The New Robber Barons Also Robbers

It was only a matter of time. First, the histrionic cry of “socialism” at the merest suggestion of a more equitable distribution of the social good known as health care. Then, the robust trade in New Deal denialism on the right — the economic version of intelligent design theory, only without the intelligence. And now, unsatisfied with turning the clock back to 1929, Wall Street Journal editorial hand Daniel Henninger has called for the resuscitation of the Robber Barons. Henninger derides the incremental efforts of the Obama administration to boost job creation with tax credits and stimulus funds. That’s all just bootless government meddling in the masterful free market, he announces; in lieu of that we need “industries no one thought of before”-and that means, in turn, that “we need vision, vitality, and commercial moxie. The government is draining it [sic] away.”

And who better to summon these primal virtues forth than a new breed of robber baron? Oh, not the bad kind-the unproductive financial monopolists that Matthew Josephson laid low in his 1934 muckraking classic The Robber Barons. No, thanks to the labors of Burton R. Folsom, who teaches history at the fundamentalist Hillsdale College in Michigan we have-courtesy of the publishing arm of the Tea-Party happy Young America’s Foundation-a refutation of Josephson’s broad-brush portrait of the Gilded Age business class as a rapacious plutocrats. The heroes in Folsom’s set-piece revisionist history are “market entrepreneurs,” who hewed their fortunes from the hardy natural blessings of the American land: your John D. Rockefeller oil titans, your Cornelius Vanderbilt railroad tycoons, et al. The Robber Barons you have to look out for, by contrast, are the “political entrepreneurs,” the no-account dandies and fops who gamed state legislatures for monopoly contracts and locked out competitors with price-fixing schemes and the like-such as, oh, Robert Fulton, whose ham-handed chicanery to lock up steamship traffic on the Hudson River was broken by the manful Vanderbilt, brandishing the slogan “New Jersey must be free.” (You will no doubt be shocked to learn, by the way, that Folsom also engages in New Deal denialism on the side.)

As Henninger explains it, this baby-simple dichotomy points the way out of the iron grip of Obamaism, and its efforts to defy the sacred laws of market making-not merely via woeful stimulus boondoggles, but market-distorting nightmares like “green job” initiatives to retrofit the economy to diminish the impact of climate change. What we need more of, Henninger insists, is modern day market-entrepreneurs like Larry Ellison, the chieftain of software giant Oracle. Let a thousand Ellisons bloom, Henninger thunders-while Ellison may have a personal penchant for opulent self-indulgence, he’s still contributing to the common good, in classic Adam Smith fashion. “Someone in our politics has to find the courage to say, So what?” Henninger says of the high-living Ellison lifestyle. Intoxicated by the realization that he is that courageous someone, Henninger builds to his stirring peroration: “If the next Ellison and Oracle ripples into American life as many new jobs and family incomes, I’m happy to be grossed out by parties and boats. The alternative is a nation of Pecksniffs, choking on virtue.”

Well, let the Pecksniffery begin, I say. We need not be long detained by the purported intracapitalist combat between market and political entrepreneurs in the Gilded Age, since no one in the Industrial Age saw any value in such Talmudic niceties. Indeed, the very term “Robber Baron,” referred back to medieval lords in northern Europe who’d gouge peasants on the toll roads they owned; government licensing was, in other words, a central feature of the racket.

So it was for the entire cohort of U.S. robber barons, from John D. Rockefeller-whom Henninger laughably only credits here with here with having “innovated his way to energy primacy in the United States”-to Leland Stanford, a notorious purchaser of state legislatures. Henninger, Folsom and other historical fabulists apparently have no acquaintance with the shocking boondoggle known as the Homestead Act, which directly launched the fortunes of railroad tycoons like Stanford and Vanderbilt, while indirectly permitting allied titans of industry like the oilman Rockefeller and steel mogul Andrew Carnegie to vertically integrate their enterprises into industrial-financial-political empires unto themselves.

By granting politically connected industrialists nominally priced title to land and resource wealth and doling out railroad land rights into perpetuity, the federal government engaged in a pay-to-play brokerage that Josephson appraised as “one of the great wonders of history.” [The Robber Barons, p. 51]. Indeed, Henninger is far too modest on Rockefeller’s account; it was, after all, his mammoth holding company, Standard Oil of New Jersey, that prompted the first major federal antitrust prosecution of the 20th century.

Throw a dart at any Gilded Age tycoon-which itself would have been a fine idea at the time, come to think of it, save that so many of them shared such a striking facility for buying themselves a surrogate passport out of harm’s way -and you find they all sprouted from the same fetid nexus of government favor and cartelized pelf. Any competent history of the era will furnish a motherlode of such edifying detail; I particularly recommend study of the murderous antics of Carnegie’s right-hand man Henry Clay Frick, who’s gotten a soft-sell treatment in the annals of history thanks to his fondness for the pretty paintings.

But recall, this is just Gilded Age 101 stuff. Consider instead Henninger’s curious choice of latter-day model market entrepreneur, Larry Ellison. Oracle cribbed its name from a CIA project, and the federal spook agency was the company’s first major client when it was founded in 1977-and at least a quarter of the firm’s revenues comes from software sales to government agencies. As Mike Wilson, author of The Difference Between God and Larry Ellison flatly puts it, “Oracle wouldn’t exist if it weren’t for government contracts.” And of course, in great Robber Baron fashion, Ellison’s firm generously kicks the dosh back to the purveyors of the People’s Business with campaign donations to lawmakers who make key software procurement decisions. There is also a seven-figure Washington lobbying budget. Small wonder that the company’s government work quadrupled between 1997 and 2002-and that, last fall, it had forked over $7.4 billion for Sun Microsystems, whose Solaris software is integral to many defense and intelligence applications.

So much for your latter-day model of an excellent “market entrepreneur.” And thus, it seems that what our present day plight calls for is not so much a Robber Baron revival as a new golden age of muckraking. If nothing else, it would put the Daniel Henningers of the world out of work.

Chris Lehmann is really enjoying the recent vogue of people taking to newspapers to entirely rewrite history.