What is the difference between industrial pirates and industrial statesmen

Bill Gates and Warren Buffet are perhaps contemporary successors to the steel industry giant, both likewise making extensive philanthropic contributions. Robber barons, by contrast, achieved vast wealth by what many regarded as dubious means, even in the laissez-faire 19th century.

Tricky stock maneuvers, shady contracts, credit squeezes, and at times outright fraud defeated competitors and paved the way to monopoly power or to oligopolistic power-sharing among barons. Jay Gould, the high-energy railway consolidator, and John D. Robber barons may be seen as successful entrepreneurs who value money and power above all else. However, in time the two categories can blend. For example, although Rockefeller schemed mightily to create Standard Oil, his later charitable foundations, carried on by heirs, profoundly rehabilitated a spotty reputation.

Now, on to Mr. Though he managed dozens of deals, he has won without fraud and has often lost. Thus, my sense is that Mr. After all, Jackson didn't merely bring an end to America's Hamiltonian moment; he also inaugurated the spoils system that politicized civil-service appointments and fostered massive corruption.

But the Pendleton Act and other measures have since reformed the civil service, making it much more meritocratic than it was during and immediately after Jackson's presidency. If the United States can override the Jacksonian spoils system, why can't it do away with more petty corruptions? Moreover, unilateral industrial planning is far easier today than it once was.

Progressive reformers of the early 20th century streamlined lawmaking power by establishing federal agencies and granting them extensive regulatory authority. Since then, Congress has delegated much of its lawmaking responsibility to these executive-branch entities, while the Supreme Court remains hesitant to disturb precedents that enable the legislature to contract out its duties in such a manner.

With a legislative branch no longer interested in legislating and a judiciary reluctant to adopt more rigorous separation-of-powers doctrines, the president can re-order the American economy practically at will. And yet despite these changes, there is no reason to believe that today's executive branch has either the vision or the competence to carry off the kind of policy leadership that industrial planners wish to see. One of the most important implementers of federal industrial policy in the modern age is the Department of Defense.

If there ever was a test case for the statesman view, this is it. The Pentagon is filled with members of the military who swear oaths to obey lawful orders given by their superiors, and the department itself has a well-defined mission: "to provide the military forces needed to deter and win wars and to protect the security of our country and our allies.

Through agencies like the Office of Industrial Policy, the department monitors and supports parts of the American economy that produce military supplies or can be mobilized in the event of war or other emergencies. It does so primarily through two methods: by funding research and development, and through defense procurement. In part because of notable successes, particularly during the Cold War, the funding of research and development is one of the most popular forms of industrial policy available to policymakers.

Defense procurement, on the other hand, is a parade of horrors, illustrating the greatest weakness of more aggressive forms of industrial policy: Much of the money spent will be wasted, and deliberately so. Congress may have given away much of its power, but it keeps a tight hold on the policy levers it cares about most, including discretionary spending.

And while our representatives are patriots who love their country and want a strong defense, they are also keenly interested in making sure their constituents are paid to provide that defense. This dynamic does not make for efficient or enlightened policy.

Apportioning out military spending to multiple constituencies has always been part of American defense policy. During Washington's presidency, Congress approved funding for six frigates to protect American shipping, particularly from pirates supported by the North African states. By miraculous happenstance, the administration determined that each frigate needed to be built at a different shipyard, and the materials to build them needed to be procured from locales across the country.

As naval historians Harold and Margaret Sprout put it, "there is every indication that the Administration deliberately spread its shipbuilding operations over as large an area, and among as many individuals and companies as possible. It is also evident that home industries were patronized as much as possible.

The modern defense industry is plagued by the same kind of political engineering and its associated cost overruns. The problem is easiest to observe in major acquisition projects like aircraft carriers and jets. Today's aircraft carriers are built and maintained by over 2, firms scattered across 46 states. One of the newest carriers, the U. Gerald R. Air Force with the greatest capabilities at the lowest possible cost.

Similarly, F fighters are being built in 45 states as well as Puerto Rico. Perhaps unsurprisingly, Congress frequently requires the Defense Department to purchase more Fs than the Pentagon requests. All of this prompted the late senator John McCain to denounce the F program as "a scandal and a tragedy with respect to cost, schedule and performance.

Military-base policy is another area where parochial interests crowd out national priorities. Bringing well-paying jobs to economically underperforming parts of the country is a commonly cited objective among would-be industrial planners, and maintaining military bases in those locales is one way of meeting that goal. Unfortunately, Congress employs this strategy far too zealously, and our national defense is poorer for it. The American military shrank in the late s and early s as the Cold War drew to a close, leaving some bases nearly empty.

Defense experts have advised that these bases be closed to free up spending for other programs, and the Base Closure and Realignment Act of established a process for doing so. But such reductions rarely happen in reality. Even empty bases provide employment, and since no member of Congress can stomach putting his constituents out of work, the Pentagon still pays for more bases than it needs.

Creating a civilian reserve capacity to mobilize in emergencies is another proposed goal for industrial-policy advocates. But earlier attempts to do so have become entrenched, and now they actively harm national security.

A famous example is the Jones Act, which requires cargo shipped between parts of the United States to be carried on vessels built, owned, and crewed by Americans. And yet the Jones Act remains in place. As a result, American civilian shipyards cater almost exclusively to clients held captive by the Jones Act's requirements: Between and , over ships were built in the United States, but only 80 were exported.

Since the act sustains , American jobs in various congressional districts, repealing it is a political non-starter. Perhaps the cost would be worthwhile if American civilian shipbuilders were experimenting with new and expensive technologies. But as a study by the National Defense University found, U. Given the nature of industrial policymaking in the United States, there's little reason to believe future attempts at industrial planning will result in a more coherent, rational, or strategic allocation of resources than they have in the past.

The American system deliberately divides federal and state policymaking power and distributes it among hundreds of officials in separate branches. In short, industrial policy in the United States cannot be steered by a small group of enlightened individuals, because a small group of enlightened individuals will never be at the helm. Indeed, in some sense, there is no single "helm" to speak of. Despite the burst of creative energy among manufacturing advocates and national-security conservatives, the two forces have yet to overtake the Republican Party.

Significant portions of the party's House and Senate delegations, as well as the right-leaning policy community more generally, remain devoted to the Reagan-era platform of low taxes, free trade, and a business-friendly regulatory environment. They harbor deep concerns over a national industrial policy, which they fear may usher in the kind of stagnation that plagued the U. While this pro-business contingent still defines most of the GOP's actual agenda, it's not yet clear which of the three factions will ultimately be the Republican standard-bearer in the coming decades.

What is clear is that in order to achieve or maintain electoral viability, at least two of the factions will need to join forces.

To clarify the dilemma ahead for the Republican Party, and for the country at large, it is helpful to examine the potential alliances between the factions on the right, their electoral-viability prospects, and their industrial-policy implications. Many observers assume manufacturing advocates and national-security conservatives can achieve their respective objectives by working hand in hand on industrial policy.

Sensing this natural common ground, elements of the pro-manufacturing right have already begun actively courting defense hawks. Senator Marco Rubio, one of the most prominent manufacturing advocates in Congress, has attempted to make common cause with his colleagues by framing his industrial-policy arguments in terms of national security.

National-security conservatives may be inclined to accept the embrace offered by their pro-manufacturing suitors, yet they risk compromising their objectives if they do. From a defense perspective, maintaining the U. Manufacturing advocates may talk frequently about the investment and innovation benefits that the manufacturing industry creates, but those mainly apply to new, high-productivity sectors that rarely provide the kind of mass employment these advocates desire.

As Vaclav Smil notes in his book Made in the USA: The Rise and Retreat of American Manufacturing , the three domestic manufacturing sectors that have experienced "recent employment losses surpassing half a million jobs" are textiles, motor vehicles and parts, and apparel.

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