Monday, May 23, 2016

Izabella Kaminska on Muckrakers, Monopolists and Miscreants

Over the years, simply because the blog is composed of things that caught my eye rather than some grand plan, we've from time to time mentioned some of the early 20th century journalists who got appended the term muck-rakers but when I did a quick search of the blog I was surprised how many we'd named, although usually just in passing.
Some links below.

Here, Ms. Kaminska writing for the paper rather than the flagship blog tips her cap to one of the most influential.

From the Financial Times, May 22, 2016:

Inequality and the monopolies of unfettered techno markets
Companies cut costs rather than improve process so as to grab market share, writes Izabella Kaminska
In testimony to the US Federal Commission on Industrial Relations in 1915, Ida Tarbell, a journalist known for exposing the Standard Oil monopoly of John D Rocke­feller and championing the antitrust movement of the era, made a simple but profound point about the structure of the unconstrained American marketplace.

It was the policy of business trusts, she said, to keep supply always a little less than demand to the great detriment of society. A congressman then took the stand to argue that an employer’s relationship with his employees had “turned into a feudalism grosser than English history had ever shown”.

Tarbell favoured what was then being popularised as the “scientific” approach, which elevated the role of central planners in an organisation to the supposed benefit of all concerned.

Ironically, many decades later, John Kenneth Galbraith would argue that the dependency on a thick layer of managerial planners had rendered antitrust measures ineffective at arresting the development and burgeoning power of what he described as the “technostructure”. The company, he insisted, had become an uncompetitive monstrosity.

Tarbell had seemingly only opened the door to a different type of monopoly — one focused not, like Standard Oil, on maximising profits at any cost but on maximising benefits to those it deemed technically specialist enough to be useful in serving its multi-faceted goals. In both cases inequalities resulted though, in the corporations described by Galbraith, these manifested themselves in the favouring of managers over staff.

In more recent times, Thomas Piketty has suggested that rising inequality in developed economies over the past three decades is mostly linked to the gap between the after-tax return on capital and the economic growth rate. But what if there is a simpler explanation? That old chestnut of monopoly?
In a recent article, Joseph Stiglitz, the Nobel laureate, outlined how today’s inequalities might be more plausibly linked to the tendency of unfettered markets to monopoly. The proposition is intuitively appealing. He argues that many sectors in the modern technological era — among them telecoms, cable television, social media, internet search, health insurance and pharmaceuticals — cannot realistically be classified as competitive....MORE
In 2011 we visited Ida Tarbell in "Ida M. Tarbell: 'John D. Rockefeller: A Character Study'" in part because I wanted a searchable link to the Tarbell collection at Allegheny college and partly because she described John D.'s grandfather, Godfrey as "a shiftless tippler, stunted in stature and mean in spirit".

In February 2016's "Oil Tankers and Interest Rates and Scallywags and Time" one of the Rockefeller minions, Thomas Lawson, got a mention, not for his exposé of his copper dealings with Standard Oil honcho Henry Huttleston Rogers, Frenzied Finance, but because of the ship for which Lawson was namesake.

Staying in 2016, it was Ida's buddy Lincoln Steffens in "Goldman Sachs: Death Of Capitalism Averted, Time For Working Schlubs to Partaay!", again not for the work he was most famous for, in Steffens' case his Shame of the Cities (St. Louis, Minneapolis, Pittsburgh et al) but because of his famously wrong statement about Soviet Russia in a letter dated April 3, 1919: “I have seen the future and it works.”.
It didn't.

In 2015 there was Jacob Riis because I was reminded of one of the photographs from "How the Other Half Lives: Studies among the Tenements of New York":
Jacob Riis Lives! "San Francisco Housing Bubble Goes Subterranean: $500/Month To Live In A Crawlspace"
And along the way Theodore Dreiser got a major link (possibly one of the best business novels ever) in "Switzerland Begins Two-Year Trial of Driverless Buses (plus money, art, glory and sex)"

So yes, more than wary reader might have anticipated and I've probably forgotten a couple.
Circling back to Ida, here's an online version of History of the Standard Oil Company.

Although there are quite a few critiques you can raise about her book it was pretty important and was one of the factors that led to the breakup of Standard Oil in the Supreme Court decision "Standard Oil Co. of New Jersey v. United States" seven years later. So Mr Rockefeller probably considered the book important.

It ranks #5 on NYU's Journalism school's list of the 100 best works of 20th-century American journalism. (via the NYT)