Note to General Motors.......READ THIS!.....

THE MYTH OF THE ROBBER BARONS by Burton Folsom, describes the role of key entrepreneurs in the economic growth of the United States from 1850 to 1910. The entrepreneurs studied are:    Cornelius Vanderbilt (steam transportation),

 John D. Rockefeller ( Standard Oil),

James J. Hil (Great Northern Railway)

Andrew Mellon (banking, Alcoa Aluminum, Gulf Oil),

 Charles Schwab (Bethlehem Steel),

and the Scranton family (Iron and steel).

The author then, in the conclusion of the book,  looks at the textbook bias on the
the subject of Robber Barons and the rise of the U. S. in the late 1800s. This chapter explores three leading college texts in U. S. history and shows how they misread American history and disparage market entrepreneurs instead of the political entrepreneurs.  This is a short book, only about 140 pages, not counting the extensive notes.


Folsom explains that there are two kinds of entrepreneurs, market entrepreneurs and political entrepreneurs.


According to Folsom, political entrepreneurs fit the classic robber barons mold. Meaning that the way they do business is essentially corrupt. This kind of entrepreneur gets government aid and usually wastes the money.  They have no incentive to work efficiently or innovate.

On the other hand, Folsom claims that market entrepreneurs should not be labeled as robber barons at all. He also believes that market entrepreneurs were behind the growth of America. Unlike political entrepreneurs, they made sound products and took little or no aid from the government. They didn’t steal from anyone and all of the men discussed came up from very modest means.The market entrepreneurs, such as Hill, Vanderbilt, and Rockefeller, succeeded by producing a quality product at a competitive price.

The political entrepreneurs such as Edward Collins in steamships and in railroads the leaders of the Union Pacific Railroad were men who used the power of government to succeed. They tried to gain subsidies, or in some way use government to stop competitors.


The market entrepreneurs helped lead to the rise of America as a major economic power. By 1910, the U. S. dominated the world in oil, steel, and railroads led by Rockefeller, Schwab (and Carnegie), and Hill.

The political entrepreneurs, by contrast, were a drain on the taxpayers and a thorn in the side of the market entrepreneurs. Interestingly, the political entrepreneurs often failed. Without help from government they could not produce competitive products.

It shows how the key to these men’s business success was lower costs, through attention to detail, hands on management, improved technology to produce a higher quality product, accurate predictions of where the market was going, price reductions to increase markets, sound financial structure to prevent getting in over the head, and swooping down to buy their competitors out during times of panic.

When they started their enterprises, the United States was a second-rate power; during their lifetimes they spurred American industry to world dominance. Their accomplishments in transportation, steel, oil, and chemicals led to the unparalleled economic progress of the late 1800s, contributed to American prosperity, and prepared the way for future innovation.

It becomes difficult to defend government as a driver of progress. THE MYTH OF THE ROBBER BARONS shows that, more often than not, when government programs and individual enterprise have gone head to head, the private sector has achieved more progress at less cost with greater benefit to consumers and the economy at large.

A short while ago, it was announced that the much-anticipated 2011 Volt electric car will be arriving at Chevy dealers this fall -- and that it will have a starting sticker price of $41,000. (The Volt is driven entirely by electric motors and batteries, with a small onboard gasoline engine providing back-up juice to the battery pack.)

 







Meanwhile, a 2011 Ford Fiesta -- built by a private concern without government bailouts or subsidies -- is selling a 40 mpg Fiesta for $13,320.

We have entered the Golden Age of the Political Entrepreneur.  Health care, automobiles, and the green jobs industry sit at the center of the of the current administration’s plan for the American future.  All depend on public subsidies.  The Green Jobs initiative for wind and solar technologies adds taxes on carbon to suppress it as a competitor within a labyrinth of bureaucracies.


Job creation happens from the bottom up, not from the top down.
“ Great employment markets are discoverable only by people who create opportunities or see them in the cracks of what already exists—“