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Friday, January 24, 2014

The Industrial Revolution and the Robber Barons (Part One)

(Editor’s note:  This is the first segment in a two part series, introducing readers to the Industrial Revolution and the underpinnings of modern times.)

What were the key ingredients to "make" America's Industrial Revolution?  What, if any, was the government’s role?  Why were the times seen as a Gilded Age, when style points both in politics and culture triumphed over substance?

In truth, the US was “ready” for the Industrial Revolution long before it actually arrived, but divisiveness on the slavery question held back progress.  Compromise after compromise had put off resolution of the most basic of civil rights issues, until it could be put off no longer.  When the Civil War ended, and the states were reconstructed, the US could return to the matter of industrial progress and prowess at the turn of the 20th century.

Some say the birth of the Industrial Revolution was a precipitous event, transitioning America from a promised land into a crusader state, to capture and protect the wealth of foreign markets for its own citizens.  In this way America was said to mimic every great empire which had come --- and gone --- before.

The Industrial Revolution was the great free for all, US government “guided” by principles of Social Darwinism.  Basically, it was a game of survival of the fittest, most adaptable, Darwin’s theory of evolution as applied to society.  Those individuals who had figured out how to amass great personal wealth were viewed as being in the best position to make leadership decisions for the good of the masses.

Government’s role was either to support these individuals and their industries or avoid meddlesome interference (laissez-faire acceptance of supply and demand theory).  Industrial ventures operated through large, capital massing business organizations, called “trusts.”  But the relationship of these trusts to their government was to test severely the lawmaker’s role as the impartial umpire in the people’s pursuit of happiness.

The so-called titans of capitalism were bolstered by the collective success of the nation occasioned by explosive economic growth brought on by the Industrial Revolution.  The early capitalists featured names like Rockefeller in the business of oil, Morgan in banking, Carnegie in steel, and Vanderbilt in railroads.  They were firm believers in a free, unregulated market promoted by competition, with a new consumer class, a thriving force in the industrial economy.  With the incentive to reap great profits, these titans consolidated operations into large mega-corporations, streamlined the various systems of production, eliminated redundancies and maximized efficiencies.  While consolidation permitted them to control their industries, a primary goal was still to give the customer the best product at the lowest price.

It is perhaps helpful to think of the process of “making” an Industrial Revolution as similar to baking a wedding cake.  There were several key ingredients.  Among them were natural resources, such as oil, copper, land and water; a capital supply serving as “fertilizer.”  Government support was in the form of protective tariffs for the new, fledgling American industries, the birth of the modern corporation, low interest loans and adherence to the monetary gold standard.  Entrepreneurs took risks, mastered the art of vertical integration, business re-organization, and buying low and selling high.  Technological developments, such as electricity, steel, glass and the internal combustion engine, permitted innovations in rail transit, and the invention of the telephone and canned food.  A work force/consumer class was fueled mostly by an abundant flow of previously uneducated and unskilled laborers comprised mainly of a seismic inflow of new immigrants.  They had migrated to the cities in search of opportunities, filling the abundance of new industrial jobs.

For sure, there were many positives to consider.  In the span of a mere generation, the US became the #1 industrial power in the world, during which time a modern industrial economy emerged.  Skyscrapers were constructed, soon began to overtake the urban landscape, and our modern, industrial, steel and glass cities were born.  Immigrants comprised a new economic unit, a powerhouse called the “middle” class, a new term for the era.  With rising income, industrial workers doubled as what became known as consumers.  Their collective purchasing power permitted them to achieve a raised standard of material existence previously unknown.  It also kept the economy humming.

While the titans of industry were champions of competition, ironically, their goal was to eliminate competition.  Specifically, they sought to accomplish this by creating and then maintaining a hierarchy with themselves at the top.  Many had arrived there through superior intellect or other legitimate means.  But some used questionable or even illegal business practices.  Bribes, kickbacks and other monopolistic trade practices were all utilized to destroy competitors.

The times were regarded in negative terms as the Gilded Age, with great wealth flashed to the masses but accessible only to a precious few.  Those precious few were sometimes referred to not so nicely as robber barons.  Style points both in politics and culture triumphed over substance.  Consider the image of sunglasses attached to a bright, smiling face.

((Editor’s note:  The second and concluding segment in this two part series introduces readers to Andrew Carnegie, the Gospel of Wealth and the third lesson of US History.)

-Michael D'Angelo

Thursday, January 9, 2014

The Umpire

Who acts as “Umpire” in the great American experiment in democracy?  How is the umpire protected from big money interests to complete our nation's great unfinished business --- achieving meaningful equality of opportunity?

Thomas Jefferson felt that the happiest society was one where inequalities of condition were not great.  As president, he considered what was needed for the happiness and prosperity of the people.  Jefferson talked about “a wise and frugal government, which shall restrain men from injuring one another.”  Further, that government should leave the people “otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.”  Are these the government and conditions we are experiencing today?

Jefferson believed that the status of aristocracy, based as it was not on merit but inherited privilege, made it doubtful that this class would exercise its public obligation for human progress on its existing foundation.  Consequently, his ideas sought to restore “the natural order of freedom to give talent and virtue, which were scattered through all ranks of society, a chance to rise.”  He described his purposes in terms of “natural philosophy.”  Throughout his life, Jefferson never ceased to believe that men (white men, that is) by right were free in their minds and persons and that human society should guide its steps by the light of reason.

Today’s news media heaps praise upon America as a land of opportunity.  This praise is earned on merit.  The constitution requires all citizens to be considered equal under the law, that they should be afforded "equal protection of the laws."  But did the founding fathers designate anyone in particular to discharge the responsibility for fair dealing on a level playing field?  In other words, can we identify the Umpire?

Jefferson, for one, argued that it was the legislature, working in unison with the executive, which was best suited to play the unassuming, under-appreciated role of umpire.  On the important condition that proper policy was in place by the combined efforts of this pair, working together, then thereafter,

The path we have to pursue is so quiet that we have nothing scarcely to propose to our Legislature.  A noiseless course, not meddling with the affairs of others, unattractive of notice, is a mark that society is going on in happiness.  If we can prevent the government from wasting the labors of the people, under the pretense of taking care of them, they must become happy.

To this noiseless course approach,

It must be added, however, that unless the President’s mind in a view of everything which is urged for and against (a particular bill) is tolerably clear that it is unauthorized by the Constitution; if the pro and the con hang so even as to balance his judgment, a just respect for the wisdom of the legislature would naturally decide the balance in favor of their opinion.  It is chiefly for cases where they are clearly misled by error, ambition or interest, that the Constitution has placed a check on the negative (i.e.: veto) of the President.

So, it is the legislative branch which serves the role of umpire, calling balls and strikes, fair or foul, letting the citizens “play” and using its authority to maintain a level playing field.  But the ordinary citizen must be mindful that the “science of human nature” will be silently at work in the democratic process.  This involves an expectation of reasonable men acting reasonably in their own best interest.  That is to say, lawmakers face natural corruption by self-interest.

Notorious among the primary, big money, self-interest components of American democracy are the financial interests of capitalism, the resulting onset of political parties, large corporations, labor unions, lobby groups, political action committees, etc.  Importantly, each has evolved only after the constitution was enacted in 1789.  Together they tend to undermine the transparency necessary to understand how and why laws are made --- or not made.

The ordinary citizen may draw certain conclusions when wealth and income disparity are presently at an all time high, and those conclusions are not all positive.  For one, the situation is morally indefensible.  And for another, the legislative branch is inadequately protected from big money interests.  This confounds the quest to complete the great unfinished business of the nation --- achieving meaningful equality of opportunity.

How can the rules of the game be revisited to assist lawmakers with their inherently difficult role of impartial umpire in a level playing field society?  The good news is that sound, practical measures appear to be readily available.  Does the ordinary citizen possess the courage to meet the challenge of our time?

-Michael D’Angelo