“It takes near superhuman vision, endurance, bravado, and guts to pioneer a whole new industry. These are capitalists in the finest sense of the word – and they are by-products of a free enterprise system that lets all develop their talents.” – The Myth of the Robber Barons
“No one ever makes a billion dollars, you take a billion dollars,” snarled NY Congresswoman Alexandria Ocasio-Cortez (AOC). Equally irate are her fellow progressive warriors Bernie Sanders and Elizabeth Warren with their own illiterate tales of plunder. One would think that billionaires are the biggest menace on the planet. The time has come, they boast, for an end to the moneyed class.
“Not by your bootstraps”, continued AOC. “It’s a physical impossibility to lift yourself up by a bootstrap. The whole thing is a joke.” But bootstrapping, by one definition, is exactly how many millionaires and billionaires got their start. It seems Bill Gates, Jeff Bezos, and Michael Dell, each began their billion-dollar companies from their suburban oil-stained garages. It’s a classic story told over and over by many successful businesspeople, the quintessential American dream.
John D. Rockefeller became the first recorded billionaire in 1916. A man of meager beginnings, who with God’s help, sincerity, and hard work, made his way into the record books. Today, there are over 2,000 billionaires worldwide, with just over 600 in the United States alone. Nine out of ten are self-made men and women, not by luck or chance, or simply as an aristocratic heir. And not one donned a feather headdress to stake their claim.
The super-rich in America seem to have one of three traits: they have a unique talent, like golfer Tiger Wood; they have a great idea, like Apple’s Steve Jobs; or they have a fervent drive and dogged determination to overcome obstacles and make their dreams come true. Education and intelligence help but aren’t enough; the world is littered with educated derelicts.
In Burton W. Folsom, Jr.’s, 1987 book, “The Myth of the Robber Barons’, Folsom describes two types of business developers during the nineteenth and twentieth centuries: market entrepreneurs and political entrepreneurs. While market entrepreneurs created industries through innovation and cost-cutting; by providing the best products at the lowest prices, political entrepreneurs, AKA crony capitalists, used price-fixing, federal subsidies, and government-imposed monopolies. The rise of big business during this era occurred in an environment of relatively low taxes and limited government, allowing these visionaries to endure the risks while building industries in steamships, railroads, steel, banking, and oil. While the robber baron moniker of predatory behavior and exploitation persists, Folsom soundly puts those myths to rest.
As they say, history repeats itself, and today’s titans confront the same derogatory labels. Standard Oil faced monopoly accusations in their day, after cornering 90 percent of the oil market by offering the best service at the lowest prices. For the first time in history, Rockefeller gave middle and working-class families evening light, something only the rich had previously known. When Amazon bought Whole Foods in 2017, grocery prices dropped. Wal-Mart and Amazon, as well, grew by lowering prices, not increasing them. Any competitor can enter the market at any time. Whether they can compete, is a different question.
So, are billionaires really the evildoers we’ve been led to believe? Entrepreneurs are needed to create wealth in a society because the wealth of a nation is amassed by its citizens, not its government. Every successful businessman is made successful with the consent of the consumer. Wal-Mart didn’t destroy the mom-and-pop stores, the consumer did. These businessmen and women created new businesses, that created new jobs, that created more opportunities for the rest of us. Their products and services grew the economy and improved the standard of living for all.
Recently the US Census Bureau dropped its annual list of richest counties in the US. The top two richest counties were Loudoun County, VA, and Fairfax County, VA. Both are, unsurprisingly, suburbs of Washington DC, Folsom’s self-described political entrepreneurs, no doubt. Perhaps, Ms. O-C might like to shine her light there.
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