Interesting observation from Benjamin Powell, a professor of economics at San Jose State University, about what really happened to the American Pilgrims and why. Many people believe that after suffering through a severe winter, the Pilgrim’s food shortages were resolved the following spring when the Native Americans taught them to plant corn and a Thanksgiving celebration resulted. In fact, the Pilgrims continued to face chronic food shortages for three years after this first year until the harvest of 1623. Bad weather or lack of farming knowledge did not cause the Pilgrim’s shortages, bad economic incentives did.

In 1620, Plymouth Plantation was founded with a system of communal property rights. Food and supplies were held in common and then distributed based on “equality” and “need” as determined by Plantation officials. People received the same rations whether or not they contributed to producing the food. Because of the poor incentives little food was produced. (In case you think this is a case of 20/20 hindsight 350 years later, a history of the Plantation written back in 1647 was quite clear on this point. “…young men, that were most able and fit for labor, did repine that they should spend their time and strength to work for the other men’s wives and children without any recompense.”)

Faced with potential starvation, the colony decided to implement a new economic system where every family was assigned a private parcel of land. They could then keep all that they grew themselves but were now alone responsible for feeding themselves. While not a complete private property system, the move away from the communal ownership had dramatic results. Once the new system was in place, women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability.”

The economic lessons are clear: the benefits and necessity of an economic system in the form of prices and profits to coordinate our individual behavior for the mutual benefit of all. The economic incentives provided by private competitive markets where people are left free to make their own choices make bountiful feasts possible.

This entry was posted on Monday, March 7th, 2005 at 4:32 am by Insider and is filed under Brilliant, but uncategorizable. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.