Wednesday, August 24, 2011

Corporate Growth

In the last few decades of the nineteenth century, and the first few decades of the twentieth, corporations grew, wages rose, the number of people working in industry increased, and the population of the United States grew steadily. A steadily growing population is one necessary precondition for a prosperous economy. Cengage's history book describes this era:

This growth in scale was in part a response to the enormous domestic market. By 1900, railroads provided the country with an efficient transportation system that allowed corporations to ship goods virtually anywhere in the United States. A national network of telegraph lines allowed constant communication between buyers and sellers separated by thousands of miles. And the population, which was expanding rapidly, demonstrated an ever-growing appetite for goods and services.

This prosperity, and its benefits to citizens at every income level, is founded upon an understanding of property. Although legal ownership is a central concept in any free society, it is balanced by a moral tradition of stewardship - that one is only temporarily in charge of one's property, and has a duty to use it wisely, fairly, and for the benefit of others. Legal ownership gives the individual power to make decisions; the moral tradition gives the individual guidance about how to make those decisions. Temple University's Mark Levin writes:

The key to understanding the free market is private property. Private property is the material manifestation of the individual's labor—the material value created from the intellectual and/or physical labor of the individual, which may take the form of income, real property, or intellectual property. Just as life is finite, so, too, is the extent of one's labor. Therefore, taxation of private property, or the regulation of such property so as to reduce its value, can become in effect a form of servitude, particularly if the dispossession results from illegitimate and arbitrary state action.

If the legal notion of private property is threatened, both the freedom of society, and its ability to attempt justice are inhibited.

the federal government should raise revenue only to fund those activities that the Constitution authorizes and no others. Otherwise, what are the limits on the Statist's power to tax and regulate the individual's labor and, ultimately, enslave him?

Taxes, although sadly necessary, must be kept to a minimum, or else both the individual and society will suffer a loss of freedom, the inhibition of justice, and a decrease in the ability to benefit either the person or the community.

Economics Changes Society

Karl Marx wrote that all history is economic history. While he may have taken it a bit too far, it is certainly true that culture can be influenced developments in the business world. In the second half of the 1800's, economic growth makes itself felt, as the historical narrative tells

about how the newly powerful corporations transformed America; how they intensified their search for a new forms of production and management; how the jobs they generated attracted millions of immigrants, southern blacks, and young single women to northern cities; and how they triggered an urban cultural revolution that made amusement parks, dance halls, vaudeville theater, and movies integral features of American life. [Cengage's history book]

While the business world was seeking to explore the capabilities of science and technology, society explored the new options it found in these developments:

The free market is an intricate system of voluntary economic, social, and cultural interactions that are motivated by the desires and needs of the individual and the community. [Mark Levin]

In a complex web of millions of individual actions, individual choices add up to form both economic and cultural trends. Each person minutely and indirectly affects the course of society:

while the symmetry between the free market and the civil society is imperfect—that is, not all developments resulting from individual interactions contribute to the overall well-being of the civil society—one simply cannot exist without the other. [Levin]

Because of the complexity, indirectness, and subtle manner in which these millions of economic actions and cultural preferences add up, it is impossible to predict their ultimate direction, and their progress will not be perfectly efficient. Despite difficulties, setbacks, false starts, and dead ends, the general pattern will emerge, yielding both individual and societal gains.

Tuesday, August 23, 2011

Free Markets, Free People, Free Society

As Americans explored the increasing economic freedoms of the 1800's, the nation prospered. The abolition of slavery, even if it meant a temporary setback for the businesses of the deep south, brought opportunities for millions of Americans. The defeat of the Populists, or People's Party, with their desire for increased taxes, encouraged the markets and workshops in small towns across the country. As the growth continued, small businesses turned into big businesses, and new ways of envisioning trade arose. Cengage's history book states:

Corporations were changing the face of America. Their railroad and telegraph lines crisscrossed the country. Their factories employed millions. Their production and management techniques became the envy of the industrialized world. A new kind of building - the skyscraper - came to symbolize America's corporate power. These modern towers were made possible by the use of steel rather than stone framework and by the inventions of electrically powered elevators.

But it did always go so smoothly. Although the rise of large corporations created wealth and job opportunities for millions of people, and raised the standard of living for almost all Americans, there were times when the system went bad. A good business environment depends upon a free market, in which everyone can compete fairly. But some corporations were in league with the government: a cozy relationship between a business and the government can lead to unfair advantages being given to that business: then there is no free market, and no fair competition. All corporations should face the fierce conditions of competition equally; only then will a truly free market create prosperity for lower, middle, and upper class citizens.

Temple University's Mark Levin writes

that the individual is more than a producer and consumer of material goods. He exists within the larger context of the civil society—which provides for an ordered liberty.

Free markets do more than raise the standard of living for the working class. Free markets acknowledge human dignity. The worker

sees in the free market the harmony of interests and rules of cooperation that also underlie the civil society. For example, the free market promotes self-worth, self-sufficiency, shared values, and honest dealings, which enhance the individual, the family, and the community. It discriminates against no race, religion, or gender. The truck driver does not know the skin color of the individuals who produce the diesel fuel for his vehicle; the cook does not know the religion of the dairy farmers who supply milk to his restaurant; and the airline passenger does not know the gender of the factory workers who manufacture the commercial aircraft that transports him—nor do they care.

Free societies arise from, and are sustained by, free markets.

Soothing Racial Tensions

Those who live in the United States are accustomed, when hearing the phrase 'racial tensions', to think of misunderstandings and frictions between African-Americans and Americans of European ancestry. But 'race' can refer to much more than simply Black or White. There are many other racial distinctions which can be made among humans, and which can be the occasion for miscommunication and even conflict.

A large number of Chinese immigrants entered the western U.S. in the second half of the nineteenth century. They came mainly to work on railroads: the few pennies per day they were paid was much more than they could have earned in China. Cengages's history book states:

As many as 300,000 Chinese immigrants arrived in the United States between 1851 and 1882, and more than 200,000 Japanese immigrants journeyed to Hawaii and the western continental United States between 1891 and 1907. They contributed in major ways to the development of two of the West's major industries: railroad building and commercial agriculture.

But different cultures do not always easily mix. Although the vast majority of Chinese, Blacks, and Whites developed cooperation and mutual respect as they lived in pioneer towns together, sometimes there were frictions. Professor Ferenc Szasz at the University of New Mexico writes that

Famed Methodist itinerant John "Father" Dyer reportedly staved off an 1880 anti-Chinese riot in the mining town of Breckenridge, Colorado. When an angry mob began to shout, "The Chinese must go," Dyer mounted the nearest steps and began to sing "All Hail the Power of Jesus' Name." He paused after several verses to launch into an extemporaneous sermon, preaching that God's love was intended for all humanity and that all men were brothers. Eventually the mob dispersed.

The pastors, priests, and preachers of the western U.S. worked to create a social harmony in which all races could live and work together.

Monday, August 22, 2011

Journalist Caught

Newspaper reporters often wish to present themselves as neutral and objective in their communication of facts to their readers; and some of them are. But some are not. The case of Walter Duranty has become a famous example. He wrote for the New York Times, and reported from Russia in the 1920's and 1930's. During these years, Soviet rule Joseph Stalin was creating a series of artificial famines which would ultimately kill several million people; Stalin was depopulating sections of the country which were not enthusiastic about his dictatorship.

Duranty, however, failed to mention any of this in his articles. In fact, he painted a rather pleasant picture of life in the Soviet Union, and assured his readers that there was no starvation. How and why would a journalist write such unquestionable falsehoods?

Columbia University Professor Mark von Hagen, who worked with the management of the New York Times to investigate Duranty's writings, commented that Duranty

frequently writes in the enthusiastically propagandistic language of his sources


Much of the 'factual' material is dull and largely uncritical recitation of Soviet sources, whereas his efforts at 'analysis' are very effective renditions of the Stalinist leadership's self-understanding of their murderous and progressive project to defeat the backwardness of Slavic, Asiatic peasant Russia.

Duranty has knowingly repeated the texts of the Soviet propaganda agency in his articles, despite his clear awareness that the claims were false.

The management of the New York Times, distancing itself from Duranty's work, commented that

Other writers in the Times and elsewhere have discredited this coverage.

It remains something of a mystery why Duranty would sacrifice his own credibility and professionalism to support the dictatorship which would ultimately kill millions of its own citizens.

Thursday, August 18, 2011

Money and History

It is impossible to keep political history, social history, economic history and cultural history completely separate from one another. These areas of life are all inter-related. When the United States began in 1776, and when it replaced its Articles of Confederation with the Constitution a few years later, it was clear that the political and religious freedom which Americans wanted needed to be harmonized with financial freedom. Although these areas of life many seem unrelated, the principle was clear: if you lose one, you'll soon lose the other. Having the freedom to speak your political opinion goes hand-in-hand with keeping taxes low. Having the liberty to exercise whatever religion you choose is inseparable from a free market economy.

It is no coincidence the end of slavery, being an expansion of personal freedom, gave rise to economic growth. Temple University's Mark Levin writes:

The free market is the most transformative of economic systems. It fosters creativity and inventiveness. It produces new industries, products, and services, as it improves upon existing ones. With millions of individuals freely engaged in an infinite number and variety of transactions each day, it is impossible to even conceive all the changes and plans for changes occurring in our economy at any given time. The free market creates more wealth and opportunities for more people than any other economic model.

Economic systems are very sensitive to any trend which seeks to reduce individual liberty. Just as the abolition of slavery increased personal freedom, a few decades later the Populists would try to reduce it. Most attempts at reducing individual liberty are hidden behind promises of more freedom, not less. The Populists, or People's Party, was a political movement formed in 1891 that claimed to work in the interests of labor and farmers, and pretended to seek more economic liberty in the free coinage of silver. But in reality, they wanted a graduated income tax, and government control business. The presence of the Populist Party, and its attempt to place candidates into elected offices, slowed economic growth.

Happily, the ordinary voters saw through the claims of the Populists, and by 1896, the People's Party was no longer a force in the nation's political life. Prosperity could continue. Cengage's history book states:

With the collapse of populism in 1896 and the end of the depression in 1897, the American economy embarked on a remarkable stretch of growth. By 1910, the United States had secured its status as the world's greatest industrial power.

The lesson is clear: personal political freedom and individual religious liberty lead to free markets and lower taxes - all of which brings prosperity for the entire nation.