The business of america column for many years and rights that longview column for barons. Hes the author of several books including hamiltons blessing, the extra ordinary life and times of our national debt, the emergence of wall street as a world power, the business of america hails from the market place, American Enterprise from the selling of doing when to the breakup of at t and an empire of wealth, the epic history of American Economic power. Please join me in welcoming Mister Gordon to the podium. [applause] good evening. Im happy and honored to be at Hillsdale College once again. Im here to talk about socialism and American History which is to say the history of socialism on very stony ground. Socialism is by definition an Economic System where in the means of production are held in common, that is by the government. Socialism necessarily concentrates power while the people might in syria on the means of production, only individuals can actually act so socialism in all its many forms from the democratic socialism of postworld war ii britain to the unspeakable horrors of paul pots cambodia to that weird combination in north korea means economic power to the people but fiduciaries for the people, the same people who exercise political power. And absolute power corrupts absolutely. In capitalist countries the they become rich. That is not easy to accomplish. In the living universe, a force as all persuasive as gravity is in the physical one. By having means of production in the hands of individuals and corporations capitalism disperses power and takes advantage of selfinterest. In other words capitalism swims downstream. Socialism to work, negotiate selfinterest, has to swim upstream. To use the analogy of gravity again, we can negate gravity. That is how we got to the moon 50 years ago and how i got to Hillsdale College this morning. It takes energy to do so. This is why socialist economies on very small scale work for any length of time by the use of coercion. That is why the phrase democratic socialism, a phrase much in vogue these days is largely an oxymoron. We usually think of the United States as the most capitalist of all major countries and it is. And and Alexander Hamilton who deserves the title founding father, and when socialism was rapidly evolving into a coherent philosophy, in after napoleon seized power, they do not make history as they please. They do not make it under circumstances chosen by themselves but under circumstances directly encountered and transmitted from the past. This country like the European Countries marks was familiar with. And precious little past to be transmitted in 1776. We are not a fully formed society with deeply entrenched economic interests and welldeveloped class system. We were Something Like a national tabula rasa in the 1780s and more than any other country in history the United States could make itself as it pleased, into the american character. All but one of the ten amendments to the constitution known as the bill of rights protect individuals from excessive government power. This passion to do as we please under the rule of law that made this country such stony ground for socialism. The american colonies benefited greatly from the mother countrys benign neglect. Unlike france and spain england did not care who went to its colonies, it is a dumping ground for convicted felons. After the american revolution, led directly to the settlement of australia in 1788. We should celebrate july 4th two. The population of early america was largely made up of people who marched to the beat of a distant drummer. Unlike their contemporaries in the poor economy of seventeenth century britain they chose to take an enormous chance. It was called the howling wilderness in hopes of making a more prosperous life for themselves and their posterity. As to the chance they were taking consider this. In early virginia the death rate for immigrants in the first year was 25 , it was said to be seasoned and the Life Expectancy increased considerably. These risktaking immigrants have been coming ever since. The propensity for taking risk was bred into the very dna of this country, the twin engines of capitalist success or willingness to take risk, neither of which are found in socialist economies which is why they are not innovative and poor. Transport hes total 100,000 in the colonial era, and assertions required to the american genetic mix. Thats not to say theres been no experience with socialism, the English Settlement in this country were socialist enterprises even though the word socialism wouldnt be coined until 1833. The colony of virginia was not established by the english, for profitseeking corporation shouted by king james the first in 1606. London merchants, these were savvy businessmen but the company they founded was in a wholly new business, american plantations. The steep learning curve to profitability that any new type of business necessarily entails would not be successfully done in this case. The Virginia Company invested all told 50,000 pounds sterling in the enterprise, colossal some in the early seventeenth century. It amounted to only 75,000. Regardless the company had collapsed by 1624 and virginia became the grand colony. The Virginia Company made every mistake it could have made. Jamestown was cited badly surrounded by mosquito breeding swamps and where the water was often brackish, led to salt poisoning near the hot humid virginia summers but the virginias biggest mistake was to keep title to the land, the means of production. To work it as peasants for the companys profit. Any goal they found was theirs to keep or sell, the settlers the company recruited all men in the first year or so were mostly sturdy beggars, a healthy man who had no employment, the burgeoning sons of london and gentry families. The latter was disinclined to do hard work. Pursuing selfinterest as people always do they preferred to search for gold from which they could profit directly but there is no goals to be found in the plains of tidewater, virginia. They found plenty reform that looked like gold, they shifted to england where it was found to be worthless. The result was starvation. The 104 settlers, only 38, nine months later. The colony has 229 settlers. By 1610, only 60 were still alive. One man had killed and eaten his wife. He was burned at the stake. The glass factory, the abundance and and would but profitably exported to england, two develop and save the company, saved the colony. One was discovery of the cash crop, tobacco. After the indians told the colonists the exacting part of growing and curing it, tobacco became very profitable indeed. The second was the abandonment of the companys policy of Holding Title to the land and expect in columnists to work and share profits. The Company Began to use early americas greatest resource, infinity of land, to entice settlers. 50 acres of land along with each relative, to the colony. That much good Agricultural Land and land for england would have given the family gentry status. It was a powerful and thoroughly capitalist incentive. Those who come as indentured servants were given land once they served their indentures. Food production rose sharply and tobacco production soared from 20,000 pounds in 1618 to 1. 5 Million Pounds only 11 years later. The american experiment was often running in virginias early socialist economy forgotten. Early new england which was settled by profitseeking joint Stock Company sold a land held in common as well as poor results. In the Plymouth Colony despite the story of the first thanksgiving, the harvest of 1621 has been formed. In early 1622, governor William Bradford gave each family a plot of land but required the, quote, all profits and benefits that are not done by trade, working, fishing or any other means placed in a common storehouse so that, quote, all such persons of this colony have their meat, drink and all provisions out of the common stock. The settlers were expected to work the fields, go fishing and hunting but the results were doled out to each family according to size, not according to contribution of labor. The result was a very poor harvest in 1622 and severe hunger in winter of 162223 but bradford happily was no ideologue. He could learn from experience. He wrote in his book of plymouth plantation, quote, the failure of the experiment of communal service, the taking away of private property and the possession of it in community by a commonwealth was found with much confusion and discontent and retard much employment which would have been to the general benefit but young men are able and fit for service objected to being forced to spend their time and strength in working for other mens wives and children without recompense. The strongman or the resourceful man had no more share of food, clothes etc. Than the week man who was not able to do a quarter of what the other could. This with thought in justice. The asian engraver man in labor, food, clothing etc. With the younger ones thought with some indignity and disrespect of them. Bradford decided each family could growing keep the food they raised, the change in attitude among the settlers was stunning. The women in 1622 state how many children in 1623 as bradford explained, the women now went willingly into the field and took their little ones with them to set corn. Food production rose dramatically. In a couple years the colony was able to export a load of green to england. As the historian nathaniel explains, the pilgrims had stumbled on the power of capitalism although the fortunes of the colony still teetered precariously in the years ahead, the inhabitants never again start. New england turned to trading and shipbuilding given lack of cash crop, those early merchants knew about capitalism even though the word wouldnt be invented for a couple of hundred years many of them road at the tops of their ledgers in the name of god and profit. For these merchants saw personal economic success as a sign of gods grace. Nice of Elizabeth Warren had the same attitude. Now among the early settlers of colonial america were many groups seeking religious freedom, the United States remain the most religious of western nations. This year earning for moral and spiritual perfection so much a part of the american character has led to a plethora of new americanborn religious sects like the church of jesus christ of latterdays, seventhday adventist, shakers, jehovahs witnesses and Christian Science to name a few of the more successful and longlived. It also led to many social experiments in a search for a new way of living where property was to be held in common. The most famous of these was new harmony, indiana. It was founded in 1825 by a wealthy british industrialist by robert owen, one of the founders of the movement that came to be called utopian socialism. It got that name because the founders of the movement believed socialism could be achieved without class struggle but rather by example. That society could work in a different and better way and as with Ralph Waldo Emersons better mousetrap the world would be the path to your dorm. Marks and angles dismissed this is utopian and the term stuck. Marks and angles for once were right. Owen put his money where his mouth was, he bought an entire town, 20,000 acres in the Southwest Corner of indiana plus the buildings and infrastructure through a german religious sect to the decided to relocate, he paid 150, 000, a substantial fortune in the 1820s. People were expected to provide household goods, invest Capital Enterprises that would promote Community Independence and social equality. They would work for the community and be paid in credits at the town store or they could buy credits there, there were troubles from the beginning. A shortage of skilled craftsmen and the community could not produce enough goods to pay its way. Robert dale owens, son of the founder described the people who settled in new harmony, quote, as a heterogeneous collection of radicals, enthusiastic divorces to principle, honest lazy theorists with a sprinkling of unprecedented sharpers thrown in. After the towns prospects hero, quote, a plan which remunerate solid like will in the present condition of society ultimately eliminating from a cooperative association the skill, efficient and industrious members leaving an ineffective and sluggish residue in whose hands the experiment will fail socially and selfinterest doomed such and or prizes. And individual pursuit came to the town. There was one in virginia, the tobacco farm was in operation. After the civil war as the country industrialized at a furious pace the wealth inequality, enormous fortunes the penalized by the families invited to mrs. Astors annual ball were piled up while Industrial Workers did not get anything like a fair share of the profits they helped create. Tweet industrial cooperation spoke with one voice when there are tens of thousands of workers each spoke for himself. Industrial capitalism was something new under the sun, it would only be developed from experience. The stock market reforms of the civil war era, invention of independent accountants and generally accepted accounting principles in the 1890s, the antitrust legislation in 1914, the creation of the interstate Commerce Commission in 1887 and the wagner act of 1839 were what resulted. It was a process that would take 50 years and the reforms need their own reforms, the intrastate commerce provision was meant as a check on the unbridled economic powered of girls but evolve into a cartel protecting the railroads profits and inhibiting innovation in that industry. When the ratesetting powers were abolished in the 1970s the railroads and trucking firms could compete by means of price the transportation sector dropped 15 , transportation was what economists call the transaction costs, a necessary cost but does not increase the value of the product, it dropped as prosecution forced manufacturers to share the lower cost, it should be noted, what rules were needed to properly regulate the new Digital Economy we live in that has caused another surge in income inequality. There were calls for socialism in american politics as a way to abate the increasing inequality just as there are today. Among the leaders of this movement was eugene debs born in 1855 in terre haute, indiana, came from a middleclass family, his father is text file business and went to work for a local railroad, identified with the working class and economic problems in the new industrial age. Debs was a founder of and early labor union, Industrial Workers of the world as well as the American Railway union. The pullman strike of initial legislation was a series of often violent strikes at this time, with 13 deaths. Charged with contempt of court with federal injunction against the strike served 6 months in jail. During that time debs read widely about International Socialism and emerged from jail a firm believer. Originally democrat he said two terms in the Indiana House of representatives, debs was a Founding Member of several socialist political parties, socialism was never able to form a single coherent Political Party in this country, socialist leaders almost entirely intellectual endlessly split over ideological minutia. There were social democrats and many others. Debs joined the socialist party in 1901, a party formed with the merger of the social Democratic Party and socialist labor party. Iran for president on this ticket 5 times, in 1912 received 900,000 votes, fully 6 of the total vote. In 1920 won 3. 4 of the vote though he was in jail for sedition at the time. The socialist party was adamantly opposed to american participation and debs spoke out in favor of resisting the draft. Sentenced to 10 years president Lauren Harding commuted the sentence to time served after debs served nearly 3 years in jail. After the collapse of bizarre regime in russia and subsequent takeover by the bolsheviks along with this countrys entry into world war i the United States experienced the first of two Twentieth Century red scares. There are reasons for these scares, there were numerous attempts to bomb people and property, the Washington House of Woodrow Wilsons was badly damaged by a bomb in june although palmer himself was not seriously hurt. In september of 1920 always a load of dynamite blue up in front of the morgan bank on wall street killing 38 and injuring 143, windows were blown out, but the morgan bank was scarred, they decided not to repair the damage. Leaving it as a sort of stigmata of capitalism. The fear generated by the red scare was more than the threat. Hundreds of aliens were deported including emma goldman and Alexander Berkman who tried to assassinate the industrialists Henry Clay Frick, though by wonderful coincidence the day he was deported was the day Henry Clay Frick died of National Rural as Natural Causes and he left the country before i did. The socialist party never came close to winning the president ial race but had alleged oral success at local and conventional levels, 5 socialists into new york state assembly, they were suspended and expelled and rented special elections and were reelected but denied their seats. The communist party of the United States was founded in 1919 after the Russian Revolution as socialist party of america. Unlike debss socialists it supported dictatorship of the proletariat which is to say dictatorship of selfappointed fiduciaries for the proletariat. It was deeply involved in the American Labor movement and a variety of front organizations influenced many prominent people. Membership grew to 55 thousands according to seek the usa but it was from the first largely funded by and took orders from the soviet union. After world war ii broke out in september of 1939 the communist Party Newspaper the daily worker began a long and frequent series of editorials demanding this country stay out of the war. On june 20 third 1941, the paper without noting its aboutface demanded the immediate entrance of the United States into the war. What caused it to change its editorial mind, nazi germany invaded the soviet union in 1941, this convinced many that the communist party was not a genuine american Political Party but a foreign agent. Noncommunist socialism as Political Party mary wayne to the 1920s while increasing in europe, both britain and france elected socialist governments in 1924 but Norman Thomas received 2 of the vote in the election of 1932 despite the country being in the depths of the Great Depression while there was widespread fear that capitalism and even democracy would not survive. New deal programs and especially the g. I. Bill of rights proved the deathknell of socialism in america. But subsidizing College Education and homeownership the g. I. Bill lifted millions into the middle class with Financial Assets like real estate, in other words the proletariat became capitalist. At the same time a new red scare thanks to the onset of the cold war, people like senator Joseph Mccarthy and the house unamerican activities committee, before television cameras, found relatively few actual communists while ruining many lives and careers. In 1954 senator mccarthy overplayed his hand, censored by the senate and the second red scare began to fade away. Socialism disappeared as a Political Force after world war ii, his lastgasp was the president ial campaign of henry wallace, conservatives wondered at what point the social safety net ends and latterday socialism begins. The Democratic Party has moved markedly leftward in the last few years and once again we are hearing calls from the far left for socialist policies such as medicare for all and ego material policies like punitive wealth tax on those who have been successful. Britain tried this tactic in the labor government after world war ii, the top income tax rate was 104 . In other words you were fined for creating too much wealth. That goes a long way to exciting why britains economic recovery after the war was so sluggish. Senator Bernie Sanders, himself a millionaire who owns 3 houses says no one should be worth 1 billion and would impose an 8 tax on the very very rich most of whom made their own fortunes, 70 of the forbes 400 are selfmade men and women. No one is any poorer because of mega fortunes. Enriching the rich by ms. A rating of the poor was public policy. Ask louis the sixteenth, by giving everybody a better and cheaper way to shop made all of us richer. Bernie sanders had his honeymoon in the soviet union, i have been to moscow, it is very gay, anyway on the first of may. These ideologues are insensibly ignorant of the most basic economics. Not only with a wealth tax be hard and expensive to administer, it would have devastating effects on the entire American Economy and population. Jeff bezos had to pay 8 of his networking taxes every year he would have to sell 8 of his vast holdings of amazon stock, that would cause the price of amazon stock to drastically decline, the anticipation of the sale would cause it to decline, with 8 of net worth. But directly and indirectly, millions of middleclass americans in the 401 k amounts, Pension Funds and annuity accounts but 2 thirds of corporate stock today is held not by plutocrats but ordinary americans. Multiply jeff bezoss woes under a wealth tax with 620 billionaires in the country today and you have a stock market crash that would be worse than 1929. Wealth tax, would stick it to this room. Not to mention Hillsdale College endowment fund. I expect these policies will get nowhere, the wealth tax is certainly unconstitutional as well is a direct tax that cannot be apportioned from the state according to population and ability and are, supplied with a list of 600 billionaires in the country. The majority of americans celebrate capitalist success, not decry it like Bernie Sanders and Elizabeth Warren, and more golden eggs by so many people. They understand instinctively that those risktaking entrepreneurial genes they inherited that socialism to borrow a phrase from George Orwell is an idea so stupid that only an intellectual could be leave it. The United States is still stoning around for socialism. Thank you very much. This date in history posts. Its my honor and pleasure today to welcome you to this virtual lecture delivered by marlene [inaudible]. Marlenes a lawyer. Shes also the author of a book entitled fair labor lawyer the
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