trade. The tariffs were used to shelter northern industries as they built up, but it did hurt the south. Of course, much of this is because the south chose to remain agricultural. Remember Jefferson was very suspicious of anything but “yeoman farmers,’ even though he wasn’t one. He died heavily in debt, typical of southern “aristocracy.”

    Sherman’s letter explained it well.

    “You mistake, too, the people of the North. They are a peaceable people, but an earnest people and will fight too, and they are not going to let this country be destroyed without a mighty effort to save it.

    “Besides, where are your men and appliances of war to contend against them? The Northern people not only greatly outnumber the whites at the South, but they are a mechanical people with manufactures of every kind, while you are only agriculturists–a sparse population covering a large extent of territory, and in all history no nation of mere agriculturists ever made successful war against a nation of mechanics. …

    “The North can make a steam-engine, locomotive or railway car; hardly a yard of cloth or shoes can you make. You are rushing into war with one of the most powerful, ingeniously mechanical and determined people on earth–right at your doors. You are bound to fail. Only in your spirit and determination are you prepared for war. In all els eyou are totally unprepared, with a bad cause to start with.

    “At first you will make headway, but as your limited resources begin to fail, and shut out from the markets of Europe by blockade as you will be, your cause will begin to wane. … if your people would but stop and think, they must see that in the end you will surely fail.”

    He warned them and they were friends.

  7. this isn’t about slavery or police brutality, anymore than the Russian Revolution was about food scarcity, or the Cuban Revolution about the 1940 Constitution,

  8. “I don’t doubt that cotton produced a lot of revenues that benefitted the privileged but I don’t see how it benefitted the 19th century equivalents of Joe Six Pack eking out a living on the great plains.”

    It didn’t. According to Olmstead and Rhode again, antebellum cotton production was only 5% of total economic output. The most valuable crop in the country was corn, and some years corn was even the leading crop in the South. The exaggeration about cotton’s impact on the economic development of the United States has now risen to criminal levels.

  9. The2020 Democratic presidential candidate Joe Biden is far ahead of the incumbent Donald Trump in the polls

    Good one.

  10. Cotton was much more important to England and they wavered in support of each side, mainly because of cotton. The had abolished the slave trade but the mills of the midlands needed cotton. There was a good deal of smuggling, much of it by northerners. Grant and Sherman tried to stop it but there was much influence, not least by politicians. The British allowed “The Alabama” to be built but, after Antietam, they backed away.

  11. Curious, isn’t it, that BLM, Antifa, celebrities, media personalities, activists, academics, foundations, corporations, advertisers, and politicians have not seized the day and raised public awareness of the “coerced labor” that exists in today’s global supply chain. It would be an ideal platform. Maybe they avert their eyes because it hits too close to their own homes and their own livelihoods, or they are just ignorant. How is it different from buying cotton produced by slaves, 200 years ago? They sure do embrace presentism, judging and blaming the Americans of the past far more harshly than they do themselves. I don’t know who else is on board, but the US DoD prohibits slavery, human trafficking, coerced labor, deceptive labor practices in it’s supply chain. This requirement is flowed down from supplier to supplier. For what it’s worth, the query form and process is very similar to the one used to monitor for the presence of Conflict Minerals, which itself is supposed to curtail funding of murderous militias and cartels. My own take is that these are very expensive, mostly feel good exercises, meant to create the illusion of action. Never the less, their existence does imply an underlying problem.

  12. Slavery completely disgraces and delegitimizes America, but somehow it doesn’t do the same to socialism.

  13. Mile K: “They [the English] had abolished the slave trade but the mills of the midlands needed cotton.”

    Note that the English made the slave trade illegal under English law during the Napoleonic Wars — but they did not abolish slavery in English sugar plantations in the Caribbean at the same time.

    There is an argument that the English decision to interrupt the slave trade (which was largely carried out by the English themselves) was an act of economic warfare directed against the French, since the French slave plantations in the New World were out-competing the English slave plantations but required a continuous input of new slaves due to the short life-span of slaves on French plantations. As an aside, the unusual feature of slaves sent to North America was that they survived and reproduced, unlike in the Caribbean plantations.

    Daniel Mannix wrote “Black Cargoes” about the slave trade in 1962, before Political Correctness totally distorted the picture. It is worth reading. One of the minor points is that much of the English opposition to the slave trade stemmed from the horrendous death rate among English sailors, who were abused by the English ship-owners as badly as the African slaves they transported.

    If only the race-baiters of Black Lives Matter would study history!

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