Happy & Brainy Group discussion
Politics
>
Reason Reigns quote: "Rejoice! Angels do exist in our midst, though it takes the highest of virtues to recognize them."
date
newest »
newest »
Mod
Author.... Thomas J. DiLorenzo
The Truth About the "Robber Barons"
Excerpts:
As common as it is to speak of "robber barons," most who use that term are confused about the role of capitalism in the American economy and fail to make an important distinction — the distinction between what might be called a market entrepreneur and a political entrepreneur.
A pure market entrepreneur, or capitalist, succeeds financially by selling a newer, better, or less expensive product on the free market without any government subsidies, direct or indirect. The key to his success as a capitalist is his ability to please the consumer, for in a capitalist society the consumer ultimately calls the economic shots.
By contrast, a political entrepreneur succeeds primarily by influencing government to subsidize his business or industry, or to enact legislation or regulation that harms his competitors.
In the mousetrap industry, for instance, you can be a market entrepreneur by making better mousetraps and thereby convincing consumers to buy more of your mousetraps and less of your competitors', or you can lobby Congress to prohibit the importation of all foreign-made mousetraps. In the former situation the consumer voluntarily hands over his money for the superior mousetrap; in the latter case the consumer, not given anything (better) in return, pays more for existing mousetraps just because the import quota has reduced supply and therefore driven up prices.
The American economy has always included a mix of market and political entrepreneurs — self-made men and women as well as political connivers and manipulators. And sometimes, people who have achieved success as market entrepreneurs in one period of their lives later become political entrepreneurs. But the distinction between the two is critical to make, for market entrepreneurship is a hallmark of genuine capitalism, whereas political entrepreneurship is not — it is neomercantilism.
In some cases, of course, the entrepreneurs commonly labeled "robber barons" did indeed profit by exploiting American customers, but these were not market entrepreneurs. For example, Leland Stanford, a former governor and US senator from California, used his political connections to have the state pass laws prohibiting competition for his Central Pacific railroad, and he and his business partners profited from this monopoly scheme.
Unfortunately, the resentment that this naturally generated among the public was unfairly directed at other entrepreneurs who succeeded in the railroad industry without political interference that tilted the playing field in their direction. Thanks to historians who fail to (or refuse to) make this crucial distinction, many Americans have an inaccurate view of American capitalism.
!!!!!!!!!!
James J. Hill built the Great Northern Railroad "without any government aid, even the right of way, through hundreds of miles of public lands, being paid for in cash," as Hill himself stated.
Quite naturally, Hill strongly opposed government favors to his competitors: "The government should not furnish capital to these companies, in addition to their enormous land subsidies, to enable them to conduct their business in competition with enterprises that have received no aid from the public treasury," he wrote. This may sound quaint by today's standards, but it was still a hotly debated issue in the late nineteenth century.
James J. Hill was hardly a "baron" or aristocrat. His father died when he was fourteen, so he dropped out of school to work in a grocery store for four dollars a month to help support his widowed mother. As a young adult he worked in the farming, shipping, steamship, fur-trading, and railroad industries. He learned the ways of business in these settings, saved his money, and eventually became an investor and manager of his own enterprises. (It was much easier to accomplish such things in the days before income taxation.)
Hill got his start in the railroad business when he and several partners purchased a bankrupted Minnesota railroad that had been run into the ground by the government-subsidized Northern Pacific (NP). The NP had been a patronage "reward" to financier Jay Cooke, who in the War Between the States had been one of the Union's leading financiers. But Cooke and his NP associates built recklessly; the government's subsidies and land grants were issued on a per-mile-of-track basis, so Cooke and his cohorts had strong incentives to build as quickly as possible, which only encouraged shoddy work. Consequently, by 1873 the NP developers had fallen into bankruptcy. The people of Minnesota and the Dakotas, where the railroad was being built, considered Cooke and his business associates to be "derelicts at best and thieves at worst," writes Hill biographer Michael P. Malone. …
The Great Northern's efficiency and profitability were legendary, whereas the government-subsidized railroads, managed by a group of political entrepreneurs who focused more on acquiring subsidies than on building sound railroads, were inefficiently built and operated. Jay Cooke was not the only one whose government-subsidized railroad ended up in bankruptcy. In fact, Hill's Great Northern was the only transcontinental railroad that never went bankrupt. …
*
Read the entire article for knowledge and justice – an honest man seeks the truth and praises the good.
Thank you, Mr. DiLorenzo. I will buy "How Capitalism Saved America".
Hi. This is my first post on GoodReads. Strange how one is drawn to particular posts, on line. My dad was a major capitalist, rising from a penniless first generation immigrant in the 1930s to owner and CEO of the largest residential construction company in Northern California in its heyday in the late 1950s and 60s. Unfortunately for our family, the fruit of his labor disappeared after he was killed by a drunk driver in 1964. (Succession must be planned in capitalist dynasties.) While I didn't have my father as an example after his death, I did have the experience of growing up with him and my family. He was a whirlwind of activity and purpose. An amazing spiritual presence, and a weightlifter, amateur wrestler, and supporter of causes.
What most writers about capitalism don't get is the psychological/spiritual element of the capitalist.
When I was earning my MA in Marriage, Family and Child Counseling, I learned that many entrepreneurs are extroverted intuitives in Jung's typology.
Their introverted intuitive counterparts, people like Jesus and the Buddha, focus on the inner world.
Extroverted intuitives orientate themselves with wisps of meaning and intuition they glean from the outer world––the world of commerce and trade. Others can't see these. They can make extraordinary judgement calls from data others miss.
Seeing my father in operation showed me how intuitive he was. How much he picked up from the world around him. How he guided himself. How much fun he had. He and his entrepreneur buddies were like boys playing with giant enterprises.
I also saw driven my dad was. John D. Gardner, PhD, who teaches at Johns Hopkins School of Medicine wrote The Hypomanic Edge: The Link Between (A Little) Craziness and (A Lot of) Success in America (Hardcover)(ISBN-13: 978-0743243445)
In this book, Gartner, a clinical psychologist, describes the psychological state of many of Silicon Valley's top movers and shakers. He found that ALL the top entrepreneurs he surveyed showed symptoms of hypomania.
This is not to say they were bipolar. Hypomania is like "bipolar lite". People with the condition don't usually flip into psychotic depression or elation like full bipolars. They just go FAST, and they go HARD.
Gartner argues that these people and their touch of madness are responsible for much of America's economic greatness. It's an interesting thesis. He's just written a book on Bill Clinton, using his case as further data. That book isn't out yet.
This material was background infromation for me, having been raised in my family. I'm sure my dad was hypomanic, though never diagnosed as such. He was the most focused, most effective, most inspiring man I've met––outside meditation masters.
When I began writing my series of psycho/spiritual thrillers, The Bloodsong Series, which is about how the richest man in the world, a Silicon Valley billionaire, meets a great Native American shaman, all this swam inside me.
My "hero" has elements of my dad and MANY others. He doesn't get diagnosed until the second book in the series, but he's an example of what I discuss here and Gartner and my psychology profs talked about elsewhere.
Capilatists are not just greedy pigs. They do a lot for society, and will continue to do so. Look at Bill Gates. He's giving it all away, after earning and achieving more than most of us can conceive.
My best wishes, Mr. DiLorenzo
Sandy Nathan
Numenon
Mod
Kudos to your Dad for rising from a penniless immigrant to owner and CEO of a large company!
Mod
Excerpt - The Prime Movers: Traits of the Great Wealth Creators
Even though the categories (and traits) are not, in reality, independent since each reinforces the others, I have grouped these traits into four categories:
1. Thinking
----- Independent vision
----- Active mind
----- Competence and confidence
2. Motivation
----- Drive to action
----- Egoistic passion
3. Attitude Towards Employees
----- Love of ability in others
4. Character
----- Virtue
Mod
Moochers and looters lust for the unearned; they ascribe their greed to the producers to cover up their mooching and looting.
Good men think productive work is noble.
Great comments,Ilyn. I'm going to check out your book and The Prime Movers. What I saw watching my dad and his friends so fits the 4 points you list in Movers. These guys had fun––and contributing to society and making money were an integral part of it. Money was the score card, nothing more. My dad built houses because he never had a good house until he built one for himself (and he went on to provide them for the rest of the family). I've got his senior thesis from UC Berkeley (in engineering). His thesis is about the need for decent housing for everyone and how to provide it.
He got a shock doing research for it (in the 1930s) when he discovered that subsidized housing (and tiny units) was selling in Southern California for three times the price at which he could sell a roomy three bedroom home. Because of this and other experiences, he was a major advocate of private enterprise. (And a liberal Democrat all his life.)
Of course, we've seen in recent days with the collapse of huge banks and the financial markets that capitalism isn't effective or socially useful if the people behind it aren't.
I'll check out your references. Thanks for posting!
Numenon
Mod
Hi everyone.
*
Posted in the "To the Glory of Man" group:
The present US social system is a mixed economy; it is part statist.
Ayn Rand is for the complete separation of state and economics, i.e capitalism, because it is the social system that respects individual rights.
From wise and honest President Abe Lincoln: “Property is the fruit of labor... property is desirable... is a positive good in the world. That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built."
The only moral social system is one that respects individual rights, i.e. Liberty, defined by Presidents Lincoln and Jefferson as: each man to do as he pleases with himself, and the product of his labor, within limits drawn around him by the equal rights of others.
For decades now, the housing and financial industries are not free. The lending practices that politicians now blame on lenders are mandated by the Community Reinvestment Act (CRA) enacted in 1977. http://en.wikipedia.org/wiki/Communit...
Freddie Mac and Fannie Mae are GSEs: government sponsored enterprises. Fannie Mae was founded as a government agency in 1938 as part of FDR's New Deal. From 1938 to 1968, the secondary mortgage market in the US was monopolized by Fannie Mae. In 1968, to help balance the federal budget, part of Fannie Mae was converted to a private corporation. To provide competition in the secondary mortgage market, and to end Fannie Mae's monopoly, the Emergency Home Finance Act of 1970 created Freddie Mac. http://en.wikipedia.org/wiki/Governme...
The housing and financial industries are crumbling because of massive government intervention. Politicians who pity the poor and who force banks to lend to people who have no means to pay them back, are short-sighted and irrational; so are voters who cheer them. Of course, the lenders would eventually go bankrupt.
To those who think government intervention in business is good, ponder why the USSR crumbled, why North Korea isn’t an economic power.
*
The economic power of big business establishments is very different from political power which is the “power to use force”. The government has the monopoly on the latter; it should be used solely to protect individual rights.
Business establishments have no power to force anyone. When customers patronize a company because of inexpensive quality products, and its competitors go bankrupt, this is justice – the triumph of the good. Competitors could endeavor to best the best – this is great for customers: better and cheaper goods/services are produced. If a company invents a cure for cancer, Liberty dictates that the company enjoys a monopoly on that invention.
Mod
Sample:
By Mary Bellis
Ralph Teetor, a prolific (and blind) inventor, invented cruise control. Teetor, blind since the age of five, built his first car, a one-cylinder, by the age of 12. He received his Bachelor of Science degree in Mechanical Engineering from the University of Pennsylvania. His first job post-graduation was to develop technology for steam turbine rotors used in torpedo boat destroyers during W.W.I.
Ralph Teetor became a mechanical engineer for the Light Inspection Car Company, a company founded by his family that later was renamed the Perfect Circle Corporation. The company provided piston rings to car companies such as Packard, General Motors, Chrysler and Studebaker. He soon became the Vice President of Engineering for Perfect Circle and later the President.
In 1945, Ralph Teetor received his first patent on a speed cruise control device....
Happy & Brainy Group
Books mentioned in this topic
Numenon: A Tale of Mysticism & Money (other topics)Numenon: A Tale of Mysticism & Money (other topics)
Book....... How Capitalism Saved America
Author.... Thomas J. DiLorenzo
The Real History
The lesson here is that most historians are hopelessly confused about the rise of capitalism in America. They usually fail to adequately appreciate the entrepreneurial genius of men like James J. Hill, John D. Rockefeller, and Cornelius Vanderbilt, and more often than not they lump these men (and other market entrepreneurs) in with genuine "robber barons" or political entrepreneurs.
Most historians also uncritically repeat the claim that government subsidies were necessary to building America's transcontinental railroad industry, steamship industry, steel industry, and other industries. But while clinging to this "market failure" argument, they ignore (or at least are unaware of) the fact that market entrepreneurs performed quite well without government subsidies. They also ignore the fact that the subsidies themselves were a great source of inefficiency and business failure, even though they enriched the direct recipients of the subsidies and advanced the political careers of those who dished them out.
Political entrepreneurs and their governmental patrons are the real villains of American business history and should be portrayed as such. They are the real robber barons.
At the same time, the market entrepreneurs who practiced genuine capitalism, whose genius and energy fueled extraordinary economic achievement and also brought tremendous benefits to Americans, should be recognized for their achievements rather than demonized, as they so often are. Men like James J. Hill, John D. Rockefeller, and Cornelius Vanderbilt were heroes who improved the lives of millions of consumers; employed thousands and enabled them to support their families and educate their children; created entire cities because of the success of their enterprises (for example, Scranton, Pennsylvania); pioneered efficient management techniques that are still employed today; and donated hundreds of millions of dollars to charities and nonprofit organizations of all kinds, from libraries to hospitals to symphonies, public parks, and zoos.
It is absolutely perverse that historians usually look at these men as crooks or cheaters while praising and advocating "business/government partnerships," which can only lead to corruption and economic decline.