THE FOUNDATIONS OF PROSPERITY. I have on occasion suggested that the role of the G.I. Bill college benefits in the emergence of a large, comfortable middle class in the U.S. has been overstated. My interpretation comes in part from reading the history of the large business enterprises and the promoters who created them. These subjects never lack for controversy. The latest reading, Book Review No. 7, is Charles R. Morris, The Tycoons, which credits Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan with "inventing the American supereconomy." Author Morris attempts to position his book differently from Alfred D. Chandler's The Visible Hand and Scale and Scope, both of which provide excellent background on the strengths (abundant products made cheaply by a few firms) and weaknesses (abundant products made cheaply by a few firms) of industrialization. He also takes a somewhat different tack than many writers, portraying Andrew Carnegie, endower of libraries, somewhat less favorably (he comes off as indecisive and easily swayed, and his obsession with productivity -- hard-driving the steel furnaces -- as the solution to any and all ills almost wrecks his properties), and Jay Gould, issuer of watered stock and hirer of private armies, somewhat more favorably (he understood the advantages of friendly railroad connections coast-to-coast rather than community of interest pools, even if he didn't understand that railroads required proper grading and maintenance.) The central story in the book is the transition of the U.S. economy from Jefferson's yeoman farmers and Lincoln's skilled artisans to a factory system in which the machinery augments the productivity of the man in such a way that a man of even modest talents could make a valuable contribution to the assembly of a high-value product. Toward the end, Mr Morris is scornful of business theorists who would honor time-and-motion expert Frederick W. Taylor, timing to the split second the swinging of a hand-shovel, over tinkerer Alexander Holley, inventing a machine to augment the man's hands. It is in that invention of such machinery that the objective conditions favoring a broad middle class emerge. That the contemporary equivalent of such machinery makes more highly-educated people more productive gives rise to the college premium. (Thus a mass entitlement of higher education does more than slow the re-entry of demobilized soldiers to the labor force; without the objective conditions that is all the entitlement would achieve.)

Although the tycoons did engage in conduct that both inspired enactment of and later required enforcement of the antitrust laws, Mr Morris suggests that their legacy included those objective conditions for prosperity, persisting despite policymakers and management consultants alike putting too much faith in Mr Taylor's "scientific management" rather than Mr Holley's induced innovation.

The appendix inadvertently pays tribute to yet another wrong lesson. Consider this passage.

The Carnegie Co. was a holding company formed in April 1900, comprising:
  • The Carnegie Steel Co., its dominant property, plus other holdings previously held on the books of the Steel Co., including
  • The Frick Coke Co. The Steel Co. previously held a 29.55% interest in the Coke Co., but the Carnegie Co. bought out the other shareholders shortly after it was organized, so its interest increased to 100%.
  • A five-sixths interest in the Oliver Mining Co., which held large ore leases in the Mesabi ore range.
  • A variety of railroads, steamship lines, and Great Lakes docks, many of them newly developed and used primarily by the Carnegie subsidiaries.
Tyranny of the four-bullet slide, forsooth. As an exercise, rewrite that as a single paragraph without colons, maintaining proper sentence structure.

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