Miseducation About American Business; A Wortham

714 ·can Business - that businessmen are natural conspirators against freedom; - that the need of one man is his claim to the productivity of another. The latest decade of the Ameri can Story marks the emergence of young people whose ideals are an tithetical to everything ba.sic in the development of the freest na tion on earth. The idealism ascribed to the youth of the early sixties had, by the turn of the decade, been trans formed into rebellion against America's productive forces. Many business organizations, firms, and universities responded with pro posals that they and the youth come together and sort out their differences. On June 11, 1968, while university campuses erupted with student 1971 MISEDUCATION ABOUT AMERICAN BUSINESS 715 demonstrations and violence, the National Association of Manufac turers held a joint conference of students and industrialists for a possible meeting of the minds. But there was little meeting of the minds between these people who otherwise would have come to gether as producers and consumers - sellers and. buyers - potential workers and employers. Instead they came together as traditional enemies of one another: the ex ploiters and the exploited.

Their meeting typified the dia logue that can be heard screaming across ·the land even now - mark ing the beginning of but another wretched chapter of the anticapi talist campaign. It was but a re peat of past times when the Amer ican businessman was made the scapegoat for the failures of such government intervention as Wil son's "New Freedom," Roosevelt's "New Deal," Truman's "Fair Deal," Kennedy's "New Frontier," and Johnson's "Great Society." Once again, the businessmen at the NAM conference did little to de fend their stand. I received this report from a friend who was there: "One of the student panelists hurled the accusation of material ism at the businessmen. He re sented the fact that businessmen expect a university to educate and graduate students who are adequately prepared for the responsi bilities and opportunities that in dustry has available for them. This emphasis on career orientation un dercuts the idealism of young peo ple and brings about a material istic society - which the young panelist strongly condemned.

"Unfortunately, no one present was willing to step forward and rebut this and other student com ments. One other accusation was that businessmen have failed to bring about the 'good society.' No one in the audience bothered to ask what a 'good society' is, whether a 'good society' had ever been achieved in any country in which businessmen have not been allowed to exist. No one pointed out that if a man wants to do things for people, he first has to know how to get things done; and he really won't get things done un less he likes the doing itself that is, work. "The students made it abund antly clear that their goal was not work, but power. 'We want total re-evaluation of the existing struc ture,' one of them announced, while another echoed, 'We want a new political institution to deter mine what society needs.' "A new political institution is what they called for. However, no one pointed out that any political institution that sets itself as the arbiter of what society needs in716 THE FREEMAN December variably ends up dictating which needs and Iwhose are to be satis fied . . . and whose lives and/or property must be sacrificed .in the process."

The Advocates of Force Three years later, the predic tion of power leading to force has come true. A counterculture of young people dedicated to mysti cism and force has emerged to carry one step .further the assault against the businessman. They are engaged ina. new life style called "ripping off." According to aNew York Times Magazine article (Au gust 8, 1971) by Michael Drosnin, ripping off - stealing, to the un initiated - is rapidly becoming as much a part of the counterculture as drugs and rock music. Summing up the philosophy of these young thieves, Mr. Drosnin writes: "Behind the new morality of theft-without-guilt is a radical ideology . . . which sees America as a society based on the rip-off, its most respected citizens busi nessmen who have most success fully held up the most people. Stealing from these robber barons, runs the argument, is certainly more moral than working for them. It may be called a crime, but it's only a justified redistribu tion of the wealth."

I must disagree with Mr. Drosnin. There's nothing radical about the ideology of these young Robin Hoods. The idea of stealing from others what one cannot or will not produce himself is as old as man. But history records the fall of societies permeated by the morality of the thief. Fortunately, these young people do not constitute a majority of today's youth who, like it or not, will inherit the responsibility of carrying on "the American way of life." But the mere fact that these young larcenists exist says some thing rather negative about this country's moral, political, and eco nomic health. To quote Goethe: "The destiny of any nation, at any given time, depends on the opinions of its young men under five-and-twenty." Illustratively, in 1968 the students berated the free enterprise system and material property; they proclaimed as their goal a new society in which power, self -sacrifice, and semiconscious ness would determine man's state of affairs. Today's young looters have followed them as field agents, acting out the goals stated by radi cals of earlier years. The young radicals of the sixties made ex plicit the values and goals of those who, for the last century, have been campaigning against reason and free trade in favor of faith and force. The plunder and looting going on· today is the end result of that campaign.

1971 MISEDUCATION ABOUT AMERICAN BUSINESS 717 Surely, this ironic state of af fairs - where the acquisition of material goods by force is the rule of thumb for free, middle-class youth - is a saq commentary on the future of this country. The Irony of Their Existence It is ironic that these young peo ple who have never known what it is like to be without wonder drugs, space age time-saving de vices, mass transport, and instant communication should be among industry's most outspoken antag onists. It is ironic that they, the receivers of industry's massive output, should so diligently cam paign to put American business men out of commission. It is ironic that statism should be the ideal of young people whose livelihood is the product of whatever degree of free enterprise there remains in this country. It is ironic, but not so difficult to understand. Dr. Ludwig von Mises explains it this way: "Peo ple do not ask for socialism be cause they know that socialism will improve their conditions, and they do not reject capitalism because they know that it is a system pre judicial to their interests. They are socialists because they believe that socialism will improve their conditions, and they hate capital ism because they believe that it harms them. They are socialists because they are blinded by envy and ignorance."!

How is it that today's youth have come to consider the busi nessman their arch enemy? One of the reasons is that young peo ple have not been taught to see the man who believes in a free market for what he is. Indeed, they have not been adequately taught the very ideas of free enterprise. To compound the situation further, these youth have only experienced an economy that has moved far ther and farther away from capi talism. They have been exposed to a citizenry for whom it has be come commonplace to blame busi nessmen for the faults of the wel fare state in which they exist. Most American businessmen are not capitalistic; most believe in some form of government regula tion of their property and work. But it is the resiliency of the free market that has allowed these be trayers of the system to continue doing business. Conversely, how ever, it is also the objectivity of the free market that finally bucks them and sends them to the bank ruptcy courts. If they continue to function ina market that has ren dered them unworthy, it is only because of privileges andsubsi dies granted them by the govern1 Ludwig von Mises, The AntiCapital istic Mentality (New York: D. Van Nos trand Company, Inc., 1956).

718 THE FREEMAN December ment. And in this respect, receiv ing a government guarantee of a share in the market place is just as despicable and unjust as the act of taking unearned goods from a supermarket or being guaran teed an unearned share of the market as a consumer through government relief. However, today's youth seem unable to make this distinction among businessmen and they don't trust the free market to weed out the bad from the good. When the market place renders justice to an unstable business and the govern ment counteracts that verdict with a loan (taxpayers' money) to rein state that business, thoughtless youths then accuse all business men of bribing and controlling the government. They see all business men as an evil and dangerous force. And they trust nothing, short of government intervention, to rid them of what they think is their enemy. But they have unwit tingly made American business the scapegoat for the unrealistic policies and bungling actions of a government that, to say the least, is itself too big. They do not see big government as the oppressor of business; rather they see the government as the protector that stands between them and big busi ness. They see themselves as the exploited and the businessman as the ubiquitous exploiter. They seem to be unaware of the many ways in which their own freedom is jeopardized when government curtails the economic power of the business community.

Unfamiliar with the Principles My contention is that those young people downgrade the ideas of free enterprise because they are unfamiliar with the principles on which the virtue of produc tivity is based. All they know about the kind of productivity con sonant with free enterprise amounts to a misinterpretation passed on to them by their fami lies, schools, community, and civic leaders. Their outrage is due to the fact tha t everything they have been taught says that the materialistic ideals of capitalism to which many of the older generation still cling cannot be practiced in reality. They have been saturated by an intellectual onslaught against busi ness. And not having heard any other dialogue, they are rare to question and quick to join in pro test. On the one hand we have seen American business produce at rates unheard of before in the his tory of mankind. But on the other hand, the development of young Americans committed· to the prin ciples of free enterprise has seem ingly decreased. An anticapitalist 1971 MISEDUCATION ABOUT AMERICAN BUSINESS 719 attitude has been taking shape in this country during the last half century, particularly within the past three decades. The American businessman has stood by trying to appease every intellectual straw in the wind, only to see the straws pile higher and higher, until now he feels himself the needle in the haystack, lost and with no visi bility.

And so they summon the young saying: "Here we are. See us for what we are-not as your enemies but as your allies." How Is He to Know? But what is a twenty-year-old supposed to think of the American businessman if all he remembers from his high school history courses are the reported bribes of robber barons and all he knows about a free economy is that gov ernment intervention was neces sary to relieve the country of a depression allegedly caused by in dustry and big business? How is he to look at the businessman as anything else than a monster if his parents are heard saying that wars are supported by big busi ness because of the profits it can make from selling to the military? How is he to understand the bless ings of a free economy if his grandfather boasts of a farm sub sidy that got him through "those tough years" - or his uncle lauds Roosevelt for a WP A program he claims kept him alive? And at the age of eighteen how is he to vote for a man who calls for less gov ernment spending, when for all of his eighteen years he has survived by the grace of a welfare check?

How is he to understand the fail ures of his government when all he hears in school, at home, and on television is that big business is to blame for high prices and unemployment? As young men and women begin to earn their own salaries and enter the ma.rket place as consum ers, what are they to think except what they have been taught: a dis tinct distrust of those who make the products their money will buy? What are they to think if they have accepted the rationali zation for government interven tion into our nation's economy as reported in high school and col lege textbooks? Wha t are they to think if their thoughts are based on the average citizen's fear that big business is a. threat to his freedom? In their ignorance, they are to think the very worst and respond with the very worst kind of be havior toward free enterprise: be havior aimed toward destruction. How do we stop this vicious cycle so that the opinions of our young men five-and-twenty will not cause us to shake our heads 720 THE FREEMAN December in doubt about our country's fu ture? I suggest the first step is to get to the source of the misinter pretation - and my conclusion, as an under-thirty young person, is that the source is the American textbook.

Learning Distortions and Falsehoods I have selected sections of my own high school and college texts to dramatize the gross misinter pretations of the free market that are passed on to American youth. In the Applied Economics (James Henry Dodd) textbook used in my high school, I find the following: "Capitalism does not approve of monopolies. It hords that where monopolies actually exist, so that there is little or no competition, such businesses should be regu lated by the government." There is no hint here that the only kind of monopoly that threat ens the free market is the coer cive monopoly held by the govern ment. The student is told that too much individual political freedom sometimes results in selfish "dog eat-dog" practices. The author goes on to say that "as the division of labor increases and ways of mak ing a living become more special ized, new laws to prevent certain groups from taking advantage of others have become necessary."

This is the rationale offered for the regulation of big business and labor unions. In other words, the more freedom a man obtains due to the optimum use of his skills, the more control there must be on his labor and on the employer who agrees to pay him for his labor. From this,. a student might easily conclude that if left alone men will take advantage of each other; tha t the only way to prevent men from acting against their best in terest is to control them. The stu dents in my classes would hardly have questioned the conclusion that freedom is preserved by means of regulations and controls. In defining the American politi cal economy, the author states: "Probably the truth of the mat ter is that we have what we might call American capitalism. It is not the laissez-faire type of capitalism that was talked about so much a hundred years ago or more. In deed, as we have said, we have never felt that government should pursue completely a hands-off policy with regard to business."

And then comes this clincher: "To arm ourselves against com munism, certain controls over business have become necessary." In a chapter entitled "Big Busi ness and Little Business," the author focuses on "the evils that have resulted from the growth of big business."

1971 MISEDUCATION ABOUT AMERICAN BUSINESS 721 "Under the spur of competition for profits, there is always the possibility that some concerns ... will take advantage of their com petitors." The chapter on "Competition and Monopoly" ends on the follow ing note: "We have never had a pure capitalistic system. Competition has always been imperfect, and always some business concerns have enjoyed advantages over others. Furthermore, it is not so cially desirable or practicable to rely on competition to fix f~tir prices for the use of railroads and telephones. The prices of these things are controlled in part by government. . . . The question, therefore, is not whether we shall have perfect competition or pure monopoly as a method of deter mining the prices of the things we buy. Rather it is a question of how much unrestrainedcompeti tion is desirable ... shall business be controlled by means of govern ment ownership or by regulation ?"

Control or regulation! These are the alternatives, two sides of the same ideology: communism or fascism. These are what the un suspecting student is asked to choose from. History? In a college-level American His tory handbook (American History at a Glance by Marshall Smelser), used by many students at my col lege, no distinction is made be tween the giants of American in dustry who were believers in an unregulated economy and the jus tice of the free market and those men who sought political pull and government subsidies. J. P. Mor gan and Andrew Carnegie are de scribed, along with the Big Four of the Central Pacific Railroad, as a threat to competition. The eco nomic revolution that followed the Civil War is depicted as the cause of the years of economic disloca tion that ensued. The ill fate of the American farmer is blamed on industry. The student reading this sum mary of American history would have to conclude from it that dur ing the post-Civil War years until the height of the Progressive Movement of the early 1900's, American free enterprise was al ways in danger as a result of the actions of businessmen. Indeed, the student is told that the decline of the pro-business atmosphere and the increasing interest in reform came about because there was a "feeling" that the political and economic direction of American life had been given into the hands of a few or had been seized.

What of the consequences of taking the country's economy out of the market place and placing it 722 THE FREEMAN December in the hands of government bu reaucrats? There is no way for the student to know from reading this particular handbook. Booker T. Washington Portrayed an "Uncle Tom" Turn now to the Negro history book (From Slavery to Freedom, rev. ed., 1956) required as a· text at my college and still used exten sively in most southern Negro col leges. The author, John Hope Franklin, has the following to say about the role of the American businessman: "Perhaps the great est failure of Reconstruction was economic .... In the North, where their [Negro] lot was substantially better, they had not yet learned to cope with the powerful indus trialists who were using political agencies as their most reliable al lies and bribing officials with greater regularity than they paid their employees. While the white leaders of the South were preoccu pied with questions of Negro suf frage and civil rights, Northern financiers and industrialists took advantage of the opportunity to impose their economic control on the South. And it has endured to this day."

In his section entitled "Age of Booker T. Washington," Franklin criticizes Washington, a man who was easily the most sensible Negro of his time, if not one of the mo~t rational intellectuals of the post Civil War period. Washington be lieved that all races have gotten on their feet largely by laying an economic foundation. On one occa sion, in answer to his opponents, he said, "I would set no limits to the attainment of the Negro in arts, in letters or salesmanship, but I believe the surest way to reach those ends is by laying the foundation in the little things of life that lie immediately about one's door. I plead for industrial education and development for the Negro not because I want to cramp him, but because I want to free him. I want to see him enter the all-powerful business and com mercial world." He held the strikingly practical and rational view of economic freedom as a prerequisite of polit ical freedom; essentially his be lief was that economic freedom was self -ini tia ted and maintained in the market place rather than through handouts. In regard to these views, the author passes on the following interpretation of Washington's brand. of capitalism to students: "While there was much to be said for the position that Wash ington took, his doctrine contained some weaknesses that are perhaps more obvious now than they were 40 years ago. He accepted uncri t ically the dominant philosophy of 1971 MISEDUCATION ABOUT AMERICAN BUSINESS 723 American business when he in sisted that everyone had his future in his own hands, 'that success came to him who was worthy of it, and the greater the obstacles, the greater the victory over them.' It was a doctrine of triumphant com mercialism, which was strength ened by his contact with ...

wealthy American businessmen." In his final criticism, Franklin interprets Booker T. Washington's philosophy as being "an adapta tion of the theories of free compe tition and political individualism that had been taught by the school of classical political economy and was becoming more fictitious than ever by 1900." According to Franklin, the alleged concentration of economic power in the hands of a few dis credited the idea that a man of small capital could raise himself to affluence and power through hard work and thrift. That Wash ington could have believed other wise, says Franklin, showed his lack of understanding of that real ity as he developed a program of industrial education for the eco nomic salvation of Negroes. It is no wonder that many young people with whom I attended Tuskegee Institute in the early sixties began to refer to its founder as an "Uncle Tom." Stu dents who were benefiting from the industry of Booker T. Washington remembered him not for his ideas of individualism,eco nomic self-determination, and free competition; instead they remem bered him as the "Great Compro miser."

Political Science Anticapitalistic Version The textbook of my Political Science course was American Democracy in Theory and Practice by Robert Carr, Marvel" H. Bern stein, and Donald H. Morrison. In their assessment of the relations between government and business, the authors demonstrate the trend toward increasing governmental regulation of economic life. They concede government's role in pro tecting property rights. However, they add to this function of gov ernment four others which they say are the means by which gov ernment promotes business. In their view these functions are: (1) direct aid to business; (2) maintenance of competition; (3) public utility regulation; (4) fi nancial controls. After a detailed explanation of these alleged functions, the au thors tell the unsuspecting student that government regulation and the growth of public powers have been inevitable results of indus trialism and the spread of democ racy. Regulation, they say, is de signed to protect the public against 724 THE FREEMAN December the excesses of arbitrary economic power which develops in a highly industrialized society.

It must be remembered that these conclusions presented to the student are done with the best in tentions. Government regulation is described as being supportive of free enterprise - not obstructive to it. To quote Ludwig von Mises: "This assumption takes for granted the fundamental socialist idea that economic interests of the masses are hurt by the operation of capitalism for the sole benefit of the 'exploiters' and that social ism will improve the common man's standard of living."2 It is interesting that of the 810 pages of text the authors devote one-and-a-half pages to the ideol ogies of fascism and communism without defining the basic princi ples of these anticapitalistic ideas. And if the student has no concept of these opposing ideas, how is he to know that many of the claims made by the authors are them selves adherent to the principles of socialism? How is he to know that for some 115 pages, instead of explaining the theory and prac tice of free enterprise as pro claimed, the authors instead have dwelt upon the theory and prac tice of a version of socialism? How is the student, who is enjoying the blessings of liberty, to know that 2 The AntiCapitalistic Mentality.

the reason that his general welfare is among the highest of the world's peoples is not because of govern ment regulation-but in spite of it? How is he to know this if his text book clearly states that it is be cause of government control (of business) that private enterprise is maintained? What does he have to counter act six long chapters of text reiter ating the position that the Amer ican economy "depends substan tially upon government activity and control to safeguard and pro mote the public interest and to maintain private enterprise"? Conclusion I have presented the above ex cerpts from books that were a part of my own educational experience to show to what degree the tools for teaching the ideas of free en terprise were lacking in that ex perience. And I think my experi ence was not unique. It is my con tention that the young person who calls a large corporation fascist doesn't do so because he knows what fascism is; rather he does so because he doesn't recognize free enterprise when he sees it. And this is the danger - that many young people in our school systems will never know the very principles upon which their lives and liveli hood depend. They will be cheated of a means to distinguish between 1971 MISEDUCATION ABOUT AMERICAN BUSINESS 725 statist principles and laissez-faire principles. I am fully aware how rare it is these days to see any thing that looks remotely like a laissez-faire undertaking. But that does not excuse the inability of an entire generation to see these rare instances of man glorified by his productivity. That does not excuse the inability of young people to distinguish between an altruistic principle against their lives and a capitalistic principle in support of their lives.

It is, in my opinion, time for new textbooks to appear in the American 'classroom. Either we supply young minds with an accu rate means of comparison or we will continue to be subjected to the actions they take based on the dis torted ideas they now hold. ~ IDEAS ON ~ LIBERTY The World of Make-Believe IN ALL PLACES it is visible, that while people talk of a common wealth, every man seeks his own wealth; but there, where no man has any property, all men zealously pursue the good of the public: and, indeed, it is no wonder to see men act so differently; for in other commonwealths every man knows that unless he provides for himself, how flourishing soever the commonwealth may be, he must die of hunger; so that he-sees the necessity of preferring his own concerns to the public; but in Utopia, where every man has a right to everything, they all know that if care is taken to keep the public stores full, no private man can want anything; for among them there is no une.qual distribution, so that no man is poor, none in necessity; and though no man has anything, yet they are all rich; for what can make a man so rich as to lead a serene and cheerful life, free from anxieties ....

SIR THOMAS MORE, Utopia W. MARSHALL CURTISS SVBS:I.DI:ZED llXE:N.PZ-OY:N.EN'l' HAVE YOU ever tried to employ· an "older" person and gotten this reply: "I would be glad to work part time, but if I earn more than $140 in any month my social se curity that month will· be reduced 50 cents for every additional dollar I earn." If he earned $240 in a month, half of the extra $100 would be deducted from his social security check. In other words, he would give up $50 to earn $100. Furthermore, the $100 is taxable income whereas his social security check is not. The earned income also is apt to be subject to a deduc tion of around 10 per cent for social security taxes. But let's go on. Whatever a social security claima.nt earns above $240 in a month is deducted from his social security check, dollar for dollar up to the total Dr. Curtiss is Executive Secretary of The Foun dation for Economic Education.