Let me explain further by proposing a thought experiment. Suppose the South won the Civil War, and slavery became legal in the Confederate States.
How would the national and global economy adapt to this type of situation?
A Dystopian Past and Future
To begin with, there would be a huge labor shortage in this small portion of America. Businesses from around the world would flock to this unfettered zone of pure profit, as the allure of free labor would be too much to overlook. Corporations have always gone where the labor is cheapest, and they would champion a free-labor zone as a huge contribution to wealth and prosperity for all (but the slaves)…
It would be far from that. Let’s assume that Confederate slaves began producing goods for the rest of the world. The huge labor surplus would be created in the rest of the world,, as nations would shift domestic manufacturing production to the Confederacy. However, something else would happen in this transplantation of labor — something that would slowly destroy the entire global economy.
When you remove manufacturing labor (or labor of any kind) from a domestic economy, you create higher unemployment. As any economic theorist will tell you, unemployment is bad for the economy. There are two fundamental reasons for this:
- . Unemployed people are tight for cash and will not spend money like they used to. An economy with low demand is one that simply cannot grow.
- Unemployed people will seek government subsidies. The welfare state would balloon if all manufacturing labor was transplanted to the Confederacy. While domestic corporations make a killing on the free labor, governments are putting themselves in massive debt to keep their population alive.
The Confederacy Would Also Suffer
It is not only the rest of the world that would suffer. The hub of all manufacturing would also come to economic ruin for the exact same reasons.
The slaves would essentially be like pawns in a global system of domination and oppression, unable to make any money of their own and thus unable to invest back into the economy. Demand would stutter to a halt as personal debt would rise.
Work would become devalued beyond compare. The entire economic system would be sucked dry by the greedy corporatists who did not realize their castles were in fact made of sand.
Slavery, Technology, and the Paradox of Growth
You cannot have an actual growth economy when demand is either static or shrinking. That is what would have happened in a slave economy before too long. If labor is devalued, and the majority of labor itself is isolated to one region, you get a lopsided economy that does not work for anyone in the long-term.
Slavery and advanced technology are similar on this point. Automation is the distant echo of slavery because they both lead to economic ruin. Decreased consumer spending is the result of a lack of income, and who will have income when there are no jobs left? That is what would have happened if slavery was allowed to continue, and that is what will happen if robots replace all our meaningful work.
Optimizing America is a new ideology that offers a solution to this structural problem. By limiting the lending power of the federal reserve, the government will no longer artificially inflate the economy for the benefit of banks and corporations — the very institutions that got us in this mess in the first place.