John Mcdonogh Day

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On
Memorial Day, once a year, we pledge ourselves to remember the hundreds
of thousands of victims of American foreign policy. But Americans
are not much interested in history. We prefer to forget both the
victims and the perpetrators. So, on Memorial Day, Americans generally
ignore our war dead and wait to hear news reports about our Indianapolis
500 dead. We forget about memorials, just as on July 4, we pay little
attention to the Declaration of Independence; on Thanksgiving Day,
we ignore the Pilgrims; on Labor Day, we don’t go to work; on Easter
Sunday, we search for Easter eggs; on Christmas, we open presents;
on Presidents day, we ignore two presidents at the same time; and
on Good Friday, we ignore the crucifixion. Finally, on Martin Luther
King [Jr.] Day, most Americans pay as little attention as possible
to the memory of Rev. King. (I would be a lot more enthusiastic
about Rosa Parks Day, i.e., I would have voted against it, but not
with the same enthusiasm that I would have voted against Martin
Luther King Day.)

I
hate holidays — all of them, without regard to race, creed,
color, or national origin. When it comes to holidays, I am not only
Scrooge, I am Alastair Sim’s version of Scrooge.

A
holiday is technically a holy day, i.e., a day set apart for some
religious purpose. But the common feature of all American holidays
is that they are days set apart for doing nothing productive. They
are basically consumption days. They are excuses to consume, especially
time, our only irreplaceable resource.

I
make it a point to work all day on every holiday except Christmas.
I only work half a day on Christmas. I sell out. The peer pressure
is too great.

LOST
PRODUCTIVITY

For
almost a century, there has been an academic debate over whether
Protestant nations gained an economic advantage over Catholic nations.
The man who argued that this was the case was Max Weber (Mawx Vayber),
whose book, The
Protestant Ethic and the Spirit of Capitalism
(1905) remains
a classic. He argued that Protestantism was more favorable to capitalism
than Catholicism was. If the 16th century School of Salamanca
had been dominant, this would not have been true, but those remarkable
scholastic defenders of free enterprise were not in control of holidays.
Some Catholic countries had 150 holidays a year, including Sundays,
in Luther’s day. The Protestants abolished most of them.

Protestant
rulers generally opposed holidays. The Puritans were the archetype.
In 1659, the General Court (legislature) of Massachusetts passed
the following law:

“For
preventing disorders, arising in several places within this jurisdiction
by reason of some still observing such festivals as were superstitiously
kept in other communities, to the great dishonor of God and offense
of others: it is therefore ordered by this court and the authority
thereof that whosoever shall be found observing any such day as
Christmas or the like, either by forbearing of labor, feasting,
or any other way, upon any such account as aforesaid, every such
person so offending shall pay for every such offence five shilling
as a fine to the county.”

http://masstraveljournal.com/features/1101chrisban.html

Protestants
worked on Saturdays. They took seriously these words: “Six days
shalt thou labour, and do all thy work” (Exodus 20:9). The Puritans
wouldn’t allow recreations on Sundays. Most Continental Protestants
did, including John Calvin himself. So did Anglicans. Protestants
might allow a few special prayer days in a national crisis, but
that was about the limit of their tolerance for leisure.

Two
rules of economic success are these: (1) work a little bit harder
than your competitors every day; (2) then allow the compounding
process to give you an enormous advantage over decades. It’s John
Schaub’s rule: making it big
on little deals
.

Almost
three decades ago, I wrote a manual for college students on how
to do well in college. One of my recommended strategies was (and
is) to do homework while everyone else is at the Big Game. If you
work while everyone else is playing, you gain a permanent advantage.

Working
on Saturdays is basic to lifelong success. You may choose to work
around the house, but if you’re productive, it’s better to work
at your occupation at (say) $50/hour, and hire someone to work on
household jobs at $20/hour.

Most
Americans are salaried. They see no reason to work more than 40
hours a week. They also see no reason to improve their skills, start
a weekend home business, learn a new trade, earn a college degree,
or in some other way become more productive on their own time. This
offers a tremendous advantage to those few people who are willing
to use Saturdays and time after work, including drive time, to improve
their skills.

People
think, “if I could earn 20% per annum on my money, I could get rich.”
But they can earn 80% on their time. Instead of working a 40 hour
week, they can work 72: 12
hours a day, six days a week, year after year. They could also limit
vacations to two one-week-long sessions.

In
The
Millionaire Next Door
, we learn the secrets of success of
80% of America’s millionaires, the ones who made their own fortunes.
Here are the secrets:

  • Start your
    own business.
  • Invest your
    profits in your business.
  • Work 72
    hours a week.
  • Spend less
    than you earn.
  • Don’t get
    divorced.

I
would add this: tithe ten percent of your pre-tax income.

This
was how I did it. This is how most of the rich people I know did
it.

There
are other worthwhile goals besides making money. You must invest
large amounts of time to achieve these goals. You can achieve some
of them with money, but if you don’t have money, you must invest
time. Also, even if you have money, it is unlikely that you will
achieve maximum success in these other areas of life without a major
investment of time. It takes skill to give away money wisely. Skill
comes through time applied to learning.

Television
isn’t free. It’s expensive. It eats up your time. The same is true
of novels. A few TV shows are informative. I watch “Sunday Morning.”
A few novels are informative. I have read Gore Vidal’s history of
the United States. But time is scarce. We must allocate it wisely.
Jesus said, “I must work the works of him that sent me, while it
is day: the night cometh, when no man can work” (John 9:4). That
is good advice.

There
is a legitimate use of carefully planned relaxation. It makes you
work better. It also makes work seem worthwhile. As with all things
in life except addictive substances or addictive activities, as
you get more of something, the value of each successive unit falls
in relation to the previous unit’s value. Put another way, everything
is subject to the law of diminishing returns. This includes work.
But when entertainment becomes addictive, it’s time to go back to
work. In this society, entertainment for most people has become
addictive. The quantity has increased, and the quality has declined.

THE
SOVIET UNION

I
spoke with a woman recently who has spent her life in the Soviet
Union. As an Armenian Christian, she was out of step in Muslim Uzbekistan.
As an Armenian, she was also out of step with the Communist workers’
ethic, which proclaimed: “They pretend to pay us, and we pretend
to work.” The Armenians are Christianity’s Jews. Their work ethic
is similar, their commitment to education is similar, and their
ability to make money is similar. As my Jewish roommate told me
in 1962, “We used to live in Fresno, but when the Armenians moved
in, the Jews moved out.” My wife’s Armenian father grew up in Kingsburg,
not far from Fresno.

The
lady told me of the horror faced by pensioners in the 1990′s, after
the collapse of the Soviet Union. Their money fell to zero value,
and the Communist welfare system also collapsed. They were worse
off than before Communism failed.

I
told her that Soviet Communism was like a gigantic prison in which
none of the inmates learned a productive skill. Then, without warning,
the guards opened the gates and sent everyone away. For the old,
the retired, and the congenitally bureaucratic, the collapse of
Communism was a painful experience. But for the young, there is
now hope.

Her
grandfather had the ability to make a fortune under Communism. Two
times, his fortune was confiscated by the authorities. Her son has
the same ability. If he can get permanent legal status in the United
States, he will be successful. He will generate net income. Society
will benefit. Under Communism, he would never have been able to
become this productive. Freedom makes the difference.

THE
LEGACY OF JOHN MCDONOGH

This
leads me to the story of John McDonogh. He was one of the great
forgotten men in American history. He was not well known outside
of Louisiana, and he was generally hated there. He died in 1850,
the richest man in the state. Today in Louisiana, there are many
public schools named after him. There is a reason for this.

John
McDonogh was a penny-pinching Scot. Like most Calvinist Scots, he
was a strict sabbatarian. Nobody worked on his plantation on Sundays,
but they worked like madmen on the other six days.

Why?
From everything we know about the slave economy, slaves were slackers.
They stole, they cheated, they faked illnesses. They were goldbricks.
They were officially regarded as natural slaves.

What
John McDonogh proved, as perhaps no one in American history has
proved more clearly, is that men respond to incentives. In 1825,
he conceived of a plan that would enable his slaves to buy their
way to freedom. He hoped that they would go to Liberia, but only
one did.

As
a strict sabbatarian, he would give them Saturday afternoons off
for their own work if they promised not to work on Sundays. Other
planters also gave their slaves Saturday afternoon off. But McDonogh
made this offer: if they would work for him on Saturday afternoon,
and two extra hours each day, he would pay them extra. He paid them
50 cents a day in winter and 62.5 cents in summer.

He
established a set release price for males of $600 and $450 for females.
This was somewhat less than the average market price for healthy
field hands. Once they had paid off one-sixth of this agreed-upon
price, they would get one free day of their own. They could then
use their earnings on this free day to speed up repayment. When
they “owned” Saturday, the time they spend working for him on Saturday
enabled them to buy Friday. When they had bought Friday, they started
buying Thursday. When they bought Monday, they were granted their
freedom. It took fifteen years for a slave to buy his way out of
slavery.

Slaves
ran his entire operation: rent collection from his white tenants,
the agricultural operations, his urban real estate. A jury of six
slaves handled all disciplinary matters, which he reviewed. He would
overturn their punishments when they were too harsh. The slaves’
jury tended to be overly rigorous in their judgments against fellow
slaves.

He
was a man of his word. He reported to them every six months concerning
their progress. He later told his white contemporaries that slaves
were in the best position to know a master’s character, and the
plan could work only if they trusted him to fulfill his promise.

He argued that
merely by giving them their freedom, the owner could never get them
to plan ahead. The owner might go back on his promise. But by selling
a slave his freedom, this future-orientation would affect the slave’s
character positively. “Hope would be kept alive in his bosom; he would
have a goal in view, continually urging him on to faithfulness, fidelity,
trust, industry, economy, and every virtue of good work.” [Cited by
Carl N. Degler, The
Other South
(New York: Harper & Row, 1974), pp. 43-44.
Degler relies on two main sources: Lane Carter Kendell, "John McDonogh
— Slave-Owner," Louisiana
Historical Quarterly, XVI
(1932), and William Talbot Childs,
John Mcdonough: His Life and Work (Baltimore, Maryland: Johns
Hopkins University Press, 1939).]

He
understood that by allowing a slave to buy his way to freedom, the
very effort would prepare him for independence. Meanwhile, the efforts
of these independence-seeking slaves made him a rich man.

At
his funeral, there were many weeping former slaves, but very few
whites. He had broken covenant with his white contemporaries.

His
principle was this: a man should be allowed to buy his way out of
bondage. The South did not agree. So, after Lee’s surrender, the
prostrate South had to dig its way out of the hole without slaves.
This is why the region went to sharecropping: a land owner’s right
to receive a percentage of the crop. Sharecropping maximized productivity
in a society in which the land was the major capital asset. Sharecropping
provided incentives for ex-slaves to work hard, and it allowed land
owners to maximize the return on their capital, including seed and
tools.

The
freed slaves had a major advantage: the United States’ economy in
1865 was based on capitalism. There was payment for services rendered.
There was mobility of capital, including the legal right to walk
away. This was what gained ex-slaves a higher return on their labor.
(The other major factor in their liberation and their ability to
gain wealth was their new-found right to marry, which had been denied
to them for two centuries.)

In
the Soviet Union, an entire society was in bondage for 74 years.
There was no provision for buying your way out. So, when the economy
collapsed, and then the political order followed the economy, it
left tens of millions of people without income or hope. There was
no capitalist framework for men to maximize their productivity.
The free market there is still haphazard. The women I spoke with
says that she owns her home but not the land it sits on. The State
still owns the land.

DENG
XAIO PING

Unlike
Brezhnev and his successors, Deng recognized the need to free up
the economy if China was to experience economic growth. He began
his reforms in 1979. He initially freed up agriculture. Peasants
could now own their land and sell their output into free markets.
Overnight, agricultural output increased. This liberation spread
to other areas of the economy. China began an unprecedented boom
that is still rolling along at 7% per annum.

Deng
presided over a prison. He did not announce the end of the prison
system. His successors still call their system Communism. But the
Chinese prison system is steadily resembling freedom. This freedom
does not apply to political expression, which matters most to Western
political liberals, but it does apply to ever-growing segments of
the economy, which is an affront to Western political liberals.

Meanwhile,
house churches are operating quietly and illegally to undermine
the old Communist ideology. There were virtually no visible Protestant
churches in 1975. Today, there are between 60 million and 80 million
Protestants, and 8 million Catholics. This, in a society that is
officially atheistic.

The
older Confucianism is reviving. This is an ethical system that is
closer to Dale Carnegie’s How
to Win Friends and Influence People
than Mao’s Little
Red Book
. The Chinese family is steadily replacing the Communist
Party in terms of most people’s allegiance.

This
time, China is selling into an international free market. There
are no regional trade zones established by Western political powers.
Teddy Roosevelt’s open door policy — which meant open to the
United States — is actually beginning to be applied. China
now has almost five decades of successful examples to imitate: Japan,
South Korea, Singapore, Taiwan, and Hong Kong. The success of capitalism
is clear to everyone with a TV set. The satellite TV networks are
bringing daily evidence of the wealth of the West to an entire society.

Deng
was far more of a capitalist reformer than either Reagan or Thatcher.
He began with a seriously centralized economic system and, while
carefully avoiding the rhetoric of free market capitalism, he freed
up the most significant sector of the Chinese economy.

In
recent weeks, George W. Bush and Congress have reaffirmed mercantilism
for the American agricultural sector, as if Adam Smith had not refuted
mercantilist economics in 1776. More than ever, America is denying
what Deng affirmed: the necessity of free markets in agriculture.
I prefer actions to rhetoric. As Attorney General John Mitchell
put it before he went to jail, “Watch what we do, not what we say.”

CONCLUSION

The
secrets of economic success are now known around the world: private
ownership, legally enforceable contracts, thrift, low taxation,
the free flow of capital, and the avoidance of war. Men still trust
in government-controlled monetary systems, so we have not yet applied
the principle of liberty of contract to the central economic institution:
money. Men still trust governments to pay off their pension promises,
just as Russians did in 1991. That illusion will be gone soon enough,
along with the existing monetary system. But, on the whole, people
now know what makes societies rich: the free market. There are a
few Chavezes left in politics, but not many. While actions rarely
match rhetoric in politics, the rhetoric is no longer socialistic.
This bodes well for the future.

I
prefer to live in a world where men have the liberty to pursue their
dreams. Like McDonogh’s slaves, the more liberty they have to follow
their dreams, the harder they will work to keep me, a sovereign
consumer, comfortable and better equipped to do my work.

The
more capital that people have, the better they can fulfill their
dreams. So, I prefer Moses to Congress. “Six days shalt thou labour,
and do all thy work” (Exodus 20:9).

If
I had the votes, there would be fewer national holidays. The strongest
case for national holidays that I can think of is that Congress
isn’t in session on holidays. I would vote to replace every holiday
with John McDonogh Day, which would allow all Federal employees
to take a day off, but would let the rest of us go to work.

I
hope you had a safe and productive Memorial Day. Next time there
is a holiday, mow the lawn. Wash some windows. Organize your hard
drive. Download Google’s
toolbar
. But do something. Anything. Say to yourself, “I am
not Congress. I am productive.” Then act accordingly. Every little
bit helps.

The
harder you work, the richer I get. That’s capitalism.

May
31, 2002

Gary
North is the author of Mises
on Money
. To subscribe to his free
investment letter (e-mail), click here.

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