Folsom's Lecture
Dr. Burt Folsom, professor of History at Hillsdale College and author of bestselling book The Myth of the Robber Barons, gave a lecture to Young America's Foundation Conservative Student Conference detailing the current realities of entrepreneurship and the principles that we should use to guide our nation toward future growth.
Folsom began his lecture and his book by citing competition of the steamship industry between the United States and Britain as the beginning of government subsidies for industries. After the initial years of the steamship subsidies going to one particular man, Cornelius Vanderbilt offered to do the same amount of work at half of the price of the competitors. The federal government denied Vanderbilt's proposal and gave a larger subsidy to the individual who they had the first contract with. Vanderbilt built a steamship on his own, without subsidy, and entered the market in competition with the government subsidized company. Despite the obstacles, Vanderbilt turned a profit, while his competition reported an enormous loss, and needed additional subsidies for the following year. Stories of government supplanted government projects like railroad development paralleled the losses and inefficiency observed in the steamship saga.
How we Should View This History
These examples really made the idea of government subsidies more concrete for me. Through this anecdote, I began to really understand how much money is wasted a lot of the time on government subsidies and mismanagement of industry through congressional action. I had in the past assumed that government subsidies would decrease competition, but in this case... competition was not decreased, but rather valuable tax payer funds were misused on a government investment that ultimately flopped. Subsidies are still commonplace today, and many of them result in the same wasteful spending. Such policy destroys free market principles. True entrepreneurs like Vanderbilt or James J. Hill achieve unimaginable feats without federal subsidies, and their products are generally more preferred by consumers and thus more profitable. While Vanderbilt and Hill are often viewed as tycoons of industries, undeserving of the fortunes that they made upon transportation businesses, took the harder road -- a road without government handouts to jumpstart the development of the industry.
Going Forward
I think the guiding principle we should use going forward, as quoted by Dr. Folsom in his lecture is: "We rise and we fall based upon the creativity of the people in the United States" . It is through this montra that innovation in the past has been possible... It is through this that future developments and innovation is possible... This is how the United States would once again become the leading superpower in realms of technology, production, innovation. Free market principles are tried and tested, giving favorable outcomes. Government subsidies are also tried and tested, producing failure more often than success - stagnation more often than development.
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