Given that we run an $800B trade deficit, how can that be?
Posted on 03/21/2009 7:41:56 AM PDT by Publius
Synopsis
Dagny and Hank visit the county seat and discover that the Twentieth Century Motor Company is tied up in litigation with two owners vying in court for possession. Mark Yonts of the People’s Mortgage Company of Rome, Wisconsin, an S&L known for easy credit, had sold the company to a concern in South Dakota and had used it again as collateral for a loan from a bank in Illinois. When his S&L collapsed, he disappeared after stripping the factory of its assets. All records are gone due to a courthouse fire.
They visit Mayor Bascom of Rome who had sold the factory to Yonts. The mayor, whose ethics are flexible and has no room for principle, had looted the factory of Jed Starnes’ mahogany desk and a manager’s high class stall shower. He had picked up the factory from the crash of the Community National Bank in Madison. Eugene Lawson, the “banker with a heart” who had owned the bank, is now with the Bureau of Economic Planning and National Resources, working with Wesley Mouch!
It takes them a 200 mile drive to find a place where they can make a long distance phone call. Dagny reaches Eddie to ask him to send two engineers to Starnesville, but Eddie tells her in a panic that “they” are planning to kill Colorado.
Back in New York, Dagny and Eddie stash the mysterious motor in a vault under the Taggart Terminal.
Political chaos has broken out. The rail unions are demanding lower speeds and shorter trains. The states surrounding Colorado are demanding that they receive an equal number of trains as Colorado. Orren Boyle’s political action committee is demanding a Preservation of Livelihood Law that would limit Rearden’s mill output to an amount equal to his competitors. Mr. Mowen’s PAC is demanding a Fair Share Law to give equal supplies of Rearden Metal to all customers. Bertram Scudder’s PAC is demanding a Public Stability Law that would forbid Eastern businesses from leaving their home states. Wesley Mouch is issuing directives left and right based on a national emergency due to an unbalanced economy. Jim Taggart is firmly on the looters’ side, but says he is going to protect the railroad’s interests.
Hank discovers that Paul Larkin has not kept his word on the shipment of ore to the Rearden mill. He has been shipping it by rail, not lake boat, to support Jim Taggart’s failing branch line in Minnesota. And he has shipped it to Orren Boyle. Hank now works the back alleys of the steel business to find the ore he needs.
At home, Lillian enters Hank’s bedroom; she wants something. She speaks of the virtue of telling an ugly women she is attractive and how loving a woman for her virtues is meaningless. She notices that Hank has been less tense of late. As she embraces him, he tears himself away from her in revulsion. Hank asks her what is her purpose in life. She hints that simply being is enough for an enlightened person.
Dagny visits Eugene Lawson at his Washington office; he thinks she is there to beg favors of the bureau for her railroad, but Dagny disabuses him of that notion. Lawson feels no guilt in the collapse of his bank because he lost everything in the crash; he is proud of his sacrifice. He based his bank’s lending policy on need, not greed. Lawson put up the money for the purchase of the Twentieth Century Motor Company because the plant was absolutely essential to the region. While saying that the common worker at the plant was his friend, he can’t seem to remember anyone’s name. As Lawson sees it, he suffered for an ideal: Love. Dagny asks if he has seen that section of Wisconsin lately, and Lawson becomes defensive, blaming the rich. But Lawson remembers Lee Hunsacker, the man from Amalgamated Services, who bought the plant and is now living in Grangeville, Oregon. As Dagny leaves, Lawson states that he is proud that he has never made a profit. Dagny tells him that is the most despicable statement a man could ever make.
Lee Hunsacker lives in squalor, cadging free space from a working married couple in their home, and he blames the world for having never given him a chance. Jed Starnes was a backwoods garage mechanic, while Hunsacker came from the New York Four Hundred, the city’s richest and most prominent citizens. Hunsacker’s mission in life is to complete his all-important autobiography; he has no interest in pulling his weight at the house. His shot at the Twentieth Century Motor Company was his life’s dream. The Starnes heirs had run it into the ground, and he went to the bankers to get money to buy the plant, only to discover that the bankers were intent on profit! Midas Mulligan, the Chicago banker, had been particularly rough on him. Hunsacker says he was the only man who beat him.
Dagny remembers the legend of Michael “Midas” Mulligan, who had bankrolled Rearden Steel in its early days. You never dared mention “need” when you went into his office to ask for a loan. Seven years ago, Mulligan had vanished in the most orderly bank run in American history; everyone got his money back.
Hunsacker had applied to Mulligan for a loan, and Mulligan had told him he was unqualified to run a vegetable pushcart. So Hunsacker sued, and a liberal lawyer and an Illinois law aimed at emergency situations got him into court. Judge Narragansett ruled against him, but an appeals court granted him the loan. Mulligan shut down his bank and disappeared rather than comply. Narragansett retired and disappeared six months later.
Eugene Lawson granted him the loan, though, but it wasn’t enough. The new factory owners went bankrupt when Nielsen of Colorado put out a similar motor at half the price. Hunsacker’s top priority was to make the plant’s offices prettier for the sake of his mental attitude, to include that high class stall shower in his executive washroom. He blames the failure on outside conditions beyond his control. But he does have the location of the Starnes heirs: Durance, Louisiana.
The Durance police chief tells Dagny that Eric Starnes had killed himself years ago after a life of whining about his sensitive feelings. When a 16 year old girl spurned his advances and married someone else, Eric had broken into their house and slashed his wrists. Gerald Starnes lives in a flophouse married to a whiskey bottle and an attitude that the world is totally rotten. Ivy Starnes lives in a house by the Mississippi inhaling incense while sitting on a pillow on the floor. She is far above the mundane concerns of mere mortals thanks to a trust fund from her father. But she has a story to tell.
Jed Starnes was an evil man because all he thought about was money; the fact that he had built a successful business was immaterial. Ivy and her brothers existed on a more enlightened plane. So the heirs of Jed Starnes implemented “The Plan” for the factory according to a historical precept: From each according to his ability, to each according to his need. Everyone was paid the same, and there was an annual meeting for each employee to present his needs to the collective. But things did not work out; The Plan collapsed over four years into a morass of lawyers, cops and courtrooms. She can only remember the name of William Hastings, the lab chief, who quit as soon as The Plan was introduced and who moved to Brandon, Wyoming. He was the second person to quit, and she can’t remember the name of the first. Dagny’s impression of the visit is an encounter with pure evil.
Dagny meets Mrs. Hastings, now a widow. After working for some years in Wyoming, her husband retired. In the last two years of his life he went away for a month every summer and wouldn’t tell his wife where he was. Mrs. Hastings remembers the motor, however, and says it was designed by a 26 year old colleague of her husband. Mrs. Hastings had seen the designer as he left on a train along with an older, distinguished looking gentleman. More recently she had seen that same older gentleman working at a diner west of Cheyenne in the mountains.
Traveling to Cheyenne, Dagny sees the older gentleman cooking at the diner, and he cooks her the best burger she has ever tasted. She offers him the job of head of the dining car department at the railroad, but he refuses. Dagny is upset that she can’t find anybody who can do a job properly, and she gets compassion from the cook. She asks him if he knew the engineer at Twentieth Century, and after a pause he says yes. He tells her that she will never find him. The cook is Hugh Akston! Dagny can’t figure out why the leading philosopher of the age is cooking at a diner in the Rockies. He tells her to give up the quest and to check her premises; if there is a contradiction, then something is wrong. Dagny asks about the three students he and Robert Stadler had shared at Patrick Henry University; Akston says that nobody would remember the nameless third man. But he is proud of all three. Akston offers Dagny a cigarette and tells her that the designer of the motor will find her when he chooses. The cigarette is stamped with a dollar sign.
At the Cheyenne station, Dagny overhears a conversation about the latest directives issued by the government bureaucracy, apparently authorized by the National Legislature. Alarmed, she grabs a newspaper and discovers that Wesley Mouch has been very busy, issuing a set of directives due to a national emergency.
Dagny senses that Ellis Wyatt is going to do something rash; she tries to stop him before it is too late, but Wyatt doesn’t answer the phone. As her train comes to an emergency stop, in utter horror Dagny witnesses Wyatt’s oil fields going up in flames. His last message before his disappearance is, “I am leaving it as I found it. Take over. It’s yours.”
”Picket Fences” and Rome, Wisconsin
The CBS series “Picket Fences” aired in the early Nineties, and was set in the fictional town of Rome, Wisconsin. Producer David Kelley was hardly a conservative, and the show was about the town’s police chief and his wife, a doctor, who spent much of their time admiring their own liberalism. I can’t help but think of this as a slap at Rand.
Beatniks, Hippies and Atlas
Following the end of World War II, the bebop movement in jazz gave birth to the beatniks, who became one of the two rebel classes of the Fifties. (The other was the greasers.) Rand witnessed the rise of the beatniks, but gave them no space in the book. What she did, however, is astonishing.
A decade after the publication of the book, during the late Sixties, the hippies came along. These were the children of Timothy Leary who urged people to “Tune in, turn on and drop out.” They were all about detaching themselves from the annoying realities of mundane material concerns. It’s fascinating that Rand could so clearly anticipate the hippy movement with her portrayal of Ivy Starnes. Ivy lives in a house by the Mississippi River inhaling the vapors of incense – and God only knows what else – while she sits on a pillow on the floor contemplating her navel, no doubt in a lotus position. She is a practicing communist and will keep practicing until she gets it right. She attempted to bring Marxism to Wisconsin and destroyed a company and a town in the process.
But Rand’s other surprise is Lillian Rearden. When hippies of the Sixties were asked about their purpose in life, they would often reply that it was not necessary to achieve, but merely to be. Ivy Starnes would have understood this sentiment. Lillian says much the same thing to Hank when she is asked this question, and she is as far away from being a hippy as one could imagine. It’s impossible to visualize Lillian Rearden in jeans, peasant blouse with no bra, and sandals. (Even Gucci sandals!)
Lee Hunsacker, Coleman Young and the CRA
In many respects, the real life Lee Hunsacker was long-time Detroit mayor Coleman Young. Back in the early Seventies, he noticed that different sections of Detroit had differing degrees of investment, a phenomenon known as “redlining”. Bankers would invest in one area but not another, which meant that unelected bankers, not elected officials, were deciding which neighborhoods of Detroit would prosper and which would decline. Young was joined by other big city mayors, to include Dennis “the Menace” Kucinich of Cleveland.
What the mayors chose to ignore was that banks are businesses. They are not only interested in return on investment, but return of investment. People in certain parts of town understood the importance of paying the local bookie or loan shark, but didn’t feel the same sense of urgency when it came to paying the local banker. Had bankers employed Mafia soldiers armed with baseball bats to be applied to certain knees, these problems would never have surfaced. Young’s success came from framing the argument in terms of racism and civil rights.
So in 1977 Congress passed the Community Reinvestment Act. This gave the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision the authority to supervise banks to make sure they were not engaging in discrimination and to act as an approval authority for the opening of new branches, and for mergers and acquisitions. Banks were not being forced to make risky loans – that was strictly forbidden – but bank lending practices were now placed under government supervision.
In 1992 the other shoe dropped; the Federal Housing Enterprises Financial Safety and Soundness Act was passed. Up until this point, bankers were not required to write loans to those who could not meet the appropriate criteria. But now that the loans were to be backstopped by Fannie Mae and Freddie Mac, the banks were on the hook. And with these government guaranteed loans, the banks didn’t protest all that much. The price for rape was right.
Coleman Young didn’t go to court to beat Midas Mulligan, he went to Congress. And that led to our current crisis with sub-prime mortgages and the derivatives intended to protect them.
Lee Hunsacker and Richard Wagner
What does Lee Hunsacker have in common with German opera composer Richard Wagner? Wagner spent much of his time soliciting funds from wealthy Germans to subsidize him while he wrote great German operas, and he was not shy about describing his “music dramas” that way. Once someone gave Wagner money, he treated the donor shabbily, and the more the donor gave, the more contemptuous Wagner was. He had an attitude of absolute entitlement.
Victor Borge had a wonderfully droll, but absolutely accurate, view of Wagner.
”I cannot live like a dog,” he wrote to Franz Liszt, “I must be soothed and flattered in my soul if I am to succeed at this horribly difficult task of creating a new world out of nothing.” Well, I don’t know about his soul, but Wagner did all right for his body. He imported lilac curtains and satin quilts and silk ribbons. He ordered huge quantities of exotic powders and delicate cold creams and perfumed bath salts. He installed soft lights and hung brocaded tapestries and put up Chinese incense burners and kept his music scores in red velvet folders. He filled his house with golden cherubim and ivory figurines and hand-decorated porcelains. After that, composing was a snap.
At least, Wagner delivered on his promises. He not only reformed German opera, gone dissolute after Mozart and Beethoven, but completely reformed the art of opera, influencing Verdi among his contemporaries, and those who came after.
Lee Hunsacker is Richard Wagner without the talent. He needs pretty colors in his office to be properly inspired, not to mention that classy stall shower. He is contemptuous of those who would help him, and his failures are always somebody else’s fault. And he didn’t write one single opera.
Some Discussion Topics
I missed that. I'll have to check that out.
I’m curious as to how you feel about Peter’s position opposing outsourcing. FYI, I see globalization as further self destruction of America. But I know that many here don’t agree with that, I’m just about your sentiments?
I learn so much on this forum day after day, so this is only my current position, subject to change upon further information: My gut tells me globalization and offshore outsourcing is self-destruction for the U.S. OTOH, according to what I've read, the "experts" (though I don't know if they all agree) say we lose more in American business and jobs when we try to stop businesses from outsourcing to other countries, or when we try to halt or slow the flow of products and services from other countries into ours. The quote-unquote "experts" do make a valid point there.
However, here's where my opinion will never change: I've always opposed American business bringing in noncitizens to fill jobs here, whether they're illegal aliens or H1Bs.
Given that we run an $800B trade deficit, how can that be?
Thanks for your opinion. It seems most people blame the New Deal. But, as you point out, the problem began much earlier.
Me... When I think of U.S. history prior to the War Between the States, I think of slave labor. The Left claims capitalism was enabled by slave labor. (Maybe they see a distinction between capitalism and the free market?) But, IMHO, they’re wrong: Slave labor exists where there is no free market capitalism because a slave is not trading his labor freely.
Of course, in those markets where slave labor wasn’t used, I believe you that the free market was left virtually unfettered in those early days.
My biggest beef these days is that government has monopolized education. I’d like all education to be sold on the free market. I’ll never understand why so many people balk at that suggestion, as if it’s an extremist position to take.
Thanks for the chart. Here’s their argument (and, as I said, I’m open to more information on this argument), and I’m paraphrasing this argument from various articles I’ve read and interviews I’ve heard through the years:
If we tell American businesses they cannot outsource to other countries, they’ll just move outside the country. And when we tie them down with regulations, for example, we chase them outside the country. When we slow or halt the import of goods to the U.S., we’re limiting the goods that American businesses can use to produce its own goods/services.
That’s “their” argument. How to explain the chart? I don’t know. My gut (yes, there’s my gut talking again) tells me we’re limiting American business by overregulating them.
Interesting discussion, though. I’ll come back to it in a day or so to see where it goes.
Out of sheer desperation I began to order from foreign sources (Japanese). Lead time was a little longer but it went back to being a two-step process again, order and receive. Important parts could be air freighted. Every order would be exactly what I had ordered and the workmanship and packaging was perfect. Manufacturing has since gone to China but the story is the same. With shipping our costs are about the same or a little higher but we have enormous savings in time and aggrivation. We don't have a project tied up because some idiot with a hangover pulled our order.
In Shrugged the producers retreated to Galt's Gulch but that is not the only option available to them now. They may, instead, retreat to where they can produce or the entire process may shift to peoples and countries not so mired in a smug incompetence.
Thanks for telling your story. In the way you explained it, globalization does sound like a form of gulching.
So the "expurts" line is that if legislation is passed raising barriers to importing value, the mfgrs will stop importing value, move to a location where they have less political influence to exert, and....try to import value into the US. Hmmm. Not necessarily making an argument for or against outsourcing, but that argument reminds me of an old definition of "expurt". "Ex" = something that has been; "spurt" = drip under pressure, therefore "expurt" = someone who's been a drip under pressure.
Now I certainly do agree with you about over regulation, overexposure to liability, and bizarre tax structure, but that logic from the experts seems strange. Now another anti-protectionist argument that I’ve heard that I find more plausible is that since our manufacturers use imported raw materials and finished goods to make the stuff they export, protectionism would have a negative effect on exports. Whether it would have a net negative effect on overall production is another question.
I think I probably didn't explain it well. What you typed above probably is closer to what the quote-unquote "experts" ;-) say. I try to back up everything with a source, but I only have a few minutes to type right now. I'll try to search for a source later.
You are erring with the assumption about slave labor.
The south had slave labor the north had child labor.
A distinction without a difference.
There were problems with child labor, but there was a major distinction between slave labor and child labor.
Child laborers were not “owned” as human slaves nor forced into factories by business owners. They were sent to those factories by their parents to earn money for their families. (One might argue they were “owned” in a way by their parents, but that would be an entirely different debate/discussion.)
My grandparents started work in factories as young children. When the government came around to check the factory, my grandfather along with the other children were sent outside the factory to hide. But, my grandfather said none of the children wanted the government people to see them, either, because then they would lose their jobs and the money to bring home. Those families needed to put food on the table. Once, my grandfather was fired for grabbing the whip the factory owner snapped at him, and his mother packed up food and cash to bring to the owner to apologize and ask for his job back.
So, it wasn’t a nice situation by today’s standards, but it wasn’t slavery. Just like business owners hiring poorer people in “Third World” countries isn’t slavery, either.
I've read a great deal about slavery in the south. Aside from the obvious issue of being owned, being fed, housed,and clothed is not exactly no compensation.
Children were employed because they were the indigenous 3rd world. They routinely put in 72 hr work weeks.
The owner carried a whip how different is that from the slave situation.
"Slavery" isn't about quality of life. It's about being forced (by the threat of violence) into servitude. Most of our forefathers lived a harsh existence. But, a harsh existence does not make slavery. Slavery is about not being permitted to make choices for yourself.
Consider what we're facing today: Suppose the president mandates community service for young people, senior citizens, anyone... The conditions might not be nearly as harsh as the conditions slaves and child laborers in the past faced. But mandating community service would be forced labor (slavery).
To put it another way: If the government begins requiring by law people to sweep the streets, that would be slavery/forced labor. But, if a person willingly accepts a job sweeping the streets, that's not slavery.
A child laborer was either sent to a factory willingly by his parents (or he seeked employment on his own) so that he could help earn money for his family. But, the factory owner wasn't forcing him to be there. One could make the argument that parents treated their children like slaves, but that's a different discussion.
In cases where children are/were held as slaves and forced to work in factories - THAT was slavery/forced labor. But, that wasn't the case most of the time, according to what I've read and was told. (Maybe you've read/heard something different.)
“I owe my soul to the company store”.
Still haven’t convinced me.
“The 1890 census revealed that more than one million children, ten to fifteen years old, worked in America. [5] That number increased to two million by 1910. Industries employed children as young as five or six to work as many as eighteen to twenty hours a day.
Breaker Boys, Pennsylvania
Physical ailments were common. Glassworks employees were exposed to intense heat and heavy fumes. Young miners sat on boards in cramped positions, breathing heavy dust, sifting through coal. Seafood workers stood for hours shucking oysters at five cents a pail. The sharp oyster shells sometimes cut their hands.
Industrialization did not create child labor, but it did contribute to the need for child labor reform. The replacement of skilled artisans by machinery and the growth of factories and mills made child labor increasingly profitable for businesses. [6] Many employers preferred hiring children because they were quick, easy to train, and were willing to work for lower wages. “
Are you stating that these children weren’t in forced servitude.
Couldn’t read or write, to young to make an informed decision about anything and beaten on the job.
Still a distinction without a difference.
Whereas slavery was ended in 1865 , Child labor continued well into the 20th century.
Can you add me to this ping list? Thanks! ...magritte
As a matter of fact, my grandparents grew up in PA during that time period. Again, there's no doubt that conditions were harsh for children back then. Stating that child labor doesn't equate with slavery doesn't mean that I think child labor was a good thing.
Are you stating that these children weren’t in forced servitude.
Not in servitude to the factories, mills, or mines IF they were sent to work there by their parents/families.
I'm stating that these children suffered under harsh conditions. Perhaps the conditions under which they suffered were even worse in many cases than what some slaves may have endured. But, harsh conditions doesn't equal slavery.
Again, there are cases of child enslavement: for example, orphans forced into work by an orphanage. But, the most one could argue is that child laborers like my grandfather were in servitude to their families who sent them into these factories, mills, and mines to work.
Couldn’t read or write, to young to make an informed decision about anything and beaten on the job.
Children were beaten everywhere in those days, including at home and in school. Life was BRUTAL for children back then. When I said my grandfather grabbed the whip snapped at him, that didn't mean he was beaten on the job. When all the boys would run inside after a break (according to what I was told), the owner would stand there with a whip and snap it at the last boy in. That one day, my grandfather was the last boy in. He was afraid to go home and tell his parents he'd lost his job. People had a different mindset than we do today. Our society didn't become child-centered until later.
I'm sure you don't want the whole family history. ;-) But, those days were not friendly to children, anywhere. My grandmother worked as a seamstress as a young girl, and her mother would tie her in the basement, beat her, and leave her there. She had scars on her back all her life from those beatings. Home was not a nice, warm place for many children back then. And school... None of my grandparents wanted to go to school back then. Children were beaten there, too. None of my grandparents went to school past age nine or maybe 11, maximum.
Equating harsh conditions with forced labor is what Marxists do. The Left equates the employment of people in the "Third World" with slavery. There is real slavery all over the world today. But, if we equate slavery with harsh conditions, what happens when society either tightens or loosens the definition of what is "harsh"?
Btw, I searched for an Ayn Rand comment on child labor, but I found nothing.
Adding to my last post, just to clarify further:
In a discussion about child labor, at issue would be the exploitation, mistreatment, and abuse of children. Not slavery, unless the children are slaves (as they often are today in certain cases).
Today there are burgeoning domestic constituencies in numerous countries who favour lower tariffs because their livelihoods depend on access to imported raw materials, components, and capital equipment.... That dynamic is easier to appreciate when one considers that 55% of all US import value in 2007 consisted of raw materials, intermediate goods and capital equipment — the kinds of products the construction and manufacturing sectors purchase. Put in this light, it is more obvious that tariffs raise the costs of production, which undermines economic growth — or, as in the current case, economic recovery.
Woodnboats said it better than I. But if you still don’t get it that just means that you are another one of the confused masses responsible for the perpetuation of our current mess.
cool it on the kool-aid buddy.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.