Laissez-Faire Economics a Failure?

[Patriot123]

In my history class today, we were discussing the Gilded Age; the age in American history where our economy really began to boom, and big corporations really began to take off. The point he made was that politicians were too 'busy with politics' and were too corrupt to care about the economy at the time. And thus they didn't care about the economy, either. So they used the excuse of laissez-faire economics as an excuse to just not care and to justify their laziness and corruption. My teacher then went on to explain that because of this, monopolies came about.

Is my teacher right? That Laissez-Faire economics in the Gilded Age created monopolies? My teacher didn't exactly touch in this too much, so I sort of figured I'd come here and ask.

 

[bill50]

Monopolies came about because European bankers that had monopolies by government privilege dumped tons of money into a few American companies to try to monopolize certain industries. Transportation, energy, and banking were their biggest goals. By sheer coincidence 2/3 of them happened to outlined as necessary to control for a socialist takeover by Marx. In Marx's credit, oil wasn't big when he wrote the Manifesto, so he had no way of knowing how important that would be.

 

[Patriot123]

Well how would a president at that time have stopped that? I mean, you can't just forbid a foreign company from giving money to a business in the US, can you? And you can't just tear the company a part, either, because that's unconstitutional -- and socialist.

 

[Objectivist]

In my history class today, we were discussing the Gilded Age; the age in American history where our economy really began to boom, and big corporations really began to take off. The point he made was that politicians were too 'busy with politics' and were too corrupt to care about the economy at the time. And thus they didn't care about the economy, either. So they used the excuse of laissez-faire economics as an excuse to just not care and to justify their laziness and corruption. My teacher then went on to explain that because of this, monopolies came about.

Is my teacher right? That Laissez-Faire economics in the Gilded Age created monopolies? My teacher didn't exactly touch in this too much, so I sort of figured I'd come here and ask.

Monopolies? Can your teacher be more specific and show any monopoly in history.
Standard Oil never had a monopoly if that's what they are thinking.
Have them look up the definition of the word before throwing it out.

 

[tmosley]

IIRC, that was the time when the government first started imposing regulations on those companies. Those companies which were oligopolies were at first natural ones and good, providing services that were so good and so cheap they drove their competitors out of business. As time went on, the government started piling on more and more regulations, which allowed the already massive companies to rest on their laurels, stagnate, and consolidate, driving prices up, because competition was kept out of the market by regulations.

These people always twist history and language to get to whatever sick goal they want. This is manifest in the discussion of the Wikipedia article: http://www.ronpaulforums.com/showthread.php?t=209965

 

[Objectivist]

IIRC, that was the time when the government first started imposing regulations on those companies. Those companies which were oligopolies were at first natural ones and good, providing services that were so good and so cheap they drove their competitors out of business. As time went on, the government started piling on more and more regulations, which allowed the already massive companies to rest on their laurels, stagnate, and consolidate, driving prices up, because competition was kept out of the market by regulations.

These people always twist history and language to get to whatever sick goal they want. This is manifest in the discussion of the Wikipedia article: http://www.ronpaulforums.com/showthread.php?t=209965

Yes, regulations restricted business and trade. Regulations drive up costs to the consumer too. It was regulations by government that killed off thousands of trucking companies and killed off smaller train lines.

 

[Original_Intent]

And as long as there is government regulation of trade, you can bet they will be getting those under the table kickbacks, junkets and other lobbyist favors to make sure the regulations favor the established companies and are harmful to new competition.

 

[FreeTraveler]

Governments CREATED corporations. Corporations can do nothing without the explicit or implict agreement of the government. It's been that way since pretty much forever.

So asking if Laissez-Faire Economics is a failure is roughly analogous to asking if you've stopped beating your wife.

Where has there been a Laissez-Faire economy to fail?

 

[Shed]

Patriot123,

No, your teacher is giving you a bullshit take on US economic history. Nor do we have to invoke a sinister Marxist plot to understand the time.

For a start, politicians at the state and federal levels did interfere with economic affairs (although not as much as now) through high tarriffs, central banking, and 'assistance' to canal and railroad projects that were often never completed. Laissez-faire was a strong, although not completely dominant, ideology, not an 'excuse' for inactive government. The Constitution and its limits on federal government power were still taken more-or-less seriously. Many people and politicians understood the importance of economic freedom and the harmful effects of government intervention/corruption.

Monopolies almost always come about through government-granted privilege (in the American case, high tarriffs which penalised foreign competition). There were some examples of 'monopolies' in this time, though, that attained their status through highly talented entrepreneurship.

Thomas Woods has written several books on American history from a libertarian Austrian perspective and also Thomas Dilorenzo has written a book called "How Capitalism Saved America" (which I haven't read).
You can see Tom Woods talk about the gilded age on this video, which I highly recommend. It's all worth watching, but he starts talking about business at 14:50.

 

[Objectivist]

I've got to say this for the so called robber barons, we had much better libraries, hospitals, schools, museums, concert halls, and parks when they funded them.

Maybe you should look into the things that Carnegie funded, there's a list. Same for Vanderbuilt and the other evil Capitalists.

 

[hotbrownsauce]

In my history class today, we were discussing the Gilded Age; the age in American history where our economy really began to boom, and big corporations really began to take off. The point he made was that politicians were too 'busy with politics' and were too corrupt to care about the economy at the time. And thus they didn't care about the economy, either. So they used the excuse of laissez-faire economics as an excuse to just not care and to justify their laziness and corruption. My teacher then went on to explain that because of this, monopolies came about.

Is my teacher right? That Laissez-Faire economics in the Gilded Age created monopolies? My teacher didn't exactly touch in this too much, so I sort of figured I'd come here and ask.

A monopoly in a free market is just about unheard of. (Lew Rockwell, "The Left The Right and The State") The only monopolies we see are government created. Such as the old Interstate Commerce Commission that catered to trucking and railroads which is now out of existence in name only. It hides under a new name "Surface Transportation Board" http://en.wikipedia.org/wiki/Surface_Transportation_Board

Shed is right, Tom Woods has written on this subject, all though in small amounts, check out your local barns and nobel or library for "33 questions your not supposed to ask about american history", "who killed the constitution?" and "Meltdown". Check out mises.org and check out the PBS free to choose series by Milton Friedman on ideachannel.net (Episode 7 especially "Who Protects The Consumer?")... there is more to find later on. Real knowledge comes with sitting down and taking the time to study. Knowledge is an investment that doesn't come without its sacrifices.

 

[emazur]

I've got to say this for the so called robber barons, we had much better libraries, hospitals, schools, museums, concert halls, and parks when they funded them.

Maybe you should look into the things that Carnegie funded, there's a list. Same for Vanderbuilt and the other evil Capitalists.

Yes, but on the other hand, Carnegie money founded the Carnegie Endowment for International Peace (used to take control of the State Department and change society by means of war)
YouTube - Norman Dodd On Tax Exempt Foundations
and Rockefeller money brought us the General Education Board with this philosophy:
http://query.nytimes.com/gst/abstract.html?res=9501E2DE103EEE3ABC4051DFB667838A639EDE
"In our dreams, we have limitless resources and the people yield themselves with perfect docility to our molding hands. The present educational conventions fade from our minds, and unhampered by tradition, we work our own good will upon a grateful and responsive rural folk. We shall not try to make these people or any of their children into philosophers or men of learning, or of science. We have not to raise up from among them authors, editors, poets or men of letters. We shall not search for embryo great artists, painters, musicians nor lawyers, doctors, preachers, statesmen, of whom we have an ample supply. The task we set before ourselves is a very simple as well as a very beautiful one, to train these people as we find them to a perfectly ideal life just where they are. So we will organize our children and teach them to do in a perfect way the things their fathers and mothers are doing in an imperfect way, in the homes, in the shops, and on the farm."

 

[Objectivist]

Yes, but on the other hand, Carnegie money founded the Carnegie Endowment for International Peace (used to take control of the State Department and change society by means of war)
YouTube - Norman Dodd On Tax Exempt Foundations
and Rockefeller money brought us the General Education Board with this philosophy:
http://query.nytimes.com/gst/abstract.html?res=9501E2DE103EEE3ABC4051DFB667838A639EDE
"In our dreams, we have limitless resources and the people yield themselves with perfect docility to our molding hands. The present educational conventions fade from our minds, and unhampered by tradition, we work our own good will upon a grateful and responsive rural folk. We shall not try to make these people or any of their children into philosophers or men of learning, or of science. We have not to raise up from among them authors, editors, poets or men of letters. We shall not search for embryo great artists, painters, musicians nor lawyers, doctors, preachers, statesmen, of whom we have an ample supply. The task we set before ourselves is a very simple as well as a very beautiful one, to train these people as we find them to a perfectly ideal life just where they are. So we will organize our children and teach them to do in a perfect way the things their fathers and mothers are doing in an imperfect way, in the homes, in the shops, and on the farm."

Yeah and Carnegie died in 1919. His idea of an international peace was to stop wars. Is that a bad thing for a man to want? OK so you bring something that you might not appreciate to the table... how is government an improvement over his ideas? Then if you support Laissez-Faire you should appreciate his efforts for global peace, an unstable global market place is not good for making money. You wouldn't be a Protectionist would you? Then if you disagree with them don't buy what they're selling. Oddly enough Carnegie's first appointment won the Nobel Peace Prize.
http://en.wikipedia.org/wiki/Elihu_Root