-
Hello, this board in now turned off and no new posting.
Please REGISTER at Anabolic Steroid Forums, and become a member of our NEW community!
-
Check Out IronMag Labs® KSM-66 Max - Recovery and Anabolic Growth Complex
Unemployment
- Thread starter Doublebase
- Start date
As expected no reality based answer because you don't understand economics.
There are no natural methods of recession recovery from capitalism. So basically your "solution" is to crash the US and global economy, which would result in a depression that would most likely last 30-50 years and make the Great Depression and Great Recession look like holidays.
And it wouldn't just be the big banks, it would all the retailers, all the fast food chains, all the mom and pop stores across the country because they would have no customers. Hyperinflation would cause the costs of foods, goods and services to increase 1000-2000%. There are dozens of examples in world history of these effects, the US would not escape them and they would be the same here.
Only the biggest firms would survive and during the recession they would gobble up what ever assets were held by smaller firms making them even large in scope. Recessions cause permanent wealth transfer up the ladder.
You have only the most basic understanding of how capitalism works and apparently no working knowledge of recession recovery patterns.
Without regulation it's a complete train wreck.
i beg to differ
Then you aren't paying attention. Without regulation there is no competition, there are no safeties to protect the consumer, it becomes a system horribly slanted to the benefit of the few. With a lot of the deregulation that has happened how can you not see this?
Bowden
Elite Member
- Joined
- Dec 18, 2009
- Messages
- 1,798
- Reaction score
- 736
- Points
- 0
Without regulation it's a complete train wreck.
Without government anti trust laws/regulations there is historical evidence that corporations tend to form monopolies which reduces free market competition and trade.
Without government regulations in this area companies tend to fix prices and reduce consumer choice.
That was the reason why the Sherman act was enacted into law.
The history of railroads and The Standard Oil Company illustrates the problems with unregulated capitalism and corporations.
That's because you don't know anything about it the history of it because your too lazy to read about it.
Contrary to conservative ideology, there is no such thing as a free market that is wholly divorced from laws, regulation and government. The market, as it exists, is a function of those property rights that were modified to exclude communal rights. The legal infrastructure of capitalism is what separates ownership from labor, and turns the marketplace into an inherently "owner friendly" institution.
People like you that are always talking about free market capitalism only preach about theory not about practical application. In reality there have never been any free markets in the US going all the way back to colonial times. There were laws that regulated trade between the colonies and the British in the 1600s called the Navigation Acts and laws that regulated trade between the colonies during the days of colonial mercantilism.
The fantasy world you speak of has never existed in reality and never will, get over it. You do realize that the entire original purpose of the colonies in the US was for the benefit of Britain don't you?
LOL you guys crack me up!
have fun living with the govt ruling your life in every aspect. I know you can't handle liberty and the responsibilities that come with it. its a damn shame. But some people like you just can't handle life without out govt telling you how to live. that's sad. but hey some people just need someone like govt holding your hand through life. LOL
have fun living with the govt ruling your life in every aspect. I know you can't handle liberty and the responsibilities that come with it. its a damn shame. But some people like you just can't handle life without out govt telling you how to live. that's sad. but hey some people just need someone like govt holding your hand through life. LOL
- Joined
- Mar 16, 2010
- Messages
- 14,048
- Reaction score
- 681
- Points
- 113
http://www.themuse.com/advice/how-to-answer-the-31-most-common-interview-questions
How to Answer the 31 Most Common Interview Questions
How to Answer the 31 Most Common Interview Questions
Bowden
Elite Member
- Joined
- Dec 18, 2009
- Messages
- 1,798
- Reaction score
- 736
- Points
- 0
To flourish capitalism and corporations require stable societies that are governed by the rule of law and order.
Laws are enacted by governments and law and order is enforced by government agencies such as the police.
The more complex a society, the greater need there is for a centralized government that enforces law and order .
The alternative is anarchy and a economy that is based on a 1-1 barter economy.
If you disagree provide some historical examples of complex stable societies and complex capitalist economies and corporations that have flourished within-in anarchical societies that do not have some form of centralized government.
At the Fed, The More Things Change, the More They Stay the Same
By Ron Paul
Ron Paul Institute
February 17, 2014
Last week, Federal Reserve Chairman Janet Yellen testified before Congress for the first time since replacing Ben Bernanke at the beginning of the month. Her testimony confirmed what many of us suspected, that interventionist Keynesian policies at the Federal Reserve are well-entrenched and far from over. Mrs. Yellen practically bent over backwards to reassure Wall Street that the Fed would continue its accommodative monetary policy well into any new economic recovery. The same monetary policy that got us into this mess will remain in place until the next crisis hits.
Isn?t it amazing that the same people who failed to see the real estate bubble developing, the same people who were so confident about economic recovery that they were talking about ?green shoots? five years ago, the same people who have presided over the continued destruction of the dollar?s purchasing power never suffer any repercussions for the failures they have caused? They treat the people of the United States as though we were pawns in a giant chess game, one in which they always win and we the people always lose. No matter how badly they fail, they always get a blank check to do more of the same.
It is about time that the power brokers in Washington paid attention to what the Austrian economists have been saying for decades. Our economic crises are caused by central bank infusions of easy money into the banking system. This easy money distorts the structure of production and results in malinvested resources, an allocation of resources into economic bubbles and away from sectors that actually serve consumers? needs. The only true solution to these burst bubbles is to allow the malinvested resources to be liquidated and put to use in other areas. Yet the Federal Reserve?s solution has always been to pump more money and credit into the financial system in order to keep the boom period going, and Mrs. Yellen?s proposals are no exception.
Every time the Fed engages in this loose monetary policy, it just sows the seeds for the next crisis, making the next crash even worse. Look at charts of the federal funds rate to see how the Fed has had to lower interest rates further and longer with each successive crisis. From six percent, to three percent, to one percent, and now the Fed is at zero. Some Keynesian economists have even urged central banks to drop interest rates below zero, which would mean charging people to keep money in bank accounts.
Chairman Yellen understands how ludicrous negative interest rates are, and she said as much in her question and answer period last week. But that zero lower rate means the Fed has had to resort to unusual and extraordinary measures: quantitative easing. As a result, the Fed now sits on a balance sheet equivalent to nearly 25 percent of US GDP, and is committing to continuing to purchase tens of billions more dollars of assets each month.
When will this madness stop? Sound economic growth is based on savings and investment, deferring consumption today in order to consume more in the future. Everything the Fed is doing is exactly the opposite, engaging in short-sighted policies in an attempt to spur consumption today, which will lead to a depletion of capital, a crippling of the economy, and the impoverishment of future generations. We owe it not only to ourselves, but to our children and our grandchildren, to rein in the Federal Reserve and end once and for all its misguided and destructive monetary policy.
www.LewRockwell.com
By Ron Paul
Ron Paul Institute
February 17, 2014
Last week, Federal Reserve Chairman Janet Yellen testified before Congress for the first time since replacing Ben Bernanke at the beginning of the month. Her testimony confirmed what many of us suspected, that interventionist Keynesian policies at the Federal Reserve are well-entrenched and far from over. Mrs. Yellen practically bent over backwards to reassure Wall Street that the Fed would continue its accommodative monetary policy well into any new economic recovery. The same monetary policy that got us into this mess will remain in place until the next crisis hits.
Isn?t it amazing that the same people who failed to see the real estate bubble developing, the same people who were so confident about economic recovery that they were talking about ?green shoots? five years ago, the same people who have presided over the continued destruction of the dollar?s purchasing power never suffer any repercussions for the failures they have caused? They treat the people of the United States as though we were pawns in a giant chess game, one in which they always win and we the people always lose. No matter how badly they fail, they always get a blank check to do more of the same.
It is about time that the power brokers in Washington paid attention to what the Austrian economists have been saying for decades. Our economic crises are caused by central bank infusions of easy money into the banking system. This easy money distorts the structure of production and results in malinvested resources, an allocation of resources into economic bubbles and away from sectors that actually serve consumers? needs. The only true solution to these burst bubbles is to allow the malinvested resources to be liquidated and put to use in other areas. Yet the Federal Reserve?s solution has always been to pump more money and credit into the financial system in order to keep the boom period going, and Mrs. Yellen?s proposals are no exception.
Every time the Fed engages in this loose monetary policy, it just sows the seeds for the next crisis, making the next crash even worse. Look at charts of the federal funds rate to see how the Fed has had to lower interest rates further and longer with each successive crisis. From six percent, to three percent, to one percent, and now the Fed is at zero. Some Keynesian economists have even urged central banks to drop interest rates below zero, which would mean charging people to keep money in bank accounts.
Chairman Yellen understands how ludicrous negative interest rates are, and she said as much in her question and answer period last week. But that zero lower rate means the Fed has had to resort to unusual and extraordinary measures: quantitative easing. As a result, the Fed now sits on a balance sheet equivalent to nearly 25 percent of US GDP, and is committing to continuing to purchase tens of billions more dollars of assets each month.
When will this madness stop? Sound economic growth is based on savings and investment, deferring consumption today in order to consume more in the future. Everything the Fed is doing is exactly the opposite, engaging in short-sighted policies in an attempt to spur consumption today, which will lead to a depletion of capital, a crippling of the economy, and the impoverishment of future generations. We owe it not only to ourselves, but to our children and our grandchildren, to rein in the Federal Reserve and end once and for all its misguided and destructive monetary policy.
www.LewRockwell.com
- Joined
- Mar 16, 2010
- Messages
- 14,048
- Reaction score
- 681
- Points
- 113
http://www.stltoday.com/news/local/...cle_df9db8a2-99bc-5910-ad16-5c53a15adb85.html
St. Louis jobseeker mailed feces to companies that failed to hire him
ST. LOUIS ? Rather than simply grumble to himself or complain to others, a St. Louis man aggrieved by a company's failure to hire him took another approach.
Jevons Brown packaged up cat feces and sent it through the mail.
Brown, 58, was sentenced Friday to two years of probation after pleading guilty in August to a misdemeanor charge of mailing injurious articles.
The plea says Brown, a veteran, became frustrated with his lack of employment opportunities and lashed out at employees of companies that failed to hire him.
U.S. Postal Inspection Service spokesman Dan Taylor said that investigators tracked 20 similar packages to Brown.
?This is not a victimless crime,? Assistant U.S. Attorney John Bodenhausen said in court Friday, later explaining that he meant postal workers and the people whose mail was adjacent to Brown's packages, in addition to the employees that received it.
Both Bodenhausen and Sean Vicente, Brown's public defender, agreed that probation was an appropriate sentence, saying Brown had recently found a job and had almost no criminal history.
Federal sentencing guidelines recommended probation or up to six months in prison.
Brown apologized in court, vowing, ?I'm sorry. This will never happen again.?
He has been getting counseling, and said that prayer and church had also been helping.
St. Louis jobseeker mailed feces to companies that failed to hire him
ST. LOUIS ? Rather than simply grumble to himself or complain to others, a St. Louis man aggrieved by a company's failure to hire him took another approach.
Jevons Brown packaged up cat feces and sent it through the mail.
Brown, 58, was sentenced Friday to two years of probation after pleading guilty in August to a misdemeanor charge of mailing injurious articles.
The plea says Brown, a veteran, became frustrated with his lack of employment opportunities and lashed out at employees of companies that failed to hire him.
U.S. Postal Inspection Service spokesman Dan Taylor said that investigators tracked 20 similar packages to Brown.
?This is not a victimless crime,? Assistant U.S. Attorney John Bodenhausen said in court Friday, later explaining that he meant postal workers and the people whose mail was adjacent to Brown's packages, in addition to the employees that received it.
Both Bodenhausen and Sean Vicente, Brown's public defender, agreed that probation was an appropriate sentence, saying Brown had recently found a job and had almost no criminal history.
Federal sentencing guidelines recommended probation or up to six months in prison.
Brown apologized in court, vowing, ?I'm sorry. This will never happen again.?
He has been getting counseling, and said that prayer and church had also been helping.
CBO: Hiking Minimum Wage to $10.10 Could Cost 500K Jobs
http://www.foxbusiness.com/economy-...ng-minimum-wage-to-1010-could-cost-500k-jobs/
http://www.foxbusiness.com/economy-...ng-minimum-wage-to-1010-could-cost-500k-jobs/
what's the problem with standard oil and the railroads? they gave us cheap prices for their services and products. And their prices kept falling. they weren't gouging people at all.
standard oil prices were cheap and competitive, Rockefeller's competitors wanted higher prices and increase market share. they were able to buy off lawmakers to side with them to pass anti trust laws.
so who's fixing the prices and making everything more expensive? yes, the govt........
[h=1]The Truth About the "Robber Barons"[/h]Mises Daily: Saturday, September 23, 2006 by Thomas J. DiLorenzo
Oily Characters?
Another prime example of a market entrepreneur whom generations of writers and historians have inaccurately portrayed ? indeed, demonized ? is John D. Rockefeller. Like James J. Hill, Rockefeller came from very modest beginnings; his father was a peddler who barely made ends meet. Born in 1839, he was one of six children, and his first job on graduating from high school at age sixteen was as an assistant bookkeeper for fifteen cents a day (under ten dollars a day today, even accounting for nearly 150 years of inflation).[22]
Rockefeller was religious about working and saving his money. After working several sales jobs by age twenty-three he had saved up enough to invest four thousand dollars in an oil refinery in Cleveland, Ohio, with a business partner and fellow church member, Samuel Andrews.[23]
Like James J. Hill, Rockefeller paid meticulous attention to every detail of his business, constantly striving to cut his costs, improve his product, and expand his line of products. He also sometimes joined in with the manual laborers as a means of developing an even more thorough understanding of his business. His business partners and managers emulated him, which drove the company to great success. As economist Dominick Armentano writes, the firm of Rockefeller, Andrews, and Flagler, which would become Standard Oil,
prospered quickly in the intensely competitive industry due to the economic excellence of its entire operations. Instead of buying oil from jobbers, they made the jobbers' profit by sending their own purchasing men into the oil region. They also made their own sulfuric acid, barrels, lumber, wagons, and glue. They kept minute and accurate records of every item from rivets to barrel bungs. They built elaborate storage facilities near their refineries. Rockefeller bargained as shrewdly for crude as anyone has before or since; and Sam Andrews coaxed more kerosene from a barrel of crude than the competition could. In addition, the Rockefeller firm put out the cleanest burning kerosene and managed to profitably dispose of most of the residues, in the form of lubricating oil, paraffin wax, and Vaseline.[24]
Rockefeller pioneered the practice known as "vertical integration," or in-house provision of various inputs into the production process; that is, he made his own barrels, wagons, and so on. This is not always advantageous ? sometimes it pays to purchase certain items from specialists who can produce those items at very low cost. But vertical integration has the advantage of allowing one to monitor the quality of one 's own inputs. It has the further advantage of avoiding what modern economists call the "hold-up problem." If, say, an electric power plant contracted with a nearby coal mine for coal to fuel its generating plant, the coal mine might effectively break its contract at one point by demanding more money for its coal. In such instances the power plant has the choice of paying up, engaging in costly litigation, or going without the coal and closing down. None of these options is attractive. But if the power plant simply buys the coal mine, all of these problems disappear. That is what Rockefeller, the compulsive micromanager, did with many aspects of the oil-refining business. He reduced his costs and avoided hold-up problems through vertical integration.
Rockefeller also devised means of eliminating much of the incredible waste that had plagued the oil industry. His chemists figured out how to produce such oil byproducts as lubricating oil, gasoline, paraffin wax, Vaseline, paint, varnish, and about three hundred other substances. In each instance he profited by eliminating waste.
Just as James J. Hill spent the extra money to build the highest quality railroad lines possible, Rockefeller did not skimp in building his refineries. So confident was he of the safety of his operations that he did not even purchase insurance.
Rockefeller also made the oil-refining industry much more efficient. There had been vast overinvestment in the oil industry in its first decades, as everyone had wanted to get rich quick in the business. Northwestern Pennsylvania, where the first oil well had been drilled, was littered with oil derricks and refineries of all sizes, many of which were operated by men who really should have been in another line of work.
Rockefeller purchased many of these poorly managed operations and put their assets to far better use. There was never any threat that these "horizontal mergers" ? the combination of two firms that are in the same business ? would create a monopoly, for Standard Oil had literally hundreds of competitors, including such oil giants as Sun Oil, not to mention its many large competitors in international markets.
One of Rockefeller's harshest critics was journalist Ida Tarbell, whose brother was the treasurer of the Pure Oil Company, which could not compete with Standard Oil's low prices. She published a series of hypercritical articles in McClure's magazine in 1902 and 1903, which were turned into a book entitled The History of the Standard Oil Company, a classic of antibusiness propaganda.[25]
Tarbell's writings are emotional, often illogical, and lacking in any serious attempt at economic analysis. But even she was compelled to praise what she called the "marvelous" economy of the entire Standard Oil operation. In a passage describing one aspect of Standard Oil's vertical integration she wrote:
Not far away from the canning works, on Newtown Creek, is an oil refinery. This oil runs to the canning works, and, as the newmade cans come down by a chute from the works above, where they have just been finished, they are filled, twelve at a time, with the oil made a few miles away. The filling apparatus is admirable As the newmade cans come down the chute they are distributed, twelve in a row, along one side of a turn-table. The turn-table is revolved, and the cans come directly under twelve measures, each holding five gallons of oil ? a turn of a valve, and the cans are full. The table is turned a quarter, and while twelve more cans are filled and twelve fresh ones are distributed, four men with soldering cappers put the caps on the first set?. The cans are placed at once in wooden boxes standing ready, and, after a twenty-four-hour wait for discovering leaks are nailed up and carted to a nearby door. This door opens on the river, and there at anchor by the side of the factory is a vessel chartered for South America or China ? waiting to receive the cans?. It is a marvelous example of economy, not only in materials, but in time and footsteps [emphasis added].[26]
Because of Standard Oil's superior efficiency (and lower prices), the company's share of the refined petroleum market rose from 4 percent in 1870 to 25 percent in 1874 and to about 85 percent in 1880.[27]
?
As Standard Oil garnered more and more business, it became even more efficient through "economies of scale" ? the tendency of per-unit costs to decline as the volume of output increases. This is typical of industries in which there is a large initial "fixed cost" ? such as the expense involved in building an oil refinery. Once the refinery is built, the costs of maintaining the refinery are more or less fixed, so as more and more customers are added, the cost per customer declines. As a result, the company cut its cost of refining a gallon of oil from 3 cents in 1869 to less than half a cent by 1885. Significantly, Rockefeller passed these savings along to the consumer, as the price of refined oil plummeted from more than 30 cents per gallon in 1869 to 10 cents in 1874 and 8 cents in 1885.[28]
Because he could refine kerosene far more cheaply than anyone else could, which was reflected in his low prices, the railroads offered Rockefeller special low prices, or volume discounts. This is a common, ordinary business practice ? offering volume discounts to one's largest customers in order to keep them ? but Rockefeller's less efficient competitors complained bitterly. Nothing was stopping them from cutting their costs and prices and winning similar railroad rebates other than their own inabilities or laziness, but they apparently decided that it was easier to complain about Rockefeller's "unfair advantage" instead.
Cornelius Vanderbilt publicly offered railroad rebates to any oil refiner who could give him the same volume of business that Rockefeller did, but since no one was as efficient as Rockefeller, no one could take him up on his offer.[29]
All of Rockefeller's savings benefited the consumer, as his low prices made kerosene readily available to Americans. Indeed, in the 1870s kerosene replaced whale oil as the primary source of fuel for light in America. It might seem trivial today, but this revolutionized the American way of life; as Burton Folsom writes, "Working and reading became after-dark activities new to most Americans in the 1870s."[30] In addition, by stimulating the demand for kerosene and other products, Rockefeller also created thousands upon thousands of new jobs in the oil and related industries.
Rockefeller was extremely generous with his employees, usually paying them significantly more than the competition did. Consequently, he was rarely slowed down by strikes or labor disputes. He also believed in rewarding his most innovative managers with bonuses and paid time off if they came up with good ideas for productivity improvements, a simple lesson that many modern corporations seem never to have learned.
Of course, in every industry the less efficient competitors can be expected to snipe at their superior rivals, and in many instances sniping turns into an organized political crusade to get the government to enact laws or regulations that harm the superior competitor. Economists call this process "rent seeking"; in the language of economics, "rent" means a financial return on an investment or activity in excess of what the activity would normally bring in a competitive market. This sort of political crusade by less successful rivals is precisely what crippled the great Rockefeller organization.
The governmental vehicle that was chosen to cripple Standard Oil was antitrust regulation. Standard Oil's competitors succeeded in getting the federal government to bring an antitrust or antimonopoly suit against the company in 1906, after they had persuaded a number of states to file similar suits in the previous two or three years.
The ostensible purpose of antitrust regulation is to protect consumers, so on the face of it the government's case against Standard Oil seems ludicrous. Because of Standard Oil's tremendous efficiencies, the price of refined petroleum had been plummeting for several decades, generating great benefits for consumers and forcing all other competitors to find ways to cut their costs and prices in order to survive. Product quality had improved, innovation was encouraged by the fierce competition, production had expanded dramatically, and there were hundreds of competitors. None of these facts constitutes in any way a sign of monopoly.
As happens in so many federal antitrust lawsuits, a number of novel theories were invented to rationalize the lawsuit. One of them was so-called predatory pricing. According to this theory, a "predatory firm" that possesses a "war chest" of profits will cut its prices so low as to drive all competitors from the market. Then, when it faces no competition, it will charge monopolistic prices.
?
It is assumed that at that point no other competition will emerge, despite the large profits being made in the industry. Journalist Ida Tarbell did as much as anyone to popularize this theory in her book on Standard Oil, in a chapter entitled "Cutting to Kill." To economists, however, predatory pricing is theoretical nonsense and has no empirical validity, either. It has never been demonstrated that a monopoly has ever been created in this way. Certainly predatory pricing was not a tactic used by Standard Oil, which was never a monopoly anyway.
In a now-classic article on the topic in the prestigious Journal of Law and Economics, John S. McGee studied the Standard Oil antitrust case and concluded not only that the company did not practice predatory pricing but also that it would have been irrational and foolish to have attempted such a scheme.[31] And whatever else may be said about John D. Rockefeller, he was no one's fool.
McGee was quite right about the irrationality of predatory pricing. As an investment strategy, predatory pricing is all cost and risk and no potential reward. The would-be "predator" stands to lose the most from pricing below its average cost, since, presumably, it already does the most business. If the company is the market leader with the highest sales and is losing money on each sale, then that company will be the biggest loser in the industry.
There is also great uncertainty about how long such a tactic could take: ten years? twenty years? No business would intentionally lose money on every sale for years on end with the pie-in-the-sky hope of someday becoming a monopoly. Besides, even if that were to occur, nothing would stop new competitors from all over the world from entering the industry and driving the price back down, thereby eliminating any benefits of the predatory pricing strategy.
Finally, there is a logical contradiction in the theory. The theory assumes a "war chest" of profits that is used to subsidize the money-losing strategy of predatory pricing. But where did this war chest come from? The theory posits that predatory pricing is what creates a war chest of "monopoly profits," but at the same time it simply assumes that these profits already exist!
After examining some eleven thousand pages of the Standard Oil case's trial record, McGee concluded that there was no evidence at all presented at trial that Standard Oil had even attempted to practice predatory pricing. What it did practice was good old competitive price cutting, driven by its quest for efficiency and customer service.
The antitrust case against Standard Oil also seems absurd because its share of the petroleum products market had actually dropped significantly over the years. From a high of 88 percent in 1890, Standard Oil's market share had fallen to 64 percent by 1911, the year in which the US Supreme Court reaffirmed the lower court finding that Standard Oil was guilty of monopolizing the petroleum products industry.[32]
The court argued, in essence, that Standard Oil was a "large" company with many divisions, and if those divisions were in reality separate companies, there would be more competition. The court made no mention at all of the industry's economic performance; of supposed predatory pricing; of whether industry output had been restrained, as monopoly theory holds; or of any other economic factors relevant to determining harm to consumers. The mere fact that Standard Oil had organized some thirty separate divisions under one consolidated management structure (a trust) was sufficient reason to label it a monopoly and force the company to break up into a number of smaller units.
?
In other words, the organizational structure that was responsible for the company's great efficiencies and decades-long price cutting and product improving was seriously damaged. Standard Oil became much less efficient as a result, to the benefit of its less efficient rivals and to the detriment of consumers. Standard Oil's competitors, who with their behind-the-scenes lobbying were the main instigators of the federal prosecution, are (along with "muckraking" journalists like Ida Tarbell) the real villains in this story. They succeeded in using political entrepreneurship to hamstring a superior market entrepreneur, which in the end rendered the American petroleum industry less competitive.
The prosecution of Standard Oil was a watershed event for the American petroleum industry. It emboldened many in the industry to pay less and less attention to market entrepreneurship (capitalism) and more to political entrepreneurship (mercantilism) to profit.
During World War I the oil industry became "partners" with the federal government ostensibly to assure the flow of oil for the war effort. (Of course, in such arrangements the government is always the "senior partner.") As Dominick Armentano writes:
The Oil Division of the U.S. Fuel Administration in cooperation with the War Services Committee, was responsible for determining oil production and for allocating crude supplies among various refiners. In short, these governmental organizations, with the coordinating services of leading business interests, had the legal power to operate the oil industry as a cartel, eliminating what was described as "unnecessary waste" (competition), and making centralized pricing and allocative decisions for the industry [i.e., price fixing] as a whole. Thus, the wartime experiment in "planning" (i.e., planning by political agents to satisfy political interests rather than by consumers, investors, and entrepreneurs to meet consumer demand) created what had previously been unobtainable: a government sanctioned cartel in oil.[33]
After the war, oil industry executives favored extending this government-sanctioned and -supervised cartel. President Calvin Coolidge created a Federal Oil Conservation Board that enforced the "compulsory withholding of oil resources and state prorationing of oil," a convoluted way of saying "monopoly."[34]
The newly formed American Petroleum Institute, an industry trade association, lobbied for various regulatory schemes to restrict competition and prop up prices; it did not even pretend to be in favor of capitalism or free enterprise. The institute even endorsed the use of National Guard troops to enforce state government production quotas in Texas and Oklahoma in the early l930s.
During the 1930s even more teeth were put into government oil industry cartel schemes. The National Recovery Act empowered the federal government to support state oil production quotas to assure output reductions and higher prices. Interstate and foreign shipments of oil were strictly regulated so as to create regional monopolies, and import duties on foreign oil were raised to protect the higher-priced American oil from foreign competition.[35]
In 1935 Congress passed the Connally Hot Oil Act, which made it illegal to transport oil across state lines "in violation of state proration requirements."[36] In the l950s the government placed import quotas on oil, creating an even greater monopoly power. All of this, you will recall, came on the heels of the government's antitrust crusade against the Standard Oil "monopoly." Clearly, the purpose of the political persecution of Standard Oil had been to begin stamping out competition in the oil industry. That process was continued with a vengeance with forty years of squalid political entrepreneurship. By the middle of the twentieth century, real capitalism had all but disappeared from the oil industry.
How to Build a Railroad
Most business historians have assumed that the transcontinental railroads would never have been built without government subsidies. The free market would have failed to provide the adequate capital, or so the theory asserts. The evidence for this theory is that the Union Pacific and Central Pacific railroads, which were completed in the years after the War Between the States, received per-mile subsidies from the federal government in the form of low-interest loans as well as massive land grants. But there need not be cause and effect here: the subsidies were not needed to causethe transcontinental railroads to be built. We know this because, just as many roads and canals were privately financed in the early nineteenth century, a market entrepreneur built his own transcontinental railroad. 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.[2]
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.[3] 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.[4] (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.[5] 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.[6] 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.[7]
It took Hill and his business partners five years to complete the purchase of the railroad (the St. Paul, Minneapolis, and Manitoba), which would form the nucleus of a road that he would eventually build all the way to the Pacific (the Great Northern). He had nothing but contempt for Cooke and the NP for their shady practices and corruption, and he quickly demonstrated a genius for railroad construction. Under his direction, the workers began laying rails twice as quickly as the NP crews had, and even at that speed he built what everyone at the time considered to be the highest-quality line. Hill micromanaged every aspect of the work, even going so far as to spell workers so they could take much-needed coffee breaks.[8] His efficiency extended into meticulous cost cutting. He passed his cost reductions on to his customers in the form of lower rates because he knew that the farmers, miners, timber interests, and others who used his rail services would succeed or fail along with him. His motto was: "We have got to prosper with you or we have got to be poor with you."[9]
?
In keeping with his philosophy of encouraging the prosperity of the people residing in the vicinity of his railroad, Hill publicized his views on the importance of crop diversification to the farmers of the region. He didn't want them to become dependent on a single crop and therefore subject to the uncertainties of price fluctuation, as the southern cotton farmers were.[10] Hill also provided free seed grain ? and even cattle ? to farmers who had suffered from drought and depression; stockpiled wood and other fuel near his train depots so farmers could stock up when returning from a delivery to his trains; and donated land to towns for parks, schools, and churches.[11] He transported immigrants to the Great Plains for a mere ten dollars if they promised to farm near his railroad, and he sponsored contests for the beefiest livestock or the most abundant wheat. His "model farms" educated farmers on the latest developments in agricultural science. All of this generated goodwill with the local communities and was also good for business.
Hill's rates fell steadily, and when farmers began complaining about the lack of grain storage space, he instructed his company managers to build larger storage facilities near his rail depots. He refused to join in attempts at cartel price fixing and in fact "gloried in the role of rate-slasher and disrupter of [price-fixing] pooling agreements," writes historian Burton Folsom.[12] After all, he knew that monopolistic pricing would have been an act of killing the goose that lays the golden egg.
In building his transcontinental railroad, from 1886 to 1893, Hill applied the same strategy that he had in building the St. Paul, Minneapolis, and Manitoba: careful building of the road combined with the economic cultivation of the nearby communities. He always built for durability and efficiency, not scenery, as was sometimes the case with the government-subsidized railroads. He did not skimp on building materials, having witnessed what harsh Midwest winters could do to his facilities and how foolish it was for the NP to have ignored this lesson. (The solid granite arch bridge that Hill built across the Mississippi River was a Minneapolis landmark for many years.)[13] Burton Folsom describes Hill's compulsion for excellence:
Hill's quest for short routes, low grades, and few curvatures was an obsession. In 1889, Hill conquered the Rocky Mountains by finding the legendary Marias Pass. Lewis and Clark had described a low pass through the Rockies back in 1805; but later no one seemed to know whether it really existed or, if it did, where it was. Hill wanted the best gradient so much that he hired a man to spend months searching western Montana for this legendary pass. He did in fact find it, and the ecstatic Hill shortened his route by almost one hundred miles.[14]
Hill's Great Northern was, consequently, the "best constructed and most profitable of all the world's major railroads," as Michael P. Malone points out.[15] 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.
James J. Hill versus the Real Robber Barons
By the summer of 1861, after the Battle of First Manassas, it was apparent to all that the War Between the States was going to be a long drawn-out campaign. Nevertheless, in 1862 Congress, with the southern Democrats gone, diverted millions of dollars from the war effort to begin building a subsidized railroad. The Pacific Railroad Act of 1862 created the Union Pacific (UP) and the Central Pacific (CP) railroads, the latter to commence building in Sacramento, California, and the former in Omaha, Nebraska. For each mile of track built Congress gave these companies a section of land ? most of which would be sold ? as well as a sizable loan: $16,000 per mile for track built on flat prairie land; $32,000 for hilly terrain; and $48,000 in the mountains.[16] As was the case with Jay Cooke's Northern Pacific, these railroads tried to build as quickly and as cheaply as possible in order to take advantage of the governmental largesse.
Where James J. Hill would be obsessed with finding the shortest route for his railroad, these government-subsidized companies, knowing they were paid by the mile, "sometimes built winding, circuitous roads to collect for more mileage," as Burton Folsom recounts.[17] Union Pacific vice president and general manager Thomas Durant "stressed speed, not workmanship," writes Folsom, which meant that he and his chief engineer, former Union Army genera1 Grenville Dodge, often used whatever kind of wood was available for railroad ties, including fragile cottonwood. This, of course, is in stark contrast to James J. Hill's insistence on using only the best-quality materials, even if they were more expensive. Durant paid so many lumberjacks to cut trees for rails that farmers were forced to use rifles to defend their land from the subsidized railroad builders; not for him was the Hill motto, "We have got to prosper with you or we have got to be poor with you." Folsom continues:
Since Dodge was in a hurry, he laid track on the ice and snow?. Naturally, the line had to be rebuilt in the spring. What was worse, unanticipated spring flooding along the lower fork of the Platte River washed out rails, bridges, and telephone poles, doing at least $50,000 damage the first year. No wonder some observers estimated the actual building cost at almost three times what it should have been.[18]
In 1869, after seven years of construction, the two subsidized railroads managed to meet up at Promontory Point, Utah, amidst much hoopla and celebration. What is not often mentioned, however, is that after the big celebration both of the lines had to be rebuilt and even relocated in places, a task that took five more years (into 1874).
The wasteful costs of construction were astonishing. The subsidized railroads routinely used more gunpowder blasting their way through mountains and forests on a single day than was used during the entire Battle of Gettysburg.
With so much tax money floating around, the executives of the CP and UP stole funds from their own companies in order to profit personally, something that would have been irrational for James J. Hill or any other private, market entrepreneur to do. For example, the UP managers created their own coal company, mining coal for two dollars per ton and selling it to themselves for six dollars per ton, pocketing the profits. This crooked scam was repeated in dozens of instances and would be exposed as the Cr?dit Mobilier scandal. (Cr?dit Mobilier was the name of one of the companies run by UP executives.)
With virtually everything riding on political connections, as opposed to creating the best-quality railroad for consumers, the UP and CP executives naturally spent an inordinate amount of time on politics as opposed to business management. While James J. Hill detested politicians and politics and paid little attention to them, things were very different with the UP. Folsom explains:
In 1866 Thomas Durant wined and dined "prominent citizens" (including senators, an ambassador, and government bureaucrats) along a completed section of the railroad. He hired an orchestra, a caterer, six cooks, a magician (to pull subsidies out of a hat?), and a photographer. For those with ecumenical palates, he served Chinese duck and Roman goose; the more adventurous were offered roast ox and antelope. All could have expensive wine and, for dessert, strawberries, peaches, and cherries. After dinner some of the men hunted buffalo from their coaches. Durant hoped that all would go back to Washington inclined to repay the UP for its hospitality.[19]
In addition, free railroad passes and Cr?dit Mobilier stock were routinely handed out to members of Congress and state legislators, and General William Tecumseh Sherman was sold land near Omaha, Nebraska, for $2.50 an acre when the going rate was $8.00.
Congress responded to the 1874 Cr?dit Mobilier scandal by enacting a blizzard of regulations on the UP and CP that would in the future make it impossible for them to operate with any semblance of efficiency. Because of the regulations, managers could not make quick decisions regarding leasing, borrowing money, building extensions of the rail lines, or any other day-to-day business decision. Each such decision literally required an act of Congress.
Political interference also meant that separate rail lines were required to be built to serve communities represented by influential members of Congress even if those lines were uneconomical. No business could possibly survive and earn a profit under such a scenario. The UP went bankrupt in 1893; the Great Northern, on the other hand, was still going strong. Not having accepted any government subsidies, James J. Hill was free to build and operate his railroad in a way that he deemed was most efficient and most profitable. He prospered while most of his subsidized competitors went bankrupt at one point or another.
?
Hill continued to show how effective market entrepreneurs could be. Having completed the Great Northern, he then got into the steamship business in order to facilitate American exports to the Orient. As usual, he succeeded, increasing American exports to Japan sevenfold from 1896 to 1905. He continued to reduce his rail rates in order to make American exports profitable. Being an ardent free trader, Hill was a Democrat for most of his life, because the Republican Party since the time of Lincoln had been the main political force behind high protectionist tariffs. (He switched parties late in life when the Democratic Party abandoned its laissez-faire roots and became interventionist, but he considered the Republican Party to be merely the lesser of two evils.)
Recognizing a market in the American Midwest for timber from the Northwest, Hill convinced his next-door neighbor, Frederick Weyerhauser, to get into the timber business with him. He cut his freight charges from ninety to forty cents per hundred pounds, and he and Weyerhauser prospered by selling Northwest timber to other parts of the country.[20]
Despite the quality services and reduced costs that Hill brought to Americans, he would be unfairly lumped in with the political entrepreneurs who were fleecing the taxpayers and consumers. The public eventually began complaining of the monopoly pricing and corruption that were inherentfeatures of the government-created and -subsidized railroads.
The federal government responded to the complaints with the Interstate Commerce Act of 1887, which was supposed to ban rail rate discrimination, and later with the Hepburn Act of 1906 which made it illegal to charge different rates to different customers. What these two federal laws did was to outlaw Hill's price cutting by forcing railroads to charge everyone the same high rates.[21] This was all done in the name of consumer protection, giving it an Orwellian aura.
This new round of government regulation benefited the government-subsidized railroads at Hill's expense, for he was the most vigorous price cutter. His trade to the Orient was severely damaged since he could no longer legally offer discounts on exports in order to induce American exporters to join with him in entering as foreign markets. He eventually got out of the steamship business altogether, and as a result untold opportunities to export American products abroad were lost forever.
?
The Interstate Commerce Commission soon created a bureaucratic monstrosity that attempted to micromanage all aspects of the railroad business, hampering its efficiency even further. This was a classic example of economist Ludwig von Mises's theory of government interventionism: one intervention (such as subsidies for railroads) leads to market distortions which create problems for which the public "demands" solutions. Government responds with even more interventions, usually in the form of more regulation of business activities, which cause even more problems, which lead to more intervention, and on and on. The end result is that free-market capitalism is more and more heavily stifled by regulation.
And on top of that, usually the free market, not government intervention, gets the blame. Thus, all of the railroad men of the late nineteenth century have gone down in history as "robber barons" although this designation definitely does not apply to James J. Hill. It does apply to his subsidized competitors, who deserve all the condemnation that history has provided them. (Also deserving of condemnation are the politicians who subsidized them, enabling their monopoly and corruption.)
http://mises.org/daily/2317
No actually it would the legal use of private capital in the public election cycle that's the problem. If only public monies were used then private capital COULDN'T use it's influence on government. And it's why lobbying isn't allowed in most country's in the OECD to any degree that is is in the US and why they fund their public elections with public monies only.
So far you haven't offered up any ideas.
sure I have. article one section 8. if congress followed the constitution we wouldn't have this problem.
They are following article 1, section 8 rather well. Borrowing money, regulating its value, etc. What could possibly go wrong? Oh, wait...
To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures:
As in gold and silver. they don't follow it.
it was the big govt loving Hamilton who wanted to barrow money. all the other founders didn't want that in the Constitution. Hamilton also wanted a central bank. look how good that has done for us since 1913......
article one section 10
Section 10.
10.1 No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make anything but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
the founders never wanted fiat money.
Section 10 simply prohibits individual states from making their own currency except for gold and silver coins. Otherwise there would be fifty different currencies in use.
it clearly states money is gold and silver.
I grasp at nothing.
its clearly written in the constitution.
you were able to turn your paper money in for gold and silver. it actually had value back then unlike today.
it's now illegal to use gold or silver as tender. to can buy gold or silver just can't use as money.
you were able to turn in your paper money to the govt for gold or silver back in the days the constitution had a meaning.
Re-read it because it's clearly only taking about the rights of states.
Section. 10.
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.
No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.
http://www.archives.gov/exhibits/ch...itution of the United States: A Transcription
