Readers of The New York Times Op-Ed page will know that Nicholas Kristof has recently purchased the freedom of two young girls in a brothel. It appears that the young girls were held there against their will and tricked or coerced into joining in the first place.
As an economist of course I wondered whether buying slaves will lower net enslavement. I can think of at least two general mechanisms suggesting that Kristof’s purchase will increase the number of slaves in the longer run, or at least not lower the number of slaves:
1. Slaveholders and brothel owners presumably hold profit-maximizing inventories. Depletion of inventory will lead to replacement under a variety of assumptions.
2. I suspect that Kristof, a Westerner, overpaid for the two slaves. Slave owners expect such higher prices in the future, which may lead to more slaveholding. Furthermore the cash flow may stimulate investment in more slaves. Even for firms in advanced economies, current cash flow predicts investment better than does real interest rates.
Overall we can think of the slaveholder as more able and more eager to get more slaves. That being said, the marginal slaves will be harder to trick or capture than the previous slaves. So we cannot be sure whether net slavery will go up or down. Kristof’s efforts also have a publicity effect, which may either help or hurt the slave trade. On one hand the Cambodian government may be embarrassed and crack down. On the other hand, the slaveowner has received amazing free publicity. On net, Kristof’s actions may be less heroic than they would appear at first glance.
Michael Kremer of Harvard has done some interesting work on how to best stop elephant hunting. Sometimes the best solution is for a central authority to buy up many elephant tusks and later dump them on the market, ruining the price and discouraging further tusk collection. I would not advocate that Kristof resell his two women back into slavery, just to lower future prices. Nonetheless such economic considerations once again illustrate the gap between doing something to feel good about oneself, and actually achieving useful results.
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