Wednesday, June 12, 2013

The Glory Days of America's "Robber Barons"

In response to the article Corporate Tax Dodging is Simply Unpatriotic that I blogged on yesterday, a correspondent sarcastically replied to another's comments with:

By all means let's return to the good old days of Andrew Carnegie, J.P. Morgan and John D. Rockefeller because life was so much better for the working class. Andrew Carnegie would treat a drill bit better than the guy who used it.
In fact, the first sentence is literally true, in large part because the second sentence is completely false. As Burton W. Folsom, Jr. explains in The Myth of the Robber Barons,  Andrew Carnegie valued his employees, rewarding productiveness through a "a merit system":

Strong incentives were given employees who . . . excelled. Carnegie explained that success "flows from having interested exceptional men in our service; thus only can we develop ability and hold it in our service."

One of the dopiest fantasies espoused by anti-business, anti-capitalist mentalities is that business success can be built on cheating the customers and trashing the employees. It's astounding how many people swallow this gunk, despite the fact that a few minutes of thought would expose the illogic of the idea.

I left this reply:

These three were productive geniuses who raised the general standard of living. Carnegie dramatically lowered the cost of steel, supercharging myriad steel-using industries from construction to autos to railroads to farm equipment and more. Rockefeller perfected and lowered the cost of oil products such as kerosene, bringing economical nighttime illumination to average folk for the first time (displacing expensive whale oil, which only the wealthy could afford) and, later, feeding the automobile industry with cheap gasoline. These two together created indespensible necessities of the advanced industrial civilization we enjoy today. Morgan sent surges of prosperity through the economy by providing vital capital to promising companies, technologies, and innovators such as Thomas Edison. The "working class" has rarely had such valuable benefactors. Their fortunes are a pittance compared to the value they added to the lives of untold millions.

Yes, by all means lets return to the days when the Carnegies, Rockefellers, and Morgans could once again flourish without the drag of soak-the-rich parasites.

As Andrew Bernstein notes in his article The Inventive Period, "To defend freedom against the distortions of the anti-capitalist historians it is important to reject the inaccurate and opprobrious title of 'the Gilded Age' for the late nineteenth century."

Related Reading:

The Myth of the Robber Barons by Burton W. Folsom Jr.

Patriotism and the Welfare State

Capitalism in No Way Created Poverty, It Inherited It by Yaron Brook and Don Watkins

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