Carnegie, Rockefeller, Ford, Westinghouse, Boeing, Gates and Tariffs

Posted by PITHOCRATES - September 10th, 2013

History 101

Ford brought the Price of Cars down and Paid his Workers more without Tariff Protection

Andrew Carnegie grew a steel empire in the late 19th century.  With technological innovation.  He made the steel industry better.  Making steel better.  Less costly.  And more plentiful.  Carnegie’s steel built America’s skylines.  Allowing our buildings to reach the sky.  And Carnegie brought the price of steel down without tariff protection.

John D. Rockefeller saved the whales.  By making kerosene cheap and plentiful.  Replacing whale oil pretty much forever.  Then found a use for another refined petroleum product.  Something they once threw away.  Gasoline.  Which turned out to be a great automotive fuel.  It’s so great that we use it still today.  Rockefeller made gasoline so cheap and plentiful that he put the competition out of business.  He was making gasoline so cheap that his competition went to the government to break up Standard Oil.  So his competition didn’t have to sell at his low prices.  And Rockefeller made gasoline so inexpensive and so plentiful without tariff protection.

Henry Ford built cars on the first moving assembly line.  Greatly bringing the cost of the car down.  Auto factories have fixed costs that they recover in the price of the car.  The more cars a factory can make in a day allows them to distribute those fixed costs over more cars.  Bringing the cost of the car down.  Allowing Henry Ford to do the unprecedented and pay his workers $5 a day.  Allowing his workers to buy the cars they assembled.  And Ford brought the price of cars down and paid his workers more without tariff protection.

George Westinghouse decreased the Cost of Electric Power without Tariff Protection

George Westinghouse gave us AC power.  Thanks to his brilliant engineer.  Nikola Tesla.  Who battled his former employer, Thomas Edison, in the Current Wars.  Edison wanted to wire the country with his DC power.  Putting his DC generators throughout American cities.  While Westinghouse and Tesla wanted to build fewer plants and send their AC power over greater distances.  Greatly decreasing the cost of electric power.  Westinghouse won the Current Wars.  And Westinghouse did that without tariff protection.

After losing out on a military contract for a large military transport jet Boeing regrouped and took their failed design and converted it into a jet airliner.  The Boeing 747.  Which dominated long-haul routes.  Having the range to go almost anywhere without refueling.  And being able to pack so many people into a single airplane that the cost per person to fly was affordable to almost anyone that wanted to fly.  And Boeing did this without tariff protection.

Bill Gates became a billionaire thanks to his software.  Beginning with DOS.  Then Windows.  He dominated the PC operating system market.  And saw the potential of the Internet.  Bundling his browser program, Internet Explorer, with his operating system.  Giving it away for free.  Consumers loved it.  But his competition didn’t.  As they saw a fall in sales for their Internet browser programs.  With some of their past customers preferring to use the free Internet Explorer instead of buying another program.  Making IE the most popular Internet browser on the market.  And Gates did this without tariff protection.

Tariff Protection cost American Industries Years of Innovation and Cost Cutting Efficiencies

Carnegie Steel became U.S. Steel.  Which grew to be the nation’s largest steel company.  Carnegie had opposed unions to keep the cost of his steel down.  U.S. Steel had a contentious relationship with labor.  During the Great Depression U.S. Steel unionized.  But there was little love between labor and management.  There were a lot of strikes.  And a lot of costly union contracts.  Which raised the price of U.S. manufactured steel.  Opening the door for less costly foreign imports.  Which poured into the country.  Taking a lot of business away from domestic steel makers.  Making it more difficult to honor those costly union contracts.  Which led the U.S. steel producers to ask the government for tariff protection.  To raise the price of the imported steel so steel consumers would not have a less costly alternative.

During World War II FDR was printing so much money to pay for both the New Deal and the war the FDR administration was worried about inflation.  So they put ceilings on what employers could pay their employees.  With jobs paying the same it was difficult to attract the best employees.  Because you couldn’t offer more pay.  So General Motors started offering benefits.  Health care.  And pensions.  Agreeing to very generous union contracts.  Raising the price of cars.  Which wasn’t a problem until the imports hit our shores.  Then those union contracts became difficult to honor.  Which led the U.S. auto makers to ask the government for tariff protection.  To raise the price of those imported cars so Americans would not have a less costly alternative.

These two industries received their tariffs.  And other government protections.  Allowing them to continue with business as usual.  Even though business as usual no longer worked.  So while the foreign steel producers and auto makers advanced their industries to further increase quality and lower their costs the protected U.S. companies did not.  Because they didn’t have to.  For thanks to the government they didn’t have to please their customers.  As the government simply forced people to be their customers.  For awhile, at least.  The foreign products became better and better such that the tariff protection couldn’t make the higher quality imports costly enough to keep them less attractive than the inferior American goods.  With a lot of people even paying more for the better quality imports.  Losing years of innovation and cost cutting efficiencies due to their tariff protection these American industries that once dominated the world became shells of their former selves.  With General Motors and Chrysler having to ask the government for a bailout because of the health care and pension costs bankrupting them.  Something Carnegie, Rockefeller, Ford, Westinghouse, Boeing or Gates never had to ask.

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The People are Speaking – and They’re Rejecting Pelosi and Obama and Their Very Expensive, Jobless, Liberal Agenda

Posted by PITHOCRATES - October 31st, 2010

Ethical and transparent is all well and good with Republicans in power, but devious is just fine when the Democrats are back in power.

The Wall Street Journal’s John Fund sat down with Rep. Brian Baird, a six-term Democrat from Washington State.  He’s not running for a seventh term.  He’s retiring and going home to be with his children while they’re still children.  With a close to his political career, he had nothing to lose speaking his mind.  And he did.  (See Requiem for the Pelosi Democrats posted on line 10/30/2010.)  One thing this Democrat wasn’t happy with was the Democrat leadership.

Mr. Baird recalls that he was “very excited” when his party took control of Congress in 2006, but he saw ominous signs early on. Before the 2006 election, he says, Mrs. Pelosi had 30 members working on a rules package to make the House more ethical and deliberative. “We abandoned all that work after the election, and leaders told us we should trust them to clean things up. I don’t know a single member of the Democratic caucus who saw the final rules package before they voted on it.”

Even her own don’t like her.  Nancy Pelosi was going to have the most ethical and transparent House.  Of course, Pelosi initiated that initiative when the Republicans were in control.  When she was working on a very draconian set of rules for the House of Representatives.  Then, to her shock, the Democrats won a majority in the House and, with it, the leadership positions.  And the 30-member panel stopped their work.  Why?  Those draconian rules had but one purpose; curb Republican power.  With them being in the majority, they didn’t need any set of rules to curb Republican power.  And they sure as hell weren’t going to implement any rules that would curb their own power.  For the devious like to work outside the rules as much as possible.

Obamacare – long and convoluted, best passed without reading (for it’s not as quick a read as War and Peace or Atlas Shrugged).

Once back in power, they were giddy with that power.  They took it as a mandate to change America.  But it wasn’t.  It was a mandate to change Washington.  But they tried their level best to remake America to what the people wanted.  Demanded.  To make it liberal.  To give us Big Government.  This is what they and about 20% of Americans who call themselves ‘liberal’ wanted.  So they ignored the other 80% and went to work.  Their bills were so long and convoluted that it made Leo Tolstoy’s War and Peace and Ayn Rand’s Atlas Shrugged (both in the 1,000-page class of novel) seem like Readers Digest reading by comparison.  And one of the longest and most convoluted?  Obamacare.  Which few read before voting. 

“What the hell were we doing voting on this? I had labor groups come to me and insist the bill was so important we couldn’t wait to know what was in it,” he recalls. “I asked them if they were handed a new union contract and told it was so important they had to agree to it without reading it, would they go along?” They continued to insist he vote for the bill and threatened him with a primary challenger.

Even Nancy Pelosi said that Congress would have to approve it before they could learn what was in it.  Remarkable.  Can you imagine the teachers’ union agreeing to this?  Saying to the school board, “Sure, whatever you say.  If the contract’s fair that’s good enough for me.  We, the teachers, can learn about what we agreed to after we vote to ratify it.”  No, they wouldn’t.  Neither would Nancy Pelosi pass a bill sponsored by Republicans without reading it.  It’s okay for her, though.  Because she’s an elitist.  And doesn’t really care what we ‘rubes’ think anyway.

Obamacare – We’ll pay for filet mignon but get hotdogs and hamburgers, a very expensive mediocrity.

Passing Obamacare required some financial shenanigans.  They needed CBO to score it under a trillion dollars.  Which was like giving everyone filet mignon at the family reunion BBQ by asking everyone to pay $5 to cover the cost.  You can’t do it.  If you’re buying food for everyone and only collecting $5 a head, trust me, you’re serving hot dogs and hamburger.  But if you collect the money first and don’t feed anyone until after, say, 4 years, you’ll be able to stay within your imaginary budget in those first 4 years.

“I warned my fellow Democrats that the insurance companies they were whacking could increase premiums just before the midterm election and blame them for it,” he sighs. “I pointed out that the major benefits wouldn’t kick in till 2014, but the costs were up front. I asked them, where was the political win? There was no real answer.”

Of course, people are not going to enjoy paying for nothing.  They’re not just going to sit idly by with their wallets open, whistling a happy tune.  There will come a point when they’re going to ask what they’re getting for all their money.  And then after 4 years of paying for filet mignon, they’ll finally get to enjoy the benefit they’ve been paying and waiting patiently for so long.  And, guess what?  They’ll still get hot dogs and hamburger.  Because everyone can’t have filet mignon.  It’s just too damn expensive.  So like with everything else Big Government does, we’ll end up with a very expensive mediocrity.

The rubes in flyover country have had enough of deficits.  And enough of the arrogant and condescending Pelosi and Obama.

Nancy Pelosi and most in Congress are elitists.  They are so far removed from ordinary America that it’s like visiting a foreign land for them.  That’s why they call it ‘flyover’ country.  The only thing the country outside their liberal districts is good for is flying over en route to another liberal district.  They either think everyone thinks like they think.  Or that those too stupid to be able to think like they think should just be seen and not heard, grateful for whatever alms they hand out.  The concept of alternate viewpoints is alien to them.  So when advisors told them to go ahead and spend because the people (the people that count – the 20%) don’t care about deficits, they listened.  Well, not so much listened.  But heard what they wanted to hear.

Democrats, he says, will also have to recognize why they lost touch with voters. “Back in September, we had pollsters and strategists from my party tell members that the mass of people didn’t care about the deficit. The mind-boggling lack of reality coming from some of the people who give us so-called advice is stunning.”

Well, people care about deficits.  Like the Left used to care about when Ronald Reagan was running up a deficit the size of a drop in the bucket compared to theirs.  And the amazing thing is, they aren’t done spending yet.  Which is really frustrating the 80%.  The rubes.  The good people in flyover country.  Who are growing weary of the condescending and arrogant Nancy Pelosi and President Obama.

The mandate was to change Washington, not America.  Now, America is polarized.  And it’s business as usual in Washington.

Toby Harnden, American Way, wrote a piece appearing on www.telegraph.co.uk called US midterm elections: Barack Obama’s world turned upside down as Democrats face electoral disaster.  Those familiar with history will be familiar with part of this title.  For tradition says that when Lord Cornwallis surrendered at Yorktown in 1781, the British marched out while their band played The World Turned Upside Down.  How very apropos.  For the ruling elite is stunned, much like Lord Cornwallis was, at the thought of being defeated by a bunch of rubes.  So desperate to avoid such a ‘Cornwallian’ disaster, the Left is trying everything within their power.  Even abandoning the lie that brought them into office.  

The irony of Obama being the blue-state president is acute. Back in 2004, the then state senator shot to international attention by mocking the pundits who “like to slice and dice our country into red states and blue States”.

He declared: “There’s not a liberal America and a conservative America. There’s the United States of America. There’s not a black America and white America and Latino America and Asian America. There’s the United States of America.”

Of course, once he got into office, it was all, “I won.  You lost.  Nyah nyah, na nyah nyah.” 

Swept into power on a wave of adulation and talk of an historic new era, Obama never felt he needed to work with Republicans. It took him 18 months before he invited Senator Mitch McConnell, the Senate Minority Leader, to the White House.

But the center-right, the 80%, were not amused.

The problem was that his world view was that of a conventional liberal Democrat but he was president of a nation that was centre-right. His victory came from those who wanted him to change Washington, not America.

And by governing against the will of the people, America is polarized more than ever.  And it’s business as usual in Washington.  Perhaps a bit dirtier, though.

Jobs talk and liberal BS walks.  Yeah, it’s the economy, stupid.

Obama ran as a centrist.  But once in office, he ruled as a liberal.  The most liberal president ever.  And like Nancy Pelosi, he is getting exasperated by these rubes who are just too stupid to know what’s best for them.  So he’s abandoning that reaching across the aisle nonsense and doing what Democrats do best.

Obama’s high-minded appeals for national unity are no more. His electoral strategy is one of desperate damage limitation. Most pollsters expect Democrats to lose more than 50 seats and control of the House of Representatives.

They will probably keep control of the Senate but at least six seats look lost. Obama’s response has been to “slice and dice” the electorate in the way he condemned. He endured the indignity of being called “dude” on Jon Stewart’s Comedy Central show as the price for enticing young voters.

He’s appeared on the Reverend Al Sharpton’s internet radio show to woo black voters. On Univision radio, he told Latino voters of the need to “punish our enemies”. He routinely attacks Fox News and Karl Rove, President George W. Bush’s former adviser, as a way of energising liberals.

With the realization that America doesn’t want what Pelosi and Obama are pushing, they reach out to those who they once simply took for granted: the young, the blacks and the Latinos.  Who they need more than ever now that so many women are turning to the Republicans this election.  Because there are no jobs.  After 2 years in office.  And trillions of dollars in spending.

What was that the Democrats used to say?  Oh, yes, I think I remember.  “It’s the economy, stupid.”  Duh.

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