The first excerpt is about how the history of development in early 1800s New England is different than the impression that most people have.
The Dawn of Innovation pp. 76-77
Through a European lens, in fact, America looked very backward, if only because of its overwhelmingly rural demography. In the 1820s, more than 90 percent of Americans still lived in the countryside, a pattern that had changed very little by mid-century. In nineteenth-century Europe, rural areas were mostly peasant-ridden backwaters, but America’s agrarian patina concealed a beehive of commercial and industrial activity. By the end of the War of 1812, Gordon Wood suggests, the northern states were possibly “the most thoroughly commercialized society in the world.” A Rhode Island industrialist made the same point in 1829: “The manufacturing activities of the United States are carried on in little hamlets…around the water fall which serves to turn the mill wheel.”
American historians have suffered their own bafflements. It is only in recent decades that a consensus of sorts has emerged on the nation’s early growth spurt. Winifred Rothenberg did much of the groundbreaking work—twenty-five years of patient excavation of the account books, diaries, estates, mortgages, and other records of Massachusetts farmers. What she finds is an organic, bottom-up form of modernization, originating in the increasing prosperity of ordinary farmers. The British experience was starkly different. The underbelly of Victorian society mapped by Charles Dickens was a rural proletariat brutally expelled from the countryside and herded into urban factories.
(Although we shouldn't exaggerate the negatives. )
Even if someone wants to point to government actions, don't be fooled - common genius was already a very significant force driving bottom-up organic growth.
Another point worth remembering was that the negative effects of slavery were obvious to visitors from another country.
Democracy in America pp. 344-348
When a century had passed since the foundation of the colonies, an extraordinary fact began to strike the attention of everybody. The population of those provinces that had practically no slaves increased in numbers, wealth, and well-being more rapidly than those that had slaves.
The inhabitants of the former had to cultivate the ground themselves or hire another’s services; in the latter they had laborers whom they did not need to pay. With labor and expense on the one side and leisure and economy on the other, nonetheless the advantage lay with the former.
The farther they went, the clearer it became that slavery, so cruel to the slave, was fatal to the master.
There is only one difference between the two states: Kentucky allows slaves, but Ohio refuses to have them.
So the traveler who lets the current carry him down the Ohio till it joins the Mississippi sails, so to say, between freedom and slavery; and he has only to glance around him to see instantly which is best for mankind.
On the left bank of the river the population is sparse; from time to time one sees a troop of slaves loitering through half-deserted fields; the primeval forest is constantly reappearing; one might say that society had gone to sleep; it is nature that seems active and alive, whereas man is idle.
But on the right bank a confused hum proclaims from afar that men are busily at work; fine crops cover the fields; elegant dwellings testify to the taste and industry of the workers; on all sides there is evidence of comfort; man appears rich and contented; he works.
The state of Kentucky was founded in 1775 and that of Ohio as much as twelve years later; twelve years in America counts for as much as half a century in Europe. Now the population of Ohio is more than 250,000 greater than that of Kentucky.
These contrasting effects of slavery and of freedom are easy to understand; they are enough to explain the differences between ancient civilization and modern.
On the left bank of the Ohio work is connected with the idea of slavery, but on the right with well-being and progress; on the one side it is degrading, but on the other honorable; on the left bank no white laborers are to be found, for they would be afraid of being like the slaves; for work people must rely on the Negroes; but one will never see a man of leisure on the right bank: the white man’s intelligent activity is used for work of every sort.
Antiquity could only have a very imperfect understanding of this effect of slavery on the production of wealth. Then slavery existed throughout the whole civilized world, only some barbarian peoples being without it.
Christianity destroyed slavery by insisting on the slave’s rights; nowadays it can be attacked from the master’s point of view; in this respect interest and morality are in harmony.
Don Boudreaux provides additional clarification in an article titled What's so :
Another historical myth is that Southern slavery harmed only the blacks who were enslaved. There's no doubt that those who suffered most grievously from slavery were the slaves themselves. But slavery also inflicted great economic harm on non-slave-owning whites in the South.
Most obviously, slavery artificially reduced the supply of workers available to work in whatever factories and businesses might have been established by non-slave-owning whites. Therefore, these whites — who outnumbered slave-owning whites, even in the South — suffered reduced opportunities to launch their own businesses. In the South, chattel slavery stymied the single greatest force for widespread and sustained economic growth: market-directed entrepreneurship.
Also, by curbing entrepreneurship in the South, slavery reduced the rate of introduction of new goods and services that would have enriched consumers' lives.
There was yet another way that slavery kept the antebellum American South economically infantile. Here's the late economic historian Stanley Lebergott writing about the United States before the Civil War:
“British vessels began to concentrate their voyages to New York, Boston and Philadelphia. For in these ports they could both deliver a full cargo of manufactured goods (to be consumed in the cities or sent along to the West) and also pick up return cargoes. The demand for manufactured goods and such luxuries as tea and coffee, however, grew far more slowly in such Southern centers as Charleston, Savannah, and Wilmington. One reason was that much of the nearby population were slaves, consuming little in the way of manufactured goods.”
Lebergott sensibly argues that, had slavery not existed, Southern ports such as that at Charleston, S.C., would have gotten a great deal more shipping business. But because slavery artificially kept most Southerners — unfree and free — poor, it kept the South from being a strong market for European manufactured goods.
These historical realities should be kept in mind by anyone attracted to the argument that capitalism was fathered by slavery.
As if this troubled history didn't present enough problems, there were further obstacles to escaping the impediments to progress even long after the botched or neglected Reconstruction. Earlier in the same article other impediments to Southern development are highlighted:
Everyone knows, for example, that minimum-wage legislation is meant to help the working poor. A study of history, however, shows that this just ain't so.
What is so is that the Fair Labor Standards Act of 1938 — the legislation that created the national minimum wage in America — was designed to protect the higher wages of Northern textile workers, and the profits of Northern mill owners, from the intensifying competition unleashed by Southern textile mills in the Carolinas and Georgia.
The competitive advantage enjoyed by Southern mills over their Northern rivals was access to lower-wage labor. Even at 15 cents per hour, these jobs were attractive to poor Southern workers, many of whom would otherwise have earned even less as sharecroppers.
But being insensitive to the plight of poor Southern workers, Congress and FDR in 1938 outlawed jobs that paid less than 25 cents per hour. The purpose was to stifle competition and protect the profits of politically powerful producer groups in the North.
These obstacles, self imposed and otherwise, have delayed and slowed the economic convergence of the South. Improvements in transportation, communication and infrastructure, combined with lower cost of living and cultural changes are improving circumstances. Lee Habeeb is both a participant in and an observer of these changes:
When I told my friends in New Jersey nearly ten years ago that I was packing my bags and heading south, they thought I’d lost my mind. Why, they wondered, would I give up the food, shopping, and close proximity to New York City to live anywhere else, especially a place like Oxford, Miss.? I might as well have told them I was moving to Mogadishu.
I tried to lighten things up by explaining that we had running water in Mississippi. And cable TV. Heck, we even had dentists. The planes coming and going in nearby Memphis got me most places in quick order, too. I then described the quality of life in Oxford and how far a dollar stretches. When I showed them pictures of my house and shared with them the cost of that house — and the low property-tax bill that came along with it — they got depressed.
And it isn’t just millions of American citizens packing their bags and heading south. Last month, in a move that shocked residents of northern New Jersey, Daimler’s Mercedes-Benz USA announced it was moving its headquarters from Montvale (just miles from where I grew up) to Sandy Springs, Ga. And it’s bringing nearly 1,000 people along with it, at an average salary of nearly $80,000 per worker.
“We think the infrastructure in the States has changed,” Dieter Zetsche, the chief executive of Mercedes, told reporters. “The South is much more relevant than it used to be. We think it is a new start, a rejuvenation of our company to make the move.”
And there’s another angle to the southern-migration story that hasn’t received enough media attention, though it’s perhaps more profound: The past 30 years have seen an epic migration of black people to the South. Indeed, the percentage of the nation’s African-American population living in the South hit its highest point in half a century, as more and more black people moved out of declining cities in the Midwest and Northeast.
A great many books have been written about the migration of rural black people from the South to the big cities of Chicago and Detroit during the 1940s and ’50s. Nicholas Lemann, former dean of Columbia University’s journalism school and a professor there, wrote one of them: The Promised Land: The Great Black Migration and How It Changed America.
Why, a curious student might want to ask Professor Lemann, hasn’t he written about the reverse migration, and about the economic and cultural forces behind it?
I think we know why he won’t. The ideological prejudices of so many journalists and media elites — and the academic elite, too, even in the South — won’t permit it. They’re so invested in the old narrative of the South, so busy reminding Americans about the tragic history of the region, they can’t bear the thought that it’s changed, let alone that black people are fleeing blue northern cities to live in red southern states.
But this much is self-evident: If the South is so backward, why are some of the most sophisticated foreign companies moving here? For decades, American policymakers have been worried that we would lose our manufacturing base to the world, but over the past few decades, the South has become a hub of manufacturing for the world.
This much, too, is self-evident: If the South is so racist, why are so many black people moving back here?
You won’t ever see or hear any of the above stories covered in any depth in the media. They’re too busy recounting negative stories about the South’s past — stories that no doubt need telling — to notice the progress.
An appreciation for the differing perspectives that people have of the material presented here provides some understanding of how they might have divergent ideas about economic development in America.