Jim Powell, Contributor
OP/ED
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7/29/2012 @ 4:53PM |18,183 views
No President Obama, It Was Private Business That Made Our Roads And Bridges Possible
"Private business came first, then roads and bridges."(Photo credit: Wikipedia)
Without big government, President Obama likes to suggest, we would all be poor, miserable creatures. For starters, he claims that business became possible only because government built roads and bridges.
Actually, Obama has it backwards. Private business came first, then roads and bridges.
They weren’t originally developed by governments. They were developed by merchants who began establishing trade routes thousands of years ago. In the beginning, before the first Department of Public Works, there were innumerable trails.
Developing trails required that somebody travel, and kings (I can't remember who was the original King of the United States - KoTUS) generally didn’t travel unless they were conquering new territory (Oh, fer Chriss-akes Alive - of COURSE they travelled, but damn few of the;m ever went to the territories being conquered. Didja ever hear of King George traveling to the American Colonies?). If they left their territory for an extended period, they would probably have returned to find somebody else ruling the territory that used to be theirs. So it was merchants, hoping to make money, who blazed the trails for regional and long distance trade. At their own expense, merchants determined the most worthwhile places to go and the most efficient ways of getting there (So, like, the indigenous American peoples, who followed the Buffalo were like, umm, merchants?).
Europe’s first great civilizations arose from private trade. Starting perhaps around 7000 B.C.E., a resourceful maritime people who became known as Minoans established themselves in Crete. They were ancient history to Homer. They brought copper from Cyprus, tin from Asia Minor, elephant Tusks from Syria and diorite from the Nile Valley – and Minoan pottery made its way to Egypt (okay, now I'm starting to get it - these maritime peoples built -- highways of water!).
The ancient origin of private markets and trade routes is most dramatically evident in prehistoric trade goods such as obsidian, a brittle volcanic glass that can be chipped into knife blades, mirrors and other implements. Valued for perhaps 30,000 years, obsidian tools have turned up at most early village sites in the Middle East and Mediterranean. Usually such villages were hundreds of miles away from the sources.
How do we know this? During the 1960s, British archaeologists J.E. Dixon, J.R. Cann and Colin Renfrew gathered obsidian samples from extinct volcanoes throughout the Mediterranean and ancient Mideast. Heated to incandescence, each element in the samples emitted a characteristic wavelength of light. The amount of certain trace elements – barium, zirconium and cesium – varied from one volcano to another. By analyzing obsidian samples from ancient settlement sites, Dixon, Cann and Renfrew could determine which volcano they came from. This isn’t the only method of dating obsidian.
Analysis of other commodities confirmed that private trade flourished throughout the ancient world. For example, the remains of many inland Anatolian settlements include seashells from the Aegean as well as amber from the Baltic. Both were valued for jewelry. Copper was used at Ali Kosh, an early farming village in southern Mesopotamia, yet the nearest copper deposits were hundreds of miles away. Pearls from Bahrain, jasper from Armenia, beryl from India and perfume from Egypt have turned up at ancient village sites hundreds of miles away.
Civilization arose not in remote regions but along trade routes (so, which came frist? The civilization, or the trade route?) where it was convenient for people to gather. Since at least 7000 B.C.E., Jericho was a major commercial center. It was located on a natural trade route between Anatolia, which had obsidian, and Beidha, a village to the south that supplied sea shells and hematite, an iron oxide valued for its red color.
There’s abundant evidence of flourishing trade further east. Archaeologists believe that a light-skinned, dark-haired Sumerian people migrated south from the Caspian Sea about 8500 B.C.E., settling along the delta where the Tigris and the Euphrates empty into the Arabian Gulf. Trade was absolutely vital for civilization there, because the only natural resources were water and mud. Sumerian traders invented sailboats so they could travel long distances. They organized caravans for overland routes.
By the sixth century B.C.E., Greeks began hearing about wonders from the Orient.
The sea route from India brought cashmere, furs, finished cotton, gems, jewelry and some silks. In addition, there were spices – pepper, ginger, cardamom, cinnamon and cloves.
The point here is that for a very long time, a tremendous volume of trade involved ships and overland trails – not modern highways — and this trade was enough to support the development of great civilizations.
Networks of government-built roads came much later.
Around 2500 B.C.E., the Egyptian Pharaoh Cheops ordered the construction of what’s considered to be the first paved road, but he wasn’t doing any favors for businessmen. The road was about 1,000 yards long and 60 yards wide, and its function was to help glorify himself. The road went only to the Great Pyramid where he would be buried.
Usually, the decisive reason for undertaking a costly government-built road project was to facilitate the movement of armies for defending an empire.
The first extensive road-building project seems to have occurred in the Assyrian Empire, based on the Upper Tigris River. This was reportedly around 1115 B.C.E. Here again, the main purpose was military.
The most famous ancient road builders were the Romans, and the principal function of their roads was to facilitate the movement of their armies. Roman roads certainly helped trade, but it had been going on before the roads were built. Although the Romans had built some 53,000 miles of roads that extended from England through most of Western Europe and the Mediterranean region, they didn’t prevent Rome’s decline and fall.
Settlers and traders cut trails through dense American forests. Later, the British widened the trails so that army wagons and artillery could pass through to drive out French fur traders. Most American cities arose along rivers, harbors and lakes, where boats could ship and deliver goods efficiently.
In America’s early years, there was a perceived need for better roads – our Founders complained about bad roads. But states generally weren’t able to finance them. Among other things, people commonly used roads to leave their states! The states tried to fund road projects with lotteries, forced road service and land grants to contractors, but the schemes didn’t work.
Capital for road building was raised more efficiently by the private sector. The pioneering business seems to have been the Philadelphia and LancasterTurnpike Corporation, chartered in 1792. For the first third of the 19th century, hundreds of private turnpike companies built thousands of miles of roads that linked western territories with the eastern seaboard. By 1821, 84 turnpike companies were incorporated in Pennsylvania, and 278 were incorporated in New York. Long distance roads were beyond the capability of any company, so work was divided among many companies that built connected roadways.
Then came a government-run canal building boom. In every case, politicians claimed that the projects were urgently-needed and required more money than could be raised from market sources. Politicians were hailed for having more vision than private entrepreneurs (The US government also financed 30+ railroads, from their inception; most of these went bankrupt, and were bought for pennies on the dollar by the "great" industrialists of the middle-17th century.).
From 1817 to 1825, the State of New York financed and built the Erie Canal – 364 miles from Albany to Buffalo, linking New York City and Lake Erie. The project enough revenue to cover construction costs, but not enough to cover operating costs or the cost of improvements. Merchants elsewhere in New York demanded canals. The government built eight more, but they lost money. Politically-connected merchants gained from all this, while taxpayers lost (we are to assume that connected merchants were NOT taxpayers?).
Ohio authorized construction of the Ohio & Erie Canal and the Miami & Ohio Canal, but it became politically impossible to deny similar projects to people elsewhere in the state, so the government proceeded with projects that never made any sense (unlike, of course, merchants, and private business which have NEVER proceeded with projects that made no sense whatsoever!). Most of the government-run canal projects were unprofitable. Others were fraudulent. The state had to borrow more and more money to pay its debts. It paid contractors with scrip.
Meanwhile, the private turnpike boom cooled off by the 1840s as private railroads became a principal means of commercial transportation, moving agricultural commodities, manufactured goods and imports to their various processing facilities and markets.
Many politicians didn’t think private companies built railroads fast enough, so states borrowed money to build government-run railroads. Alabama, Illinois, Kentucky, Massachusetts, Michigan, New York, Pennsylvania, South Carolina and Tennessee found themselves overwhelmed with debt. At government-run railroads, key decisions were made for political reasons rather than business reasons. For example, Illinois had more railroad debt than any other state, but few of their subsidized railroads went to Chicago!
It became apparent that despite all the claims, most of these government-run projects were failures (although, once must admit, we DO have an interstate highway system, 80% of private businesses fail within their first year of start up). They incurred losses that the states couldn’t afford. Economic historians Ernest L. Bogart and Donald L. Kemmerer observed that “Many of the enterprises were premature and unnecessary. Most of them were extravagantly, if not corruptly, managed.”
Altogether, nine American state governments – a third of all states – which had spent large sums on various government-run transportation projects defaulted on their debts during the 1840s (BAD STATES - you defaulted on your debts!). States sold off government-run enterprises as quickly as they could, and there was strong public sentiment against getting into such a mess again.
Later, governments intervened to promote private railroad expansion, and the unintended consequence was excessive capacity that led to widespread bankruptcies by the 1890s. J. P. Morgan made money reorganizing a number of these railroads ((Which, one hurries to add, were made possible by the goodness of the government's heart..
Despite the troubled history of government-run roads, canals and railroads, during the “progressive” era after 1890, the idea took hold that only government could provide roads and bridges. This became the so-called “Good Roads” movement in which merchants and farmers agitated for states to spend money improving roads.
In many cases, states had constitutional prohibitions on spending money for such “internal improvements.” And why would states be so backward as to prohibit improvements? Because as noted, the last time states provided government-run improvements – turnpikes, canals and railroads – there was incompetence, corruption, waste and bankruptcy (which, of course, there never is when companies make the deicions as tho where to build the turnpike, canal, and railroad house).
President Theodore Roosevelt backed the Good Roads movement in 1903 when he addressed the National Good Roads convention. He declared that great empires built great roads. Two years later, he signed the Agriculture Appropriations Act that established the Office of Public Roads. It did some demonstration projects, but merchants, auto manufacturers, bicycling enthusiasts and others all wanted somebody else to pay the bills, and the somebody else thought they needed their money for other things. So progress was slow.
People were reminded of the potential for financial trouble when Theodore Roosevelt embraced other kinds of internal improvements. He decided government should encourage settlers to go beyond the hundredth meridian where annual rainfall was less than 20 inches. Hundreds of entrepreneurs thought land could be farmed if there were irrigation, so they started building irrigation systems, but they couldn’t recoup their costs. States bailed out the projects by issuing bonds, but there were huge political fights about where dams and reservoirs should be located. State-run irrigation systems became notorious for corruption and losses.
Roosevelt became interested after it had become clear that irrigation projects lost money. In 1902, he signed the Reclamation Act, establishing the Bureau of Reclamation — a federal monopoly for dams and irrigation systems in 16 states west of the hundredth meridian where farming didn’t make any sense. The act promoted farming in deserts, the most costly type of farming imaginable, and there was corruption as people posed as homesteaders applying for claims, then sold their land to speculators, and most of those who tried to farm went bankrupt. The projects were nothing but losses. The Bureau of Reclamation went on to build some 600 dams, destroying beautiful valleys, increasing the salinity of irrigated soil, drying out rivers and losing more money.
We should understand that our roads and bridges exist principally because of the wealth created by private sector businesses. Government, after all, doesn’t have any wealth, other than what it extracts from the private sector (Of course, the private sector is forever trying to reduce wages, to make even more profits, and the private sector will cheat and do shoddy work, if they can get that big momma ready for play!.
Recall for a moment how dramatically the private sector has produced wealth (Good Lord - we live in a coporate welfare state, where a sufficiently large company can litterally go belly up, then come to the US govt, HAT IN HAND, begging to be saved from the onorous war on rich people..)
When the United States was established, economically it ranked as a Third World country. It had a small population. The economy was primarily agricultural. It had very limited manufacturing capacity (Not surprisingly, considering the indigenous population consisted of hunter / gather tribes and farming communities - the land was sufficiently vast, and its natural resources - fresh water, black soil, minerals, animals sufficiently abundant to sustain a rather large population of natives who had developed amazing systems of egalitarian politics and communities; the American Indians were a reverent people, who believed in a supreme creator God, and many lesser gods, or rain, wind, and fire. Since the land was so vast, and the population, relative to the land mass so sparse, there was plenty for all, and the native population used only those resources that were needed to sustain it -- a far different situation than existed in Europe and especially the British Isles, where the relatively for more crowded lands required creative solutions in order to feed and house Europe's populations. Furthermore, because there was so much abundant land, as compared to Europe, natural resources were sufficient to feed and shelter the population, without having to resort to the cutting down of all the forests; nor was the waging of wars to take lands and resources away from other nations; and thus the need for science to more perfectly create ever more efficient killing machines prevented "necessity" from becoming the mother of invention. America had few oceangoing ships, because overseas trade had been monopolized by the British. Americans didn’t have the capital to develop (exploit and eventually deplete) their natural resources. A high priority during George Washington’s administration was to avoid being drawn into the war between Britain and France, because the new nation was fragile (and also because the founding fathers were great students of history, and fully understood the folly and futility of the waging of wars amongst Europeans in order to take from one nation its resources to enrich the peoples of another nation - although the founding fathers had NO problem whatsoever in slaughtering Indians, enslaving Africans to work as the cheapest labor going).
Although there was government intervention in the economy, some of which I’ve noted, from the beginning of our country until World War I government spending was less than 10 percent of the economy – half of what it is now (and the economy was quite a bit less "robust" than it is now).
During the first half of the 19th century, the United States became a highly literate nation, but government had almost nothing to do with it, because the big expansion of public schools came later — after the Civil War when Protestants were anxious to “Americanize” millions of Catholic immigrants from Ireland and Italy (actually, the Protestants were anxious to avoid having parochial-educated Catholics gaining the upper hand from an intellectual persptective; public education, as a government enterprise, was developed because it was well recognized that a more highly educated Catholic population would in fairly short order take over the essential functioning of the Protestant "elites" in the communications sectors (newspapers), the political sectors (oh dear Lord, these Catholics will have as their first allegiance the Pope in Rome; it will kill the Republic), academia, medicine, manufacturing, etc, etc, etc).
The most important essentials for a good education are a motivated student and a motivated teacher, and America had plenty of those before the coming of large public school systems. For example, when Frederick Douglass (Frederick Douglass was HARDLY a typical example; as a slave, in many states, it would have been against the law to teach him how to read and write; Douglass, the original deconstructionist {You tell us we are too ignorant to learn to read and write, and yet, you prove exactly your point, by passing laws making it illegal for us to learn to do so. If we were so ignorant as to be unable to learn to read and to write, you would have no reason to pass such laws!) was a young household slave in Baltimore, sometimes his master read to him from the Bible, and he began to observe connections between the sounds of the words and marks on the page. He began learning to write. He learned more on the streets of Baltimore. He recalled that “when I met a boy who could write, I would tell him I could write as well as he. The next word would be, ‘I don’t believe you. Let me see you try it.’ I would then make the letters I had been so fortunate as to learn and asked him to beat that. In this way I got a good many lessons in writing, which it is quite possible I should never have gotten any other way. During this time, my copy-book was the board fence, brick wall, and pavement; my pen and ink was a lump of chalk. With these, I learned mainly how to write.”
According to John Tebbel’s History of Book Publishing in the United States, during the first half of the 19th century, “America had already far surpassed England in book sales. It was unusual to sell more than 10,000 copies of even the best fiction book in Great Britain and Ireland, but it was not at all out of the ordinary to sell 50,000 copies of even a moderately good book in America. Washington Irving’s works had sold 800,000 copies; more than a million of T.S. Arthur’s books had been purchased; James Fenimore Cooper’s novels were selling at a rate of 40,000 annually; Bayard Taylor had recorded 150,000 copies; and then there were the incredible sales of Noah Webster’s spelling book, totaling 30 million.” The number of U.S. publishers jumped from about 50 in 1755 to 385 in 1856. The number of U.S. titles published annually soared 10-fold to over a thousand between 1840 and 1855. Of course, the publishing business was entirely in private hands, without subsidies (and it pretty much still is - with the exception that state governments must approve the text books which are used to teach in the primary grades; certain of these governments pass laws mandating what can and what cannot be part of the cirriculum - for example, History text books in "the South" must refer to The Civil War, as the War of Northern Aggression, and some school districts would have their science teachers present Creationism along with Darwinism as if they were both mere theories, between which there is no opinion from the scientific community recommending one over the other. Local book burnings (Manchild in the Promised Land, Farenheight 400, Lolita to name but a few) have been encouraged. No, I think it unfair to say that the publishing business was "entirely" in private hands).
That’s not all. Before there was a permanent income tax with charitable deductions, private entrepreneurs established major institutions of higher learning, including Cornell University, Stanford University, Johns Hopkins University and the University of Chicago. Women’s colleges were privately funded, too – Mount Holyoke, Vassar, Wellesley, Smith, Radcliffe, Bryn Mawr and Barnard. Because Southern state governments spent little money educating black students after the Civil War, one private entrepreneur – Sears, Roebuck’s Julius Rosenwald – funded the construction of almost 5,000 Southern schools for black students. This amounted to about a 25 percent increase in the number of such schools (while these schools were indeed separate from the white school, it did not take very long to make them unequal, and while funding the construction of the schools is one thing - paying a school's teachers a fair or competitive or living wage is something else; maintaining the schools' infrastructures too, is something else, and while not questioning the voluntary good works done by Julius Rosenwald, it was not money enough to sustain the schools, and with the low pay given to black domestics and sharecrop farmers, the tradition of such schools does not match the tradition of white schools) .
Between the end of the Civil War and 1910, American entrepreneurs organized industries to achieve impressive gains in productivity, making it possible for living standards to rise dramatically (and enable the American peoples to consume every higher percentages of the world's natural resources for fuel and energy). For example, iron ore production increased 19-fold. Bituminous coal, up 46-fold. Copper ore, up 67-fold. Crude petroleum, up 419-fold.
Intense competition helped drive down consumer prices for just about everything – including Standard Oil’s petroleum products — which meant that people got more for their money, and living standards went up. The increasing number of branded products (Campbell’s, Kelloggs, Heinz, Armour, etc.) gave people better assurance about quality. More people had access to these benefits, thanks to improved distribution via department stores, chain stores and mail order sellers.
Immigration to the United States surged, and the foreign-born percentage of the population approached 15 percent between 1900 and 1910, but entrepreneurs created millions of jobs for everyone. Unemployment fell as low as 1.7 percent (1906).
It happened before America became a welfare state.
That’s how American taxpayers could sometimes pay very large amounts of money for roads and bridges.
Other nations, many with abundant natural resources, tried to do what our private sector did, but they failed because they bet on a government-run economy. The Soviet Union isn’t even on the map anymore (but Russia is on the map, still, and the staelite Republics are still on the map; and Russia has a state-run "free markert" system; same for China).
Many other countries can’t afford to spend what we do on roads and bridges.
I have travelled in China, India, Argentina, Eastern Europe and other places with government-run economies and some really bad roads (our neighbors are Chinese and graduated college the same year, where, in China, all the college grads that year were chemists; they both got student visas and came to the U.S. to further their education, circa 1991. They returned to China in 2008 for the Olympic games. The husband had this to say, speaking of American roads: "When we came here in 1991, America had the best infrastructure in the world. But you have not maintained it and have not invested in its upkeep. China is so much better now).
It’s past time for politicians to stop insulting all the people who make our private sector work and who pay the bills for roads, bridges and everything else (the American private sector works? Oh, REALLY? Then why is that the only segments of the job market that are experiencing growth are for bartenders / bar maids and food servers, and teachers (funded by property tax dollars, and people in the health care service sector)? The U.S. issues 250,000 special green cards a year to highly trained techies in the computer, medical, and engineering fields, and the holders of these visas WILL work for companies at somewhere between 50 and 66% of the rate of pay that would be acceptable to an American born worker, thereby holding down wages for all.
This is how this article should have ended:
This is how this article should have ended:
It's past time for members of conservative think tanks to stop insulting all the working people of the country who have seen their jobs out-sourced and their work forces "right-sized" in order that large multi-national corporations can continue to roam and (de facto) exert their power and influence on local government in return for taxual favors. It's time for them to stop claiming one thing in the title of their articls and then dancing around their claim with impunity while forcing their readers to suffer through heaping mounds of irrelevant "facts" which are in fact lies propagated by "the right" to prove their point that no one ought to pay taxes and that we let the private sector take over all the manufacture and sales of everything, absent constraints of government oversight and approval.
Jim Powell, a Senior Fellow at the Cato Institute, is the author of FDR’s Folly, Bully Boy, Wilson’s War, Greatest Emancipations, Gnomes of Tokyo, The Triumph of Liberty and other books.
