A Lesson in Wealth Creation

The following is by guest columnist Tim Nerenz.  It is a great rebuttal to democratic Senator Harry Reid's assertion two days ago on the floor of the U.S. Senate that millionaires as job creators are "fictitious."  He said that "like unicorns, they're impossible to find and don't exist."  Tim shows that in Wisconsin many millionaires started out by creating small businesses that grew to large companies that created tens of thousands of jobs.

Downward Wisconsin.

We used to make things here in Wisconsin.

We made machine tools in Milwaukee, cars in Kenosha and ships in Sheboygan. We mined iron in the north and lead in the south. We made cheese, we made brats, we made beer, and we even made napkins to clean up what we spilled. And we made money.

The original war on poverty was a private, mercenary affair. Men like Harnishfeger, Allis, Chalmers, Kohler, Kearney, Trecker, Modine, Case, Mead, Falk, Allen, Bradley, Cutler, Hammer, Bucyrus, Harley, Davidson, Pabst, and Miller lifted millions up from subsistence living to middle class comfort. They did it - not “Fighting Bob” La Follette or any of the politicians who came along later to take the credit and rake a piece of the action through the steepest progressive scheme in the nation.

Those old geezers with the beards cured poverty by putting people to work. Generations of Wisconsinites learned trades and mastered them in the factories, breweries, mills, foundries, and shipyards those capitalists built with their hands. Thousands of small businesses supplied these industrial giants, and tens of thousands of proprietors and professionals provided all of the services that all those other families needed to live well. The wealth got spread around plenty.

The profits generated by our great industrialists funded charities, the arts, education, libraries, museums, parks, and community development associations. Taxes on their profits, property, and payrolls built our schools, roads, bridges, and the safety net that Wisconsin’s progressives are still taking credit for, as if the money came from their council meetings. The offering plates in churches of every denomination were filled with money left over from company paychecks that were made possible because a few bold young men risked it all and got rich. Don’t thank God for them; thank them that you learned about God.

Their wealth pales in comparison to the wealth they created for millions and millions of other Wisconsin families. Those with an appreciation for the immeasurable contributions of Wisconsin’s industrial icons of 1910 will find the list of Wisconsin’s top ten employers of 2010 appalling:

Walmart, University of Wisconsin–Madison, Milwaukee Public Schools, U.S. Postal Service, Wisconsin Department of Corrections, Menards, Marshfield Clinic, Aurora Health Care, City of Milwaukee, and Wisconsin Department of Veterans Affairs.

This is what a century of progressivism will get you. Wisconsin is the birthplace of the progressive movement, the home of the Socialist Party, the first state to allow public sector unions, the cradle of environmental activism, a liberal fortress walled off against common sense for decades. Their motto, Forward Wisconsin, should be changed to Downward Wisconsin if truth in advertising applies to slogans.

There is no shortage of activists, advocates, and agitators in this State. If government were the answer to our problems, we would have no problems. The very same people – or people just like them – who picketed, struck, sued, taxed, and regulated our great companies out of this state are now complaining about the unemployment and poverty that they have brought upon themselves. They got rid of those old rich white guys and replaced them with…nothing.

Wisconsin ranks 47th in the rate of new business formation. We are one of the worst states for native college graduate exodus; our brightest and most ambitions graduates leave to seek their fortunes elsewhere. Why shouldn’t they? Our tax rates are among the worst in the nation and our business climate, perpetually in the bottom of the rankings, has only recently moved up thanks to a Governor who now faces a recall for his trouble.

In 1970, the new environmental movement joined unions and socialists in a coordinated effort to demonize industry. When I was in college, the ranting against “polluting profiteers” was like white noise – always there. They won, and here is the price of their victory: in 1970, manufacturers paid 18.2% of Wisconsin’s property taxes – the major source of school funding - and in 2010 those who remained paid 3.7%.

So who is it that caused the funding crisis in our schools and the skyrocketing tax rates on our homes? It is the same ignoramuses who are sitting on bridges, pooping on things, and passing around recall petitions. The unemployed 26-year old in the hemp hat looking for sympathy might look instead for some inspiration from Jerome I. Case, who started his agricultural equipment business at the age of 21, miraculously without an iPhone 4s.

Mr. Case got rich by asking people what they want and making it for them. He did not get rich by telling people what he wanted and waiting for them to do something about it. If you want to declare war on your own poverty, memorize that.

In the last decade alone we have lost 150,000 manufacturing jobs in this state – over 25%. And it’s not just jobs that have been lost; the companies that provided them are gone. Those jobs are not coming back, no matter how long we extend unemployment benefits pretending they are. The 450,000 people who still work in manufacturing in Wisconsin are damn good it at, but we are now outnumbered by people who work for government. A significant number of the latter are tasked with taxing, regulating, and generally harassing the former. While it is true that many manufacturers chased low-wage opportunities on their own, many more were driven out of the state by the increasing cost of doing business here.

It is a myth that unions improve wages. If you consider only the 1,000 jobs in a closed shop, you might think an average union wage is, say, $30/hr. But if you add in the zero wages of the 10,000 jobs lost in companies chased out by union harassment, the average of all 11,000 union workers is reduced to $2.72/hr. Do you know the average wage of union iron miners in this state? Zero. And the left is fighting hard to keep it that way in Northern Wisconsin - looking out for the working man, they call it.

It is also a myth that free trade causes job losses. Over the past three years, U.S. manufacturers sold $70 billion more goods to our Free Trade Agreement (FTA) partners than we bought from them. Conversely, we suffered a $1.3 trillion trade deficit with countries where no FTA’s exist. I doubt that kids are going to learn that in our government-union monopoly schools – it doesn’t fit the narrative.

No one wants to see another person suffer in poverty, and liberty is the best economic policy there is. The great industrialists of Wisconsin took less than a generation to lift millions up to a life of dignity, pride, prosperity and good will. When enterprise was free and government was limited, we all prospered.

Those great men of industry were not anointed at birth to be rich; they rose from nothing to great wealth through their own hard work and the value they added to their employees and their customers through choice, competition, and voluntary exchange. That is the only sure path to real prosperity; the debt economy is a temporary illusion.

Look again at the list of our famous industrialists and the list of our current employers. Who would you wish your child or grandchild to grow up to be? Who do you think will do more good on this earth – Jerome I Case and his tractors, or
the Coordinator of Supplier Diversity at MPS.

If you chose MPS, then apply now – that job is open, and it pays up to $72,000 plus benefits and early retirement. Go in peace and save the world. Me, I'm going with the tractor guy.

The above originally appeared November 19, 2011 in Moment of Clarity, a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D. Visit Tim's website www.timnerenz.com to find your moment.

Edmund Contoski is author of Makers and Takers, How Wealth and Progress are Made and How They are Taken Away or Prevented.  He blogs at www.amlibpub.blogspot.com

Decline of America's Schools Isn't Just Academic

The decline of American public education, documented by a plethora of objective tests for decades, is so well known it requires no documentation here. What I wish to address here goes beyond the academic failure. It is about the way school regulations now are regimenting all aspects of the children's lives, what they eat and drink—even their play during recess. Predictably, the results are less favorable for the children.

In his book Inside American Education, Thomas Sowell writes:

• They have used our children as guinea pigs for experiments, targets for propaganda.

• They have taken our money, betrayed our trust, failed our children.

• They have proclaimed their dedication to freedom of ideas and the quest for truth, while turning educational institutions into bastions of dogma and the most intolerant institutions in American society.

Schools have become totalitarian compounds, where an autocratic administration arrogates to itself the power dictate whatever it thinks is best for the children, irrespective of the role and rights of the parents.

Remember the campaign to remove from schools vending machines dispensing soft drinks and snacks, a measure that was supposed to help combat childhood obesity? Who could be against that? Are you in favor of childhood obesity? Few people bothered to ask if the measure would be effective or if it was the schools' role to police what children put into their mouths.

Did you think the issue would stop with banning the vending machines? If so, you should have known better. Next was banning children from bringing soft drinks and snacks from home. And school cafeterias had to be prohibited from serving french fries, pizzas, and other items the children like and substituting foods with fewer calories and less salt and sugar.

Earlier this year a firestorm of protest arose when the Chicago Tribune published a story about a school that banned children from bringing lunches from home. Principal Elsa Carmona told the newspaper her intention is to protect students from their own unhealthful food choices. But Susan Rubin, a nutritionist and founder of the Better School Food program, told AOL News, "I get physically sick just looking at it, because it makes me sick that kids are eating this processed crap." The Chicago Tribune reported, “Many students throw away their entrees uneaten and say they would rather bring food from home.” Carmona said, "Nutrition wise, it is better for the children to eat at the school," but children get zero nutrition from food that is thrown away.

Parent Erica Martinez said, "Some of the kids don't like the food they give at our school for lunch or breakfast. So it would be a good idea if they could bring their lunch so they could at least eat something." A spokeswoman for Chicago Public Schools said the decision to prohibit packed lunches is left to the principals, and she was unable to say how many have schools such a policy.

The Chicago Tribune recounted: “Fernando Dominguez cut the figure of a young revolutionary leader during a recent lunch period at his elementary school. 'Who thinks the lunch is not good enough?' the seventh-grader shouted to his lunch mates in Spanish and English. Dozens of hands flew in the air and fellow students shouted along: 'We should bring our own lunch! We should bring our own lunch! We should bring our own lunch!'”

Los Angeles, Fairfax Country Virginia, Washington D.C. and many other locales have banned chocolate and strawberry-flavored milk in schools,claiming white milk is healthier. Chocolate milk has also been banned in Minneapolis even though the product sold to Minneapolis schools had less sugar than other versions and contained only 20 calories more than a carton of regular 1-percent-fat milk. Chocolate milk represented up to 60 percent of the district's lunchtime milk sales.

The ban on chocolate milk ban was intended to give children more benefit from milk, but it resulted in some children drinking no milk. Some mothers say their children won't drink white milk. Worse, school is the only place many kids drink milk at all. The Washington Post reports that removing flavored milk from schools reduces children's milk consumption by 37 percent. The American Academy of Pediatrics and other groups support chocolate milk in schools because of studies showing that flavored-milk drinkers consume more milk than do youths who drink white milk only.

Dairy foods are a major source of saturated fat in the diet, which has been associated with heart disease. But research at Uppsala University in Sweden suggests eating dairy foods could benefit your heart by lowering blood pressure or reducing cholesterol levels, according to Dr. Eva Warsesjo, et. al., in the American Journal of Clinical Nutrition. Warensjo and her team measured blood levels of two biomarkers of milk fat in 444 heart attack patients and 556 healthy controls. The substances, pentadecanoic acid and heptadecanoic acid, indicate how much dairy fat a person has been eating. The people with the highest levels of milk fat biomarkers were actually at lower risk of heart attack. For women, the risk was reduced by 26 percent, while for men risk was 9 percent lower.

There may also be other benefits from chocolate milk. For example, the Minneapolis Tribune reports, “Runners, in particular, seek it after distance events because it provides protein and carbohydrate recovery for tired muscles.”

Why not allow for individual choice? Why does the school have to be so intolerant about chocolate milk? Because the school wants a collective decision, a one-size-fits-all policy that prevents individual choice. Obviously, some children are worse off because of the policy, because they won't drink white milk and overall milk use declines 37 percent. But that is irrelevant to a school administration that assumes the right to sacrifice the interests of a minority for the alleged overall benefit of the group. That issue doesn't come up where individual choice is allowed.

And what is the effect on the children? Are they “learning” from the banning of chocolate milk that their own choices are not to be trusted, that only an outside authority can determine what is good for them? Or that their own interests must be sacrificed for the alleged good of others?

I learned of another illustrative example of a school's collectivist premise from a single mom living in a Minneapolis suburb. She has a 10-year old daughter who, along with her classmates, was told by the teacher that henceforth there would be a new policy at recess. The children would be allowed to play with whomever they chose for the first five minutes of recess. Then a whistle would be blown, and the children would have to stop playing with those kids and play with some others. Five minutes later a whistle would sound and, again, they would have to stop playing and pick new playmates. It was explained that this would be better for the overall group because it would provide “equal opportunity” for kids to play with others. The kids, however, wanted to make their own choices, not do what the teacher thought was best for the group. So they went on strike. When recess came, they all sat down on the playground and refused to play. When the whistle sounded, they ignored it and just sat there. The administration apparently hoped things would be different the next day, but the kids again sat down on the playground during recess. Only this time they brought signs. These had messages such as “No play your way” and “We play our way.”

On the third day, when the administrators saw the kids were prepared to continue their sit-down strike, they announced the school policy wasn't such a good idea after all and would be discontinued.

One victory for the kids! Hooray! They were happier with their own choices.  And if children could choose the milk they preferred, they would be not only happier but healthier.