Tuesday, February 16, 2010

Professor Obama and Real Job Creation

We’ve recently been told that to refer to President Obama as a professor is coded racism. (Click here to read my take on such arguments) Interestingly, during the campaign for the White House his campaign didn’t see it that way as he referred to himself as a "constitutional law professor". I don’t know how good of a professor he was, but if he had spent more time reading American history and less Rules for Radicals, he might have been a better President. Two weeks before he was inaugurated the President stated that “Only government" can save us.” The subsequent actions of his administration (and its predictable lack of results) suggest that professor Obama should have spent less time reading Karl Marx or Cloward & Piven and more time reading Adam Smith.

History clearly demonstrates that government is not the engine of American prosperity. The success of the American experiment was played out on the fields of limited government and free markets, guided by the rule of law and powered by the ingenuity, entrepreneurial spirit and quest for success that runs through the veins of the Americans people. Without a doubt, the single best example of the power of that American spirit and its ability to change the world can be found in the life of one man, Cyrus McCormick, the man who freed mankind.

Cyrus McCormick has been called the "Father of Modern Agriculture." His creativity was twofold. The first element of his genius was his invention of a workable reaper, a machine that harvested grain. In the 1820s the limits on agriculture were dictated by how much grain could be harvested before it went bad. A man, using tools and techniques that were largely unchanged for five thousand years, could harvest approximately 2 acres of grain a day. For centuries men had been toiling in vain to invent a tool that would increase that number. In 1831 Cyrus McCormick solved the riddle and created the first effective mechanical reaper. Despite its great limitations, his first reaper more than doubled a man’s capacity to harvest grain and began a technological march that continues to this day.

As if that were not enough, McCormick had more up his sleeve. The second element of his genius was the introduction of financing for his equipment. Farmers moving west often had little more than the clothes on their back and very little cash. Unlike most bankers, McCormick understood the economics of farming and sold his reapers for $30 down and the balance – typically $90 or $100 – in 6 months. (By 1880 when McCormick retired, economies of scale had driven the cost of a far better reaper down to $18.) McCormick also introduced advertising, (including satisfied customer testimonials) replacement parts and the written guarantee to American agriculture. Indeed, "15 acres a day or your money back" was his promise.

By the time McCormick died in 1884, his company had sold over 6 million reapers around the world. A measure of his impact can be found by noting that in 1831, the year he invented the reaper, 85% of the American population was involved in agriculture. Today that number stands at less than 3%. Not only does that 3% feed the United States, (with its 300 million vs. 15 million in McCormick's time), but it also exports millions of tons of food every year. Although the impact on farming was substantial, the real impact of McCormick’s genius was felt far beyond the fields. Millions who had formerly been tied to the farm were now free to pursue their dreams elsewhere. From energy to medicine to manufacturing to retail... and virtually every other area of our economy, the economic miracle that came to personify the United States owes much to the man who freed the population to dream of the possibilities that lay beyond the amber fields.

Cyrus McCormick did more for the advance of the human condition than virtually any politician in human history. His efforts freed the masses of people around the world to leave the farm behind and pursue their passions for becoming… basically anything they wanted. With freedom (in this case from the chains of farming) comes creativity, and McCormick unleashed a flood of it. Because they were no longer chained to a farm, Americans were able to go out and invent and build the world we live in today: photography, movies, electric light bulbs, baseball, television, advertising, computers, the Hula Hoop and the Frisbee, the Internet, FedEx, McDonalds, Wal-Mart and yes, even things like Enron and Lehman Brothers.

If President Obama had undertaken even a cursory reading of American history he would have recognized that Cyrus McCormick was not unique. Rockefeller brought order to the petroleum market and made energy affordable. Edison illuminated the country. Alexander Graham Bell revolutionized communication. Henry Ford brought the assembly line to automobile production and made cars almost anyone could afford. Charles Goodyear brought comfort to driving a car while Elisha Otis made elevators safe and Willis Carrier made movie theaters bearable even during the dog days of August. Not only did these advances make our lives significantly better, but every one resulted in millions of jobs being created.

From Robert Fulton to Bill Gates, America is a country of inventors and innovators who solve great problems and build great fortunes… and those visionaries usually benefit millions of others along the way. This economic malaise is no match for a motivated citizenry of entrepreneurs who are just waiting for their chance to strike out and earn their fortune. If President Obama really wanted to put America back to work he’d unleash the unabashed power of American innovation by slashing taxes, rolling back government spending and moving to reign in the power of unions and lawyers, the numbers two and three obstacles (behind the imperial federal government) to any chutes of recovery that might begin to sprout. If the Professor decides not to pursue such a path, we shouldn’t be much surprised. It’s hard to imagine a shining city on a hill is something to strive for if one is looking down on it from an elevated perch in an ivory tower.

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