“What were the results of a world dominated by large, inept, but powerful failures whose influence could not be avoided?” – Richard White
This question appears to concern the recent Wall Street debacle, bail out, recession, and so on. But it’s actually the central theme behind a new study of the Gilded Age, Railroaded: The Transcontinentals and the Making of Modern America, which was reviewed (“Too Big to Fail”) by Buzzy Jackson in yesterday’s Boston Sunday Globe (why don’t I read the Sunday paper more often?).
“Richard White,” writes Buzzy Jackson, “has written a book that will entertain and outrage readers with scenes of corporate greed and mismanagement and the federal bailouts that enabled them.”
White, a Pulitzer Prize finalist and professor of the American West at Stanford University, has chosen a subject matter that, unfortunately, far-too-closely resembles our current socio-economic state, to show how corrupt businesses often succeeded not because of their avoidance of failure, but because of it.
“This is a story of the dark arts of accounting,” notes Jackson, “and the seemingly paradoxical fact that the transcontinental railroads were simultaneously” powerful and unsuccessful.
“White’s argument is simple yet surprising,” Jackson continues.
“It was not the success of the transcontinental railroads that transformed America, it was their failure. These railroads … were poorly conceived and often terribly run. When they failed – and almost all eventually did – they brought the entire economy down with them … The sources of their failure, incompetence and greed, were obscured from the public.”
How is this possible? Why haven’t we learned from this formerly made mistake?
I don’t know. But it seems a pretty bleak picture. Yesterday and today.
“The unsuccessful and incompetent not only survived but prospered and became powerful,” writes White. “It was the triumph of the unfit, whose survival demanded the intervention of the state, which the corporations themselves corrupted.”
“That’s how capitalism is supposed to work, isn’t it,” Jackson observes rhetorically, “business emerges to meet demand? Not when it came to the transcontinentals. White doesn’t argue with the idea that “railroads defined the age” of an emerging modern America, but he has a different explanation for that belief: they were, like so much of the Gilded Age, corrupt.”
If corruption is something that skeptical consumers and citizens can assume, or at least be wary of (as is demanded by their skeptical nature), than it’s worth noting that the corrupt railroad companies (and subsidizing government) at least created the tangible, usable railroads and transportation system.
What do today’s corrupt businesses-gone-wild contribute?