August 29, 2007
On Robber Barons
Hillsdale History Professor Burton W. Folsom, pens a guest editorial in the Wall Street Journal today (paid link) and hits one of my favorite themes. Mexican telecom magnate Carlos Slim is derided as a robber baron. Folsom steps in to defend the robber barons:
Whoever satisfied the most customers would have the largest businesses. Only when Rockefeller sold cheap kerosene to tens of millions of Americans did he become the nation's first billionaire. "We must ever remember," Rockefeller told his partner, "we are refining oil for the poor man and he must have it cheap and good." Ironically, the price of Rockefeller's kerosene dropped to eight cents a gallon in 1885 from 26 cents in 1870 -- all the while he was viciously pilloried as a monopolist by the press, Congress and his competitors.
Rockefeller provided poor people with heat and light to earn his pejorative sobriquet. When people run him down, I always think of the old mining bumpersticker "Let the Bastards Freeze in the Dark!" Not only does Folsom honor the Robber Barons, but he tells Senor Slim: "I knew Robber Barons, Robber Barons were friends of mine, Son, you ain't no Robber Baron." Oh wait, that was Sen. Lloyd Bentsen.
His major opportunity came when President Carlos Salinas de Gortari decided to privatize some inefficient industries. Mr. Slim bought Telmex, the nation's phone company, in 1990 in a controversial auction which was decidedly less than transparent. With that purchase came a six-year monopoly guaranteed by the government. Although Mr. Slim was supposed to relinquish the monopoly in 1997, he used a variety of legal and political tools to maintain it, for example filing injunctions in court to block orders from the regulator to provide competitors fair access to his network. According to OECD figures, Mexican consumers and businesses still pay above market telephone rates. Fewer than one-fourth of Mexican homes have telephones.Economics and Markets Posted by John Kranz at August 29, 2007 11:05 AM