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