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- This is a pretty tragic topic and in some ways it's tough to talk about, but
let's give it a try. Let's keep in mind that in the modern world there still
really is a lot of slavery and many people are rightfully outraged by this. But the
question is what to do about it? So in the 1990's, there were humanitarian reformers
and they went to Sudan and their plan was to buy slaves and set them free. Now that
sounds great, what could be better than setting free slaves? That sounds pretty
noble, but did it actually stamp out slavery or did paying slaveholders to
release these slaves lead to more people captured? Let's use the economic concept
of the elasticity of supply to help understand this better. The problem is
this, the people trying to free the slaves, we'll call them the slave
redeemers, they're also creating additional demand for slaves. After all,
they're buying slaves in the market. That additional demand shifts out the demand
curve for slaves and that leads to a new and higher market price. That higher price
will bring forth additional supply. So what are the people who round up and
kidnap the slaves, what are they going to do? Well, they're going to increase their
operations. They're going to have more raids and they're going to take more
people into slavery. We can already see there's at least a possibility that buying
the slaves and setting them free will be counterproductive because we haven't
managed to stamp out all of slavery, what we've done is set some people free but
actually give those kidnappers, those people in the middle, we've increased
their incentives to bring more people into slavery. And therein lies the potential
for an even greater tragedy. The concept of elasticity in economic terms that
refers to how responsive is quantity supplied when market price changes.
It's going to help us understand how much a slave redemption program will increase
the number of people who end up captured by slave raiders. Inelastic supply means
that even a much higher price doesn't result in a much larger quantity supplied.
In that case, even if the price of slaves went up by a lot, not that many additional
people would be captured. That's the better case scenario. It also means the
price of slaves will go up and stay high because the off setting supply response is
weak and it's not pushing that market price back down again. Again that's the
better case scenario. It means that in the long run the redeemers are doing more to
limit slavery than to encourage it. But, however, let's say the supply curve is
more elastic, that means a flatter curve and it means the quantity supplied to the
market will increase a lot with the higher price. In that case, it's easier to find
more people to enslave. Then as a result of the boost in demand from the
humanitarian redeemers, a lot more people will end up captured and enslaved and then
the total number of people captured as slaves is going up quite a bit. And you
have to wonder in that case are these slave redemption programs really a good
idea? So what's the answer? It's genuinely hard to say whether the supply of slaves
is elastic or inelastic, but we can look at price as a possible indicator of which
scenario is more likely to hold. We know that in the early years of slave
redemption there was a noticeable increase in the price of slaves and that could be
evidenced of a fairly inelastic supply curve. However, over time the price of
slaves has fallen and that could indicate greater elasticity of supply in the longer
run. That makes sense but the suppliers are usually more responsive to an increase
in price as they have more time to adjust. For instance, they can hire more people
and expand their operations. So this evidence overall suggests that
perhaps the program has become less effective over time and perhaps today it
may actually be counterproductive and be increasing the burden of slavery. In other
words, good intentions aren't always enough. If someone comes along and puts an
apparently good idea on the table, we still need to think through it's
unintended consequences.
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